Report of Sixth Joint Committee on the Secondary Legislation of the European Communities: Motion.

Mr. Ellis

I move:

That Dáil Éireann takes note of the Report of the Sixth Joint Committee on the Secondary Legislation of the European Communities; Report No. 10. Reform of the Common Agricultural Policy.

I am very grateful to the House for making time available for a debate on this report of the Joint Committee on the Secondary Legislation of the European Communities on reform of the Common Agricultural Policy.

The chairman of the joint committee, Deputy Barry, is unavoidably absent today but I am grateful that it falls to me to move this motion since I was involved as chairman of the sub-committee on agricultural and fishery matters that did the groundwork on preparing the report.

The joint committee have been the subject of criticism from time to time for their failure to address current or critical issues but I venture to suggest that Common Agricultural Policy reform is one of the most important subjects considered by the joint committee in recent years. I am glad that this has been recognised by this House and that time has been made available for a debate on a joint committee report for the first time in seven years. Such a lapse of time indicates that the House has been negligent in debating such reports. I hope this will be the new pattern for the future, particularly when the joint committee take on their new expanded role on European Community affairs, as has been promised by the Taoiseach.

The report covers a most important subject. Irish agriculture of itself represents 10 per cent of gross domestic product but in one way or another it impinges on the lives and incomes of practically every person here — not only those directly engaged in agriculture and their families, or those engaged in subsidiary industries and in supply of materials, machinery, transport and sales outlets for agricultural products but it must be remembered that the income generated by agriculture and the spending power of the farming community impacts on the economy of the country as a whole. Consequently the welfare of all our population is affected by the ups and downs of farming.

Before getting into the main elements of the report, I would like to thank all those who assisted in its compilation. I must pay special tribute to my colleagues on the sub-committee, particularly those from the Opposition benches who put party politics aside in the common interest of teasing out and clarifying the many and varied implications of the Common Agricultural Policy proposals. Indeed, it is a mark of the current joint committee on EC legislation that there is all round co-operation between the members in their determination to get to the kernel of whatever subject is under discussion and makes this kind of work very worthwhile.

In carrying out its work the sub-committee received considerable assistance in written and oral form from the Department of Agriculture and Food. In addition, the Irish Farmers Association, the Irish Creamery Milk Suppliers Association, and the Irish Co-operative Organisation Society made oral and written submissions to the sub-committee. The United Farmers Association and An Bord Bainne also made written submissions.

I would particularly like to thank Mr. Michael Corry, Mr. Dan Byrne, Mr. Danny Carroll, Mr. Gerry Cody, Mr. Dermot McCarthy and Mr. John Fox of the Department of Agriculture and Food; also Mr. Con Lucey, chief economist, IFA; Mr. Tom O'Dwyer, president, and Mr. Donal Murphy, general secretary, of the ICMSA; and Mr. John Tyrrell, director general of the ICOS, all of whom attended meetings of the sub-committee and generously gave us the benefit of their knowledge and experience. I would also like to acknowledge a written submission received from Mr. Seán Scanlan, president of the United Farmers Association and Mr. Nicholas Simms, market research manager of An Bord Bainne. The number of parties willing and anxious to assist the committee in its deliberations is a mark of the widespread concern at the implications of the reform proposals for the entire farming community.

A special word of commendation is due to our consultant, Mr. Jim Dorgan, for his clear presentation of all the arguments put forward and his analysis of all the proposals and counter-proposals.

The report is an excellent document in that it sets out the background to the introduction of a Common Agricultural Policy and the way in which it developed to its present state. The objectives of the Common Agricultural Policy were enshrined in Article 39 of the Treaty of Rome. Very briefly they were: to increase agricultural productivity; to ensure a fair standard of living for farmers; to stabilise agricultural markets; and to guarantee regular supplies of food and ensure reasonable food prices for consumers.

The Common Agricultural Policy was set up in the fifties and sought to achieve its objectives by the introduction of schemes such as intervention purchase of surplus commodities and selling them when balance had been restored or disposing of them outside the Community; quotas, levies and tariffs on imports to prevent external supplies undercutting home produced commodities; and direct subsidies to producers of certain commodities to keep them competitive with imports.

Agricultural output responded to the conditions created by the Common Agricultural Policy and rose rapidly. By degrees major surpluses built up, particularly in dairy products, cereals and beef. Intervention costs also grew so that in later years support for farming put great pressure on the Community's financial resources. An ironic aspect of the Common Agricultural Policy is that, while production is higher, farm incomes generally are lower in real terms today than they were in the mid-seventies.

A further difficulty is that benefits to the agricultural community have not been evenly distributed with smaller producers gaining least. For this reason it has to be accepted that some reform of the Common Agricultural Policy is necessary. While the report accepts this, it insists that price cutting and the deficiency payments system proposed in the Commission's document, now generally known as the MacSharry document — this is spelt out on pages 12 and 13 of the report — must be resisted strongly on the following basis: they will not on their own remove the problem of oversupply on a continuing basis and will have a very harmful impact on the incomes of the majority of Irish farmers. The deficiency payments will also create greater rural-urban divisions which I do not think anyone wants to see developed in any member state of the Community. The rural-urban divide has been allowed to grow for far too long and it is time we put a stop to this so that we can take a stand against these proposals as a country. In addition, they will not halt the flight from the land.

The proposals which were greeted with the greatest amount of anger and derision were the set aside proposals, which compensate farmers for withdrawing land from production, leaving it lie fallow to grow weeds — an action which heretofore was regarded as totally against good farming practice — and the early retirement scheme for farmers. A person of 50 or 55 years of age who lives in the city might find a lump sum and enhanced pension which would give them the opportunity to become engaged in some other kind of business venture very attractive, but the prospects of doing this for people who live in rural areas is very limited. The package on offer could never be described as a golden handshake. In fact, it could put people well below the poverty line. Anyone with any appreciation of the pride which exists among the farming community who are willing to work hard seven days a week will understand the anger the proposed deficiency payments, hand outs, provoke. The proposals have been rejected by all sections of the Irish farming community. They have been represented as supporting smaller farmers, but they are unacceptable to the farmers in my constituency and throughout County Meath. I am sure other speakers, and in particular my colleagues on the joint committee, will develop these points further during the debate.

The main arguments in the report have been taken up and supported by many farming organisations. In his discussion on the subject with Commissioner MacSharry last Tuesday the Director General of the ICOS referred to this report as an authorative document. The report analyses the Commission's proposals and sets out counter proposals which I am convinced will deal with the problem of surpluses without making any undue impact on the incomes of farming communities or the incomes of those in the service industries who depend on agriculture for their livelihood. The number of downstream jobs threatened by the Common Agricultural Policy proposals is frightening.

These counter proposals are based on three main principles upon which the joint committee believe reform of the Common Agricultural Policy should be based. These are Community preference, effective supply management and combating rural poverty, which is becoming a frightening reality in the west. The joint committee are satisfied that these principles can be achieved by the following means. First, reducing the degree of protection now given to cereals and seeking increased protection against imports of cereal substitutes from non-EC countries. Second, accepting a reduction in production of cereals, milk, beef, etc. but requiring the EC's trading partners to make reciprocol reductions in their production of these commodities. This would ensure that EC reforms are not negatived by increased production elsewhere which would result in a continuing fall in world prices. We must continue to drive home to those who will be involved in the GATT talks the message that to reduce production in Europe and allow production worldwide to increase would be a disaster.

Third, strict control of EC imports of dairy products, sheepmeat, beef and cattle. The need for this is obvious, especially in view of the recent changes in Eastern Europe which will have a detrimental effect so far as Irish livestock production is concerned. Fourth, recognition of Ireland's peripheral position and special dependence on agriculture. No one has to be a genius to realise Ireland's dependence on agriculture.

Fifth, promotion of consumption of milk and beef products by combating adverse perceptions of their nutritional and health qualities. It is important that farmers realise this and would be prepared to give the fullest support possible to the Minister for Agriculture and Food and his officials in trying to combat the use of illegal substances in farming. Even if such substances are used in other EC countries, as they have been for the past number of years, we cannot afford to let our agricultural industry be put at risk by unscrupulous individuals who are prepared to go to any lengths and use all sorts of trickery in order to use those products. I know that when such practices have been brought to the attention of the Department they have taken action in this regard. It is frightening to think of the damage which can be done to our greatest industry if people do not cooperate fully with the Department. I appeal to people who know other people who are using illegal growth promoters, such as angel dust or jungle juice, to immediately bring it to the attention of their local veterinary officer who in turn will bring it to the attention of the Department. We cannot allow these cowboys destroy our main national industry. Even if these substances can be used in Europe, we do not want them to be used here.

Sixth, the introduction of an expanded scheme of research and development into product and market development by processors in peripheral regions. In this context we have been guilty of taking the short route — namely, the intervention route — so far as Irish producers and processors are concerned. Neither the Government nor the industry has invested enough funding in the development of agricultural products. If we are to have a future we need to ensure that our products are both consumer friendly and properly produced so that customers will buy them.

I want to remind Deputies on all sides of the House that there is now a certain urgency and element of self-preservation about having the proposals reconsidered. We have been put on notice that there is likely to be a referendum next March following the Maastricht Summit. In view of the current air of disillusionment about EC membership we can expect a chilly reception when we travel the by-roads of Ireland looking for a positive response to this referendum if the Common Agricultural Policy reform plans are not modified greatly.

Commissioner MacSharry, in defending his proposals, has ridiculed Ireland for constantly coming with the begging bowl and failing to take its place as a mature member of the Community. I want to repeat that while the report makes some case for the special treatment of Ireland this is not the most costly of the recommendations. We did not in preparing this report intend to use it as a begging bowl; it was prepared to deal with the situation facing us. It also points out that the Commissioner's proposals would penalise Ireland for problems of over supply to which Ireland has not been the greatest contributor. We should remember that this time we are not coming with a begging bowl and looking for special treatment for Ireland. Rather, we are coming with a set of well thought out and argued counter proposals which could be of benefit not only to Ireland but to the entire Community.

The House may be interested to know that the report has been circulated to agricultural institutions. It has been circulated also to MEPs and to counterpart EC affairs and agricultural committees in member states. Their response has been favourable. However, we must not be complacent. Every possible avenue must be explored to try to influence the final outcome of Common Agricultural Policy reform.

We set out to prepare this report in the light of the world situation and of the problems agriculture was facing in Ireland. Since then agriculture has gone further down the hill. At present when we see the prices that are available for livestock it frightens me how farmers will be able to exist in the long term. I know the Minister and the Minister for Foreign Affairs are doing their utmost to have the third country markets reopened to our live exports. We should remember that in those third country markets we are now facing a situation where there has been adverse publicity with regard to BSE. Many of the countries which are making those wild statements have much worse records, as far as animal disease is concerned, than ours. We are being hounded in the marketplace by our adversaries and we will have to fight very hard to regain those third country markets.

We have also the question of the Eastern bloc countries which are so short of hard currency they are prepared even to undercut our prices despite the fact that we have the added advantage of the refund system. That frightens me.

I appeal again to the lending institutions in this country, who at present are taking an unnecessarily tight rein with regard to farmers when it comes to stocking winter feed lots, to reconsider their position. After all, if the suppliers — namely, the small farmers of Ireland — are forced out they in turn will do away with the source of income of those who operate the major feed lots. I say, with an air of despondency, that we must now deal with the situation.

Finally, I wish to repeat my thanks for having been given the opportunity of highlighting the subject. I hope that by doing so the powers that be in Brussels will be persuaded to take a second look at the impact of their proposals and at the merits of ours. The talks between Commissioner MacSharry and his American counterpart will be of major importance. It is important that we should explain once and for all that, while we are being asked to suffer as far as the future of the Common Agricultural Policy and pricing is concerned, we are not the main perpetrators of the problems in Europe at present. The mountains and lakes have been created by the farmers of mainland Europe, who have been involved in using cheap cereal substitutes to the detriment of Ireland's grass-based agricultural industry.

I know the House welcomes the opportunity to debate this report. I hope, as I said earlier, that the Dáil takes note of report No. 10 of the Sixth Joint Committee on Secondary Legislation of the European Communities — the report we are now discussing — and that when we finish at 4 p.m. the Members of this House and the Irish public will be much more aware of the crisis that faces us as far as the Common Agricultural Policy and the GATT talks are concerned. These crises are of enormous proportions and it will take a co-ordinated effort by all those involved on all sides of this House to give our full support to the Minister for Agriculture and Food in his negotiations in Brussels in the months ahead. When we finish this evening I know the unity that existed with regard to the preparation of this report by the members of the committee will also exist in this House and that when the Minister goes to negotiate at European level he will do so with the full backing of this House and all its Members.

Mr. Deasy

I welcome the opportunity to debate the contents of this report, an excellent document. It is well prepared, authentic, factual and we should all compliment the committee on the work they have done. Unfortunately, the difficulties which confront us in agriculture have gone largely unnoticed and have been largely ignored in recent months because of a series of scandals which, unfortunately, have largely involved the agricultural sector. I refer specifically to the Tribunal on the beef industry and the controversy surrounding the misappropriation of moneys in the Greencore affair. We really have not had a proper debate on the most potentially devastating proposals where Irish agriculture is concerned because of the hype that has been given to political happenings recently. It is most unfortunate and I sincerely wish that our position in these very difficult negotiations, based on Commissioner MacSharry's proposals, is not weakened because our attention has been deflected. That is a real possibility and danger and it would be a dreadful tragedy if that turned out to be the case.

Commissioner MacSharry has a job to do as a Commissioner in Europe. We think in terms of Irish people who are being appointed to positions in Europe as acting on behalf of this country — if not all the time, then most of the time. That is not necessarily the case, and in this instance I do not believe it is the case. Commissioner MacSharry is doing a specific job. It is unfortunate that he happens to be the Irish Commissioner at this time when major changes are being proposed within the Common Agricultural Policy because his association with those changes in many people's minds throughout Europe, and even in this country, would indicate that they believe there is a certain element of support in this country in agri-business circles for these proposals. Nothing could be further from the truth.

That impression, sometimes nurtured by sections of the media, should be buried once and for all. There is the utmost opposition to these proposals by the vast majority of politicians here. We are united whether we are parties in Government or parties in Opposition — perhaps with the exception of The Workers' Party — in opposing these proposals because, if they are implemented, they will seriously damage the Irish economy. That is the bottom line and we must not allow that to happen in view of the fact that direct agricultural output in this country represents 9 per cent of gross national product and, when taken in conjunction with associated activities, represents 18 per cent of gross national product. We have 160,000 people in Ireland directly employed in agriculture. We have 20,000 people employed in processing industies associated with agriculture. It is rather difficult to estimate the number of people who are employed in ancillary or service industries down the line, but the figure probably is almost equal to the 180,000 I have already mentioned.

We are speaking about the future, the jobs and the livelihoods of hundreds of thousands of people in this country. It is imperative that their future be safeguarded and no amount of talk about compensation or promises about compensatory measures will suffice if these proposals come to pass. No compensatory measures will be sufficient. The proposals basically mean a tremendous reduction in agricultural output leading to a huge loss of jobs on the land and in associated industries.

Surveys have been carried out by the agricultural associations and other bodies in the agricultural sector. The survey to which the committee most often referred is that which is the most objective, the survey carried out by the ICOS, the umbrella body for the co-operative movement here. Their figures are frightening, revealing huge job losses not just on the farm but in associated industries. They predict losses in the region of 38,000 jobs if these proposals go through and I doubt if they have calculated the loss of downstream jobs which are not so readily identifiable with agriculture, for instance, service industry jobs. Peculiarly enough, the ESRI, the Government-sponsored team of economists who are totally independent, gave figures not unlike those that cropped up in the ICOS survey. The ICOS reckon that farm output as a result of those proposals will drop by £590 million. The ESRI suggest that the drop in farm output would be of the order of £530 million. The ICOS estimate that farmers will directly lose £170 million if these proposals go through and the ESRI survey suggests that income will drop by £119 million if the proposals go through. There is a stark, frightening similarity in the two sets of figures produced by the two most informed and reputable groups in the country who have carried out surveys on Commissioner MacSharry's proposals. I do not wish to denigrate the other bodies or farm associations, but they would not be as objective as the ESRI and the ICOS. We should zone in on the figures that have been produced by the most reputable economists in the country and dwell on the terrible prospects if the measures are implemented. The figures correspond to a definable loss of 38,000 jobs on the farm and in associated industries in agriculture.

We cannot blame the EC for all our problems. We have been negligent since our entry into the EC in 1973. We have asked, we have implored and advised farmers to produce more, to increase their level of production in the main commodity sectors in which we are involved in agriculture, in milk and beef particularly and to a lesser extent in sheep meat and in cereals, without regard to the finer product being marketed properly. We focused our attention on increased production irrespective of whether or not the product could be sold on the open market. It was a very foolish, ill-advised policy and is one of the reasons we find ourselves in a predicament. Our reliance on support mechanisms from the EC has been far too great. We have not just used the intervention system, the main support system in the EC, we have abused that system and therein lies the story of many of our present difficulties. We have produced products without any definite idea of how they should be sold. We have produced commodities without even attempting to sell them in many cases. I know of factories here that produced products to have them placed in intervention stores. That has been a fatal mistake. That strategy was encouraged by the farming organisations and by politicians on a broad scale. It was a stupid policy and it has caught up with us. We will have to suffer the consequences unless the Minister, Deputy O'Kennedy, the Taoiseach and the Government in general can get very major derogations or exemptions from the proposals which are before us today.

Most countries in the EC can accept Commissioner MacSharry's proposals because the products which will be affected are the type of products we produce in northern Europe which are not of any concern to the people in southern Europe who nowadays make up the majority in the EC. Of the 12 members we are one of the few northern members who will be seriously affected, not just seriously affected, but most seriously affected, and not just most seriously affected, but affected to a degree which is not acceptable economically or socially where the rural community is concerned. We cannot accept the proposals as they are. They allude to milk and milk products, beef, cereals and sheep meat, the four products which are the mainstay of Irish agriculture. There is little in the proposals which indicate a cutback on products like Mediterranean fruits, olive oil, Mediterranean vegetables, cotton, tobacco and other products produced in the southern European Community area in countries such as Spain, Greece, Portugal, southern Italy and the south of France for that matter. It is purely northern European products which are the target of Commissioner MacSharry's proposals and Ireland is the country which proportionately produces these in greater quantity than any of the other northern European countries.

It is quite clear that there is not the same resolve in northern Europe to oppose these measures as might be the case. I detect that there may not be the same resolve in this country. I do not think that the motives behind that resolve are clearly seen. I want to spell it out clearly. It is obvious that the northern European countries that we might expect support from have decided that they are prepared to seek a drastic reform of the Common Agricultural Policy. They are prepared to see the elimination of subsidies and export refunds and are prepared to see the reduction in the facility of intervention. They will, in turn, renationalise their agricultural industries. We cannot afford to do that. When I say they will renationalise, my specific meaning is that they are prepared to see the general supports for the Common Agricultural Policy done away with or drastically diluted. Then they, nationally, will be able to support them from their own exchequer funds. We cannot afford to do that, and therein lies the danger for this country. The British can do it. I have no doubt the Germans will do it. Some of their Ministers are saying they oppose Commissioner MacSharry's proposals, particularly their Ministers for Agriculture. Other Ministers in the German Government are saying that they support Commissioner MacSharry's proposals. At the end of the day it will be particularly interesting to see what will be the governmental strategies of these countries.

Some of the problems relating to Commissioner MacSharry's proposals are of our own making because we did not manufacture products that can be sold. Other things that arise from Commissioner MacSharry's proposals are definitely outside our immediate control. They involve the importation into the Community of huge quantities of foodstuffs which are at present in surplus in the Community. Intervention stores are bulging to capacity and the Community still persists in importing huge quantities of beef, not just from Eastern countries but from all over the world. Likewise, huge quantities of cereals and cereal substitutes, as well as milk products, are being imported from all over the world and from Eastern Europe. It is the most irrational type of policy that one could imagine. At the end of the day we are the victims of that totally uncontrolled importation. We are told that it is regulated, that it has been agreed, but we all know that the commodities coming in from Eastern Europe are not agreed. They are totally illegal, are upsetting the market, are creating gluts on the market and resulting in intervention stores being filled to capacity. We are being blamed for that and, of course, we are not to blame.

Imports from abroad, from Eastern Europe and from other countries are a very serious factor in this whole discussion. I would hope that Minister O'Kennedy will dig in his heels and demand that this form of importation be stopped. If it is not stopped I would hope that at the Heads of State meeting, where I believe these matters will be ultimately decided, the Taoiseach will demand on behalf of Ireland that we be compensated for irregular activities such as importing goods from countries that are not members of the EC and which are causing our producers tremendous difficulties.

We welcome yesterday's statement by the Minister for Foreign Affairs that the Libyans have now announced their renunciation of the IRA. I would hope that that statement is Libyan Government policy, because if it is there should be no further barrier to the sale of live cattle to Libya, and the lack of this market has caused serious problems for farmers in this country in this year particularly. We want to see this market re-opened. We want to see the other North African and other Middle East markets reopened, markets which were worth a tremendous amount of money to this country. In the present position, which is, due to the MacSharry proposals, these markets are essential whether they are in Iran, Iraq, Egypt or Libya. We must get rid of our produce on the open market. That is the lesson we all have to learn and the sooner the better. The days of indefinite quantities of produce going into intervention are numbered.

An Ceann Comhairle

I now call on the Minister of State at the Department of the Taoiseach, Deputy Vincent Brady, to make a statement in respect of the manner in which speakers are called in this debate.

Minister of State at the Department of the Taoiseach (Mr. V. Brady)

A Cheann Comhairle, the Whips have had a meeting to discuss the position of speakers in the debate. It has been agreed that The Workers' Party should be offered the eighth speaking slot which will be at approximately 1.25 p.m. to 1.30 p.m. That has been agreed by all parties.

Proinsias De Rossa

A Cheann Comhairle, obviously I am pleased that some agreement has been reached in relation to this matter. However, I do protest that the normal procedure in debates on motions is being breached whereby spokespersons are called one after the other and I would appeal to you, a Cheann Comhairle, to use your prerogative to maintain the normal practice in this House on these debates.

An Ceann Comhairle

I had hoped for an amicable agreement, Deputy, as you will understand.

Proinsias De Rossa

I will abide by whatever you decide, a Cheann Comhairle, but I think it is deplorable that the Chief Whip has insisted on this.

Minister for Agriculture and Food (Mr. O'Kennedy)

The issue before the House this morning is a matter of the most vital importance for Ireland. I am very glad to express to the all party committee my appreciation of this important report which enables us to debate here in our Parliament the implications of those proposals for Ireland and indeed for the European Community. The conclusions of this debate will be of considerable help to me as these negotiations continue.

I welcome the opportunity to again address the Dáil on such an important issue as the reform of the Common Agricultural Policy. I would like to thank the Joint Committee on the Secondary Legislation of the European Communities for the considerable effort put into drawing up such a detailed and comprehensive report on the reform. I did of course ensure that my Department assisted the committee in its work.

The report is a valuable contribution to the ongoing debate on Common Agricultural Policy reform. In particular, it summarises the recent development of the policy and clarifies many of the issues now facing Community agriculture. The report also highlights many of the concerns which the Government and I also have with the proposals now on the table. That said, the report reaches the realistic conclusion that there is now a need for major reform of the policy. What the committee questions is whether the path chosen by the Commission for reform best suits our needs given our particular dependence on the agricultural sector and our farming production patterns. I can assure the House that the committee is not alone in raising this aspect and it is of major concern to me and the Government.

There can be no doubt but that the Common Agricultural Policy has been an effective instrument over the past two decades. Of course, it has not been a static system and this has certainly been proved in the past decade when several significant adaptations have been made in the various support arrangements. But, largely due to technological developments, inconsistencies as between support arrangements and to a lesser extent increased imports, those changes have proved ineffective beyond the short term, principally because they did not solve the underlying problems affecting agriculture. Structural surpluses have continued in several sectors despite production quotas and stabilisers and increased FEOGA guarantee expenditure has failed to prevent the decline in producer incomes. That is significant. While one might legitimately argue, as the report does, that the cost of the Common Agricultural Policy is not excessive — representing in absolute terms not much more than 0.5 per cent of Community GNP — it has to be accepted that farm incomes continue to fall at a time when overall Community expenditure has increased by 32 per cent in 12 months. This is because present support arrangements are not capable of fully protecting farm incomes in the face of mounting surpluses due to higher production, lower consumption and greater competition both from imports into the Community and on world markets. The situation in regard to farm incomes would, of course, be infinitely worse but for the present support arrangements.

In common with the general farm income situation in the Community as a whole, incomes on Irish farms have also declined notwithstanding increases in our FEOGA receipts from £886 million in 1989 to £1,352 million in 1990. Budgetary and structural problems, together with changes in public attitudes in relation to the environment, food quality and health, are providing the internal stimulus for the current reform programme initiated by the Commission.

Given that I have already outlined the Commission's proposals to this House, I do not propose to refer to them in detail again. Essentially, these proposals are based on a dramatic reduction in cereal prices and related price reductions in other sectors together with output restrictions. At the same time direct aids, either area based or livestock based, would be introduced or increased in what would be a very significant shift in the thrust of our agricultural policy. These aids would be very largely related to extensive farming and in addition biased in favour of smaller to medium sized producers. There would also be a series of accompanying measures relating to the environment, early retirement and afforestation.

The proposals are radical and create difficulties for all delegations, not least for Ireland. On a number of occasions I have made it very clear in this House that the Commission's proposals, as they have been presented to date, are not acceptable to the Government. I have consistently made this point in the Council's discussions on reform and also in the many bilateral contacts which I have had with all my fellow Agriculture Ministers and Commissioner MacSharry.

Neither the Commissioner nor any member of the Council, therefore, can be or is in any doubt about my position in the Common Agricultural Policy reform debate. Just over two weeks ago, for instance, I had a meeting in Dublin with the chairman of the Council of Agriculture Ministers, Mr. Piet Bukman, where I again stressed my major concerns and outlined my demands in the negotiations. The bottom line for me in Common Agricultural Policy reform is an outcome which stays true to the vital underlying principles of the Common Agricultural Policy, is backed by adequate and durable EC financial resources, responds to the needs of economies heavily dependent on agriculture and respects the Treaty requirements in relation to cohesion, applies realistic extensification criteria which reflect the economic basis of modern family farms, does not discriminate against grass based livestock production and ensures that the vital commercial element in our agriculture remains viable.

What is being negotiated in Brussels is Common Agricultural Policy reform — not Common Agricultural Policy dismantlement — let us be clear on that. Let us also be clear that what are before the Council are proposals for reform. We are a long way from decisions at this stage and the form these decisions will take is far from clear. What is clear is that I will not accept any arrangements which ignore the basic Common Agricultural Policy principles laid down in Article 39 of the Treaty. It is hardly necessary to add that I will not agree to any arrangements which do not address the particular requirements of Irish agriculture or respond to the needs of an economy such as ours which is so heavily — one might say uniquely — dependent on agriculture. The joint committee report pertinently points to the importance of agriculture to the Irish economy in terms of its impact on employment, incomes and exports and contrasts the significance of agriculture in Ireland to its position in other EC countries. This is something which I have repeatedly adverted to in EC discussions when insisting that whatever the outcome of the Common Agricultural Policy reform it must be responsive to the problems faced by member states with economies heavily dependent on agriculture. This is a vital requirement for me and the Government.

The matter of obtaining secure and adequate compensatory measures is also a vital issue. Changes to the existing Common Agricultural Policy systems are likely to require budgetary backing over and above current levels. Before the Council can decide on any new approach to agricultural support involving additional Community expenditure, adequate resources must be provided within a new budgetary framework to finance its cost. This must be a permanent arrangement and not just something for a transitional period. I have impressed this on the Council in the various debates that we have had on reform. In this regard it is very helpful that Commissioner MacSharry has stressed that there can be absolutely no doubt about the permanence of compensatory payments or that their status will be any different from that of price supports at the present time. Nonetheless, while I accept that commitment from the Commission, I will not agree to any proposals unless the Council in a budgetary framework formally ensure that those budgetary guarantees as to permanency and stability are written in.

Another major point for me and indeed several other Agriculture Ministers relates to the stocking limits envisaged in the proposals. I have made it clear in my various discussions both in the Council and elsewhere that the stocking rates proposed are not aceptable to me. As the proposals stand, they do not take realistic account of what is required to maintain the economic basis of modern family farms and they will have to be changed. I am extremely concerned that the very low limit envisaged for disadvantaged areas, for instance, will be particularly damaging. This is especially the case for small to medium sized farmers in those areas where Community supports and finance from other sources have been invested to raise stock levels to make holdings viable and efficient for the farmers who are dependent on this and who form a vital element in this country. What I am suggesting in the negotiations is that there should be no stocking rate criterion for the payment of premia in the less favoured areas as these areas are classified on the basis, inter alia, of low average stocking rates. At the very least discriminatory stocking rate criteria should not apply to those disadvantaged areas. It is of course equally clear that account must also be taken of the needs of intensive family run farms outside the disadvanaged areas in fixing stocking rates for them.

Other areas that concern me include the extent and rapidity of the proposed partial switch from price to direct income support policy particularly in the cereals sector; there is a clear imbalance in the compensatory proposals as between grass based and cereals based production; the modulation of support proposed could undermine our commercial farming sector while further milk quota cuts are particularly unwelcome. The whole package would effectively stabilise production at a lower level and there would be additional problems for aspiring entrants to farming. There are also further vital aspects relating to how the compensation will be treated in the ongoing GATT negotiations and the need for reciprocal action by other countries which will have to be clarified.

I will be pursuing all these concerns in the detailed negotiations which are now only beginning. I will be seeking adjustments and the necessary assurances so as to safeguard such a vital sector of our economy. I am confident that a satisfactory outcome can be achieved which responds to Ireland's essential requirements. The task, however, is going to be difficult; but one must be heartened that Commissioner MacSharry is committed to adopting the necessary flexibility in the negotiations with a view to meeting the legitimate concerns of the member states. It is my intention to exploit this to the full.

I do not underestimate the task before us, but I want to make it very clear that we cannot proceed on the basis that reform can be avoided. There are structural imbalances in the Community and the budgetary guideline, which expires in 1992 in any event, cannot sustain the cost of an unreformed policy. The alternative to reform is ongoing reductions of support levels without any or at best inadequate compensation. This is hardly in anyone's interests.

I note that the joint committee quite rightly strongly support the need for Community preference, including rebalancing, strict controls on imports and reciprocal responses from the Community's trading partners to the efforts being made by the Community. It is only equitable that Community farmers alone should not have to shoulder the burden of reform. Other countries also have major influences on world trade and the problem of surplus production. Each must contribute if the global problems are to be resolved. That is where the GATT negotiations which are now reaching a critical stage enter into the picture.

It is likely that we will know in the near future if there is a prospect of an early conclusion to the Uruguay Round. Negotiations are continuing with a view to seeing if the differences between the parties which have not noticeably advanced since the Heysel meeting last December can be bridged. I would like to see the round concluded on an acceptable basis, not just for Irish agriculture but for our economy because it is an open trading one. I would, however, remind the House that this time last year we thought we were approaching the final event of the round — the GATT ministerial meeting in Brussels last December. The Heysel discussions failed largely because of entrenched positions in a number of sectors and not only in agriculture. This was because the American side took it on themselves to make totally unreasonable demands and to lecture the Community on how we should conduct our policy. I should like to assure the House — although I am sure they know already — that I was to the fore at that meeting in resisting those demands. We played a very prominent part in discussions. There are now some signs that the US, at least, may be preparing to adopt a more flexible approach and this may become more evident at the EC-US Summit tomorrow. These talks will probably determine whether an early conclusion to the round is possible.

My priorities in the negotiations are to avoid excessive commitments and to ensure that any commitments given are realistic, coherent, balanced and will safeguard the basic mechanisms of the Common Agricultural Policy. It is also important for us to ensure that whatever compensatory measures arise from Common Agricultural Policy reform would be accommodated in the "green box" of supports which would not be subject to reduction. In regard to border protection I want to ensure that adequate Community preference is maintained and to this end it is vital that the main Community conditions for acceptance of tariffication are adhered to. Specifically those conditions relating to rebalancing and to the maintenance of a permanent corrective factor to offset all currency fluctuations and certain market price fluctuations are of particular interest to us.

In relation to export supports, I cannot accept restrictions which would not alone limit the Community's ability to benefit from the expansion in world trade which would flow from the round but which might also be inconsistent with internal support and protection mechanisms. It is also important that there should be no watering down of the agreement secured at the mid-term review of the negotiations in April 1989 that credit be allowed for reform measures undertaken since the beginning of the negotiations. We have made that clear to the Americans. I have always made the point that the Community's agriculture interests can best be safeguarded in the GATT discussions through the fullest involvement of the Agriculture Council in the unfolding situation.

During our Presidency that became a fixed position of the Agriculture Council. I am glad that, despite the attempts of some trade Ministers recently at informal meetings, they have now been told who has the responsibility in Council for agricultural negotiations. This has not always been supported by the Agriculture Council as a whole — I will leave it to Members to guess which of them take a different view — but I have insisted at meeting after meeting that the Agriculture Council play their full part. My persistence has paid off and it was clear at the October Council that agriculture Ministers will continue to be involved in the GATT debate in the critical days and weeks ahead. The Commissioner for Agriculture will be crucially involved in these negotiations on our behalf as the external Trade Commissioner might not have the same immediate concern in relation to agriculture in these negotiations.

Turning to specific sectors under Common Agricultural Policy reform, I note the joint committee's views on cereals, milk, beef and sheepmeat. The cereals sector is central to the whole reform process. I, too, believe that the Commission's proposed solutions involve too great a reduction in price over too short a period, but we need to address oversupply in the Community and this can best be done by a reinforcement of existing set-aside arrangements with full Community financing. Rebalancing will, obviously, be important in seeking to bring about greater market balance.

The proposals on the livestock side are clearly of major concern given the contribution which livestock production makes to agricultural output in Ireland — some 85 per cent. I have already pointed to the need to ensure that the proposed compensatory elements do not discriminate against grass based livestock production and that support for extensive production takes realistic account of what is required to maintain the economic basis of modern family farms. The price reductions proposed for milk and beef are in the main justified by the Commission because of the envisaged lower cereals prices. Such a drop would not, however, benefit grass based livestock production to any significant degree. This problem will have to be addressed in a way which ensures equality of treatment and involves matching aid per hectare in the cereals sector with a combination of premia in the livestock sector which gives an equivalent return in respect of grassland areas. We must ensure that new arrangements properly underpin the beef market and that imports from third countries are effectively controlled. Milk quota cuts have a wholly disproportionate effect on Ireland and, therefore, create a real difficulty for me. I will very clearly continue to press Ireland's special interest in milk production and oppose any compulsory cut in milk quotas. On the sheep side, I believe that further changes should not be considered before the full impact of the 1989 reform works its way through.

Certain elements in the Commission's reform proposals are positive in so far as Ireland is concerned. Promotion programmes for the beef and dairy sectors, as well as the proposed Community campaign to stamp out the use of growth promoting substances are very important. I have been fighting for this at the Council for a long time. I note the joint committee's comments on this area and their suggestion that significant Community funding should be made available for promotion and for combating adverse perceptions of the nutritional and health qualities of beef and dairy products. I must make the point here, however, that Community funding and initiatives can only achieve so much. They will really be effective only with the full co-operation and commitment of all involved in the agri-food chain. Regrettably, the commitment to maximising our natural advantages in producing wholesome top quality food, particularly meat, is sadly lacking in some cases.

I have frequently spoken out about the activities of an unrepresentative and reckless minority which are putting at risk our most valuable meat export industry. I am determined to ensure that these activities are punished and I will be bringing proposals before this House to apply considerably increased penalties to offenders. Farmers and all involved in the agri-food industry will, however, have to play their parts if the abuses which are damaging the good name of Ireland are to be overcome. Without this all the Community initiatives will not help us.

In this regard I want to thank the committee, and Deputy Ellis who introduced the report this morning, for saying that the farmers must give their full support to the Minister in tackling the problems of abuse and illegal substances. I express my appreciation to the all-party committee for their support.

The joint committee report is a valuable contribution to the Common Agricultural Policy reform debate. There are, of course, many studies under way including those being prepared by the NESC and the ESRI and views are being expressed by all interested parties. These are all very welcome and can only be helpful in increasing our understanding of the various issues involved in reform and in assisting in promoting Ireland's position. My officials and I have been involved over a number of months in detailed consultations with the relevant organisations both in preparing an assessment of the consequences of the reform proposals for Ireland and in seeking to arrive at a common approach to the negotiations. These consultations which follow from the Government's commitment in the Programme for Economic and Social Progress have been most useful and will be continuing during the course of the negotiations over the next several months.

The various consultations, studies, reports, whatever, all play their part in helping the Government to ensure that the outcome of the Common Agricultural Policy reform and the GATT Round are the optimum from Ireland's point of view. The joint committee have made a valuable and timely contribution to the Common Agricultural Policy and GATT debates and I would like to thank all associated with the report for a job well done.

It is very significant for me to be able to rely on what I believe will be a consensus in this House in the continuing debate on the Common Agricultural Policy and the GATT. It is very important that these vital issues be addressed in our Parliament and, for that reason, this debate is very significant.

Mr. Dukes

I should like to begin by saying that I am delighted to see the Minister here. We heard earlier that he was not up to appearing on "Morning Ireland" so I feared for his well-being.

Mr. O'Kennedy

The Deputy never lost the old cynicism and keeps the smile on his face.

Mr. Dukes

I hope we can see an identity on the issues before us between the Minister and the Minister of State, an identity which does not seem to exist in relation to other important issues with which they are dealing at the moment.

Mr. O'Kennedy

Here we go again. I thought we would hear something more serious from the Deputy.

Mr. Dukes

I would like to commend the joint committee on the report before us.

Mr. Calleary

The Deputy knows it all.

Mr. Dukes

The Minister of State should keep his whisht because he will have a bit of a problem tomorrow too.

Mr. Calleary

I will have no problem whatsoever.

Mr. Dukes

The Minister will agree that this report is a very valuable piece of work and it is proper that it should be examined in this House. It is fair to say that it is nothing short of a scandal that this House has had no opportunity of formulating proposals to alleviate in any way the grave consequences of the proposed Common Agricultural Policy reforms on our farming community, on rural Ireland and on our national economy.

On 10 July last statements were made in this House on these issues but on that day the House was not able to pass any motion or adopt any recommendations. Today the House is invited to take note of this report. I am sure the House will remember that this Government and, indeed, their predecessor have used this "take note" procedure in relation to the annual Estimates debates. They have claimed that once the "take note" motion has been passed, that means the House agrees with the Estimates. I am not so sure that the Minister will be happy to do that in relation to this report, although it would be a good day's work if he did. I am concerned that there are a number of recommendations in this report which deal with matters that the Minister did not raise in his speech. I wonder if that means the Minister disagrees with those recommendations and, if so, why?

Mr. O'Kennedy

For the record, the only reason the Minister did not raise a whole range of issues was that the Minister's contribution like that of the Deputy, was confined to 20 minutes. The Deputy will appreciate that one should not assume that if some matter was not mentioned in that time I disagree with it.

Mr. Dukes

I must apologise to the Minister. I seem to have upset him again. Today of course is not the only day on which the Minister could point out whether or not he agrees with these matters. He has been rather silent on this question. The report is dated 24 July 1991 and there are recommendations in the report on which we do not know the Minister's mind. Since July the Minister has not found it worth his while, perhaps to tell us his view, and neither has he told us today. I can only conclude that the Minister has no view on the matter or that there are recommendations in this report with which he does not agree. He does not choose to come out in public and tell us which of the recommendations he disagrees with and why. I am concerned about that. If the Government could undertake to adopt all the recommendations in this report and get the Minister for Agriculture and Food to stir himself and work to bring these proposals through the Council and the other negotiations that are taking place, we would have done a good day's work today.

I regret that when the negotiations on Common Agricultural Policy reform and the GATT have been concluded the Minister will come back to this House in his usual rather ineffectual and pallid way to try to put the best face on a Common Agricultural Policy reform result which will look very like the proposals that are dealt with in this report and on an outcome from the GATT negotiations which promises to be worse than the very ill-judged MacSharry proposals now on the table.

I hope the Minister will listen to this debate and will go away with at least one concrete proposal to which he might apply his energies, and those of his Department, to getting acceptance for it and putting it into effect. Taking account of the Minister's very poor performance to date on the Common Agricultural Policy reform, and of Commissioner MacSharry's total ineptitude on the GATT, is seems there is only one avenue that offers any hope of providing real assistance to the people of rural Ireland and to the overall Irish economy — that is that the compensation proposals put forward by the Commission must be radically altered to concentrate the main bulk of direct income aid on those regions of the Community that have the lowest income levels, are most dependent on agriculture and where opportunities for alternative employment are least. That includes Ireland together with Portugal and parts of Spain and Greece. The Government, particularly the Minister in front of us must wake up to the reality of what faces us and take action accordingly.

I am delighted to be able to tell the House that my party colleague, John Cushnahan, MEP who is a rapporteur for a committee in the European Parliament, has produced a report on the Common Agricultural Policy reform proposals for the regional policy committee that concentrates attention very much on the requirement I have just outlined — that the compensation measures must be specifically targeted at the regions of the Community where dependence on agriculture is highest, incomes are lowest and opportunities for alternative employment are least. It is only in that way that rural communities here and in the other parts of the Community I mentioned can be given a lifeline, can be given some guarantee of support in the great difficulties they face.

There is no doubt that farm incomes and farm family purchasing power will come under very severe pressure from the proposed reductions in prices, restrictions in market supports and reductions in export refunds. That, of course, will have a very immediate and serious effect on the economic and social fabric of rural Ireland. If there is a reduction in incomes and in the purchasing power of farm families, that will immediately affect the retail sector in rural Ireland, will largely affect the wholesale sector in rural Ireland and will affect the services sector. It will have the most intimate and damaging effects on the fabric of rural society here as we know it.

We can already see very clear evidence of a depression in investment on farms. The proposals before us would certainly have the effect of stagnation in on-farm investment. Today if one goes around the country — a great many Members do — it is very rare to find that a new shed or an extension is being built on a farm or that concrete slabs are being laid. The only investment in farms these days is the very necessary investment designed to deal with the protection of our environment. Machinery sales are down as are tractor sales. All the construction sector related to the agriculture industry is in a depression. That difficulty will only be exacerbated by the reform proposals before us. There will be a reduction in demand therefore not only for retail goods and services but also for construction and construction materials.

The Government may choose to argue that the measures being taken under the Structural Funds will take up the slack, but that would be a grossly over-optimistic view. Apart from anything else, capital investment of the kind provided for in the Structural Funds affects the level of economic activity only with a time lag. If one substitutes capital for current income there will inevitability be a gap — when current incomes are low, economic activity will be low before the capital produces a return. That will be the case in the next few years.

Let us look at what will happen on the investment side. The National Development Plan 1989-93 for the Structural Funds forecast that total investment in agriculture and related sectors over that period would be £1,428 million. About £400 million of that was apparently intended for compensatory measures not defined in that plan, and, indeed, not yet defined. As regards investment, the State and public authorities here were to provide £416 million; the European Commuity, £668 million; and the private sector — that is, farmers, food processors and others involved in that business — £334 million. Clearly there must be a huge question mark over the level of private investment that can be expected given the income flows we are facing in the sector. To the extent that private investment falls short of the Government's predicted figure, then investment from national sources will fall short also and the Community element in that financing will also fall short. My expectation is that this programme of investment will come in substantially under target because of the effects of the Common Agricultural Policy reform and the GATT negotiations.

Prospects for investment are undoubtedly very mixed. As I have said already, on-farm investment is already depressed. It is clear on the other hand that the food processing industry will need to continue to invest in the improvement of production, processing and marketing of food products. The need for this will be all the greater in view of the need to maintain competitiveness, not only against other firms in the European Community but also against firms in third countries. It is clear also that the trend in that investment will inexorably be towards a more highly capital intensive and a less labour intensive form of industry. I expect that the kind of employment gains we can expect in food processing are very much less than the IDA, the Fianna Fáil Party and the present Government have been trying to make us believe for the past four years. The Sixth Joint Committee on the Secondary Legislation of the European Communities actually deal with a particular aspect of this in paragraph 89 of their report and they make the case that:

an expanded scheme of EC financial aids, available under flexible criteria towards Research and Development, product development and market development by processors in peripheral regions be part of the reform proposals.

That is one of the committee's recommendations to which the Minister has not referred and I would like to hear some indication from the Government side of their views in this regard, as this is going to be a very important matter.

We can expect that the pace of investment in forestry will be maintained, or possibly increased, under the Structural Funds programme; but when looking at its effects on the fabric of rural communities we have to be very conscious of the fact that the employment content of forestry investment is very low. In fact in the National Development Plan 1989-93 it was not expected that more than 1,500 new jobs would be generated in that activity over the period 1989-93. We know that will not be net job creation, because to a very large extent — and we can see evidence of this all around the country — employment in forestry substitutes for employment in agriculture so that the number engaged in forestry employment does not represent a net gain in overall employment. There may also, of course, be possibilities for additional employment in timber processing, but we would have to make the point that while this may be important in its own way the jobs will be concentrated in a small number of centres throughout the country. The economics of scale in the timber processing industry are such as to dictate a very small number of processing plants if they are going to be successful.

Investment in the year 1990 under the integrated rural development programme showed some very encouraging results. In the 400 projects 220 full-time and 187 part-time jobs were created from a grant input from national funds of £1.5 million. On that basis I would expect that the allocation of £11 million this year, if fully used, would provide some worthwhile results. That, together with the concentration we should have on the role of small and medium sized enterprises, presents one of the few bright spots on the future scenario.

Another investment area that needs attention is that of agri-tourism. I regret to say that in my view there are some very inflated expectations of the role that agri-tourism could play in providing alternative income to farm families under pressure. It is clear that some number of farmers will convert to highly successful enterprises; some of us will have seen on television two farmers who have converted their farms to golf courses. I wish them both the best of luck and I hope they make a large amount of income from it and attract a large number of people; but the number of people who will be able to do that is strictly limited. I think a substantial number of farmers will find a very useful supplementary income in agri-tourism, but it will not make millionaires of them and that kind of activity cannot be viewed as a panacea for all our ills. Unless some positive and well directed action is rapidly taken in order to provide some sort of training for the people who are going to get involved in agri-tourism, a number who get involved will fail and find themselves with a higher overdraft than they started with and will leave a number of dissatisfied customers behind them. That will do no good at all for our tourism industry, because the last thing we need is dissatisfied customers. Uncritical enthusiasm for the development of that kind of activity is irresponsible and I fear that if the Govenment go too far in that direction they will have a lot to answer for in future years.

When all these considerations are taken together there is no doubt that the realistic expectation is that the economic and social fabric of our rural areas of the west in general and of the disadvantaged areas in particular will be under serious threat in the years immediately ahead. The income compensation proposals in the current GATT reform proposals do not, in my view, meet this case. While it may be true that 88 per cent of farmers will be compensated, this is not the whole picture. As I understand it, half of the farmers who will not be compensated are in the disadvantaged areas. Those farmers who receive compensation will not receive what we might by any stretch of the imagination call full compensation for the income losses they are going to suffer. We are not sure yet whether the compensation system will be permanent and, if it is not, of course the future is bleak. The Minister referred to this today and said that in his view it will be permanent and that Commissioner MacSharry said also that it would be permanent. But I will not fully believe that until I see the budgetary provision written into the Community's budgetary framework.

We do not know whether the full cost of the compensation system will be borne from Community funds. If it is not, I am sure of one thing, and that is that Irish farmers will be less well compensated than farmers in any other member state and that we will lose relatively as a result. Neither the Minister nor Commissioner MacSharry have referred to this. The committee, however, have referred to this in paragraph 84.2 where they talk about the dangers of renationalisation of agriculture policy. In paragraph 87, which deals with combating rural poverty the committee make a point which worries me, that "direct income support grants based on assessment of farm incomes should be instituted." The committee propose:

This scheme should be co-financed by the member states with the size of the EC contribution inversely related to regional incomes.

I believe that is a very dangerous proposal. I can understand the thinking behind it. I can understand the committee's worry, but that proposal from one of our committees talks about a partial renationalisation of an important part of agricultural policy. It is dangerous and is rather ill-judged. I regret the fact that the committee have chosen that particular road.

Acting Chairman (Mr. Doyle)

As the Deputy is running out of time, I ask him to conclude.

Mr. Dukes

I have a minute, I think, not even allowing for injury time after the Minister's rather rude interruptions. I will be concluding very quickly. What we need to do is persuade the Commission and the other member states of the Community that the income compensation mechanism should be modulated to meet, as a matter of priority, the regions of the Community where incomes are substantially less than the Community average, where agriculture is considerably more important in the economy than it is on average in the Community and where alternative employment opportunities are most difficult to come by. That should be the focus of Government attention and of the efforts of the Minister for Agriculture and Food from now on. Failing that, the reform of the Common Agricultural Policy will be just a further step in the devastation of rural communities in this country.

Minister of State at the Department of Agriculture and Food (Mr. Walsh)

I wish to share my time with Deputy Peadar Clohessy.

Acting Chairman

Is that agreed? Agreed.

Mr. Walsh

First, I thank the committee for producing this timely, useful and comprehensive report. I shall concentrate my remarks mainly on the area of my own remit, that is, the food industry; but I should like to comment briefly on the general aspects of Common Agricultural Policy reform, which were outlined very clearly from the Government's point of view by Minister O'Kennedy just now.

There is general acceptance in all circles — Government, farming organisations and economists — that the Common Agricultural Policy needs to undergo a fundamental change and that further tinkering with the mechanisms would be only a short-term measure and could possibly be counterproductive. The Commission have proposed the most fundamental reform that the Common Agricultural Policy has ever experienced. In the Commission's view such scale of change is necessary if the Common Agricultural Policy is to adequately reflect the requirements of the modern community in which oversupply rather than shortage is the problem and in which consumers are becoming ever more demanding in their requirements and in order to ensure more equitable distribution of Community support.

In its approach to Common Agricultural Policy the Commission are seeking to address several key objectives, including the retention of sufficient numbers of farmers on the land, a recognition of the dual functions of farmers in producing food and protecting the environment and control of production with a view to better market balance. While the fundamental principles of the Common Agricultural Policy would be retained, the new approach would seek to ensure a different distribution of support while taking account of the difficult situations of certain categories of producers and regions. In practice this would mean a partial switch of support away from price guarantees to direct payments targeted to a greater degree to those in greatest need and the modulation of support arrangements and quantitative restrictions in favour of smaller scale producers and disadvantaged areas.

The thrust of the reform proposals which emerged in July, and which have very recently been presented to the Council in their detailed legal format, is broadly similar to that signalled by the Commission in the course of the development of the Community's offer for the GATT negotiations and the subsequent February policy paper. These proposals create problems for all member states, not least Ireland. As I said, the Minister in his contribution adequately outlined the measures the Government are taking to ensure that these problems will be ameliorated and that the particular interest of farming in Ireland will be secured in these negotiations.

Reform has to be accepted, but acceptance of reform does not imply acceptance of the Commission's proposals in their present format. While there are indeed some positive aspects, both in relation to the compensatory element and to the socio-structural package, the Irish negotiation team have major difficulties with the approach of the Commission and will be seeking in all the negotiations at the Council of Ministers to ensure that our particular and dominant dependence on agriculture, in particular our extensive livestock farming, is fully recognised and protected in a non-discriminatory way. As well, we shall be seeking to ensure that the cohesion provisions of the Treaty of Rome are observed and that adequate Community resources are provided in the longer term to finance whatever new policies are adopted.

We would want to ensure that any changes in the Common Agricultural Policy are dovetailed with and given full credit in the finalisation of the GATT negotiations — in other words, that both the GATT negotiations and the Common Agricultural Policy are taken in tandem and that any sacrifices we have to make are mirrored by sacrifices in other third countries so that there will be a streamlined approach to the Common Agricultural Policy and the GATT negotiations.

In relation to reform, it goes without saying that we cannot continue the present arrangement under which the production of a range of products is subsidised and assisted. Those products have no outlet other than artificial outlets, namely, intervention. I refer to our farming structure and our approach throughout the past few decades, in particular during the last decade when, to a very large extent, we had an opportunity within the EC to provide the European consumer with the best quality Irish produce from Irish farms. Rather than supplying that to the consumer at a premium price, taking advantage of the very good image and positive perception of Ireland, we literally dumped a very large amount of those products into intervention storage. For example, my information from the Central Statistics Office is to the effect that eight out of ten steers slaughtered in our meat exporting plants are dumped into intervention. To have eight out of ten of the very highest quality of our steer beef carcases dumped into intervention makes no economic sense and is something that cannot continue. In the dairying area a higher percentage of our milk is now converted for manufacture into butter than was converted ten years ago, notwithstanding the fact that butter has a rapidly declining market. Butter is a suitable product for intervention, it is suitable for dumping there and it can be stored for a long time; but it makes no economic sense. For that reason and for the reasons I have given in relation to other products we cannot continue with the present arrangement.

Any reasonable and rational consideration of the present structures and support systems would show that reform is necessary. However, as I said, we are not accepting the reform as outlined by the Commission. We have a very strict focus that will take into account the very specific needs of farming in Ireland. We cannot accept an outcome of the negotiations that would undermine the basic principles and mechanisms of the Common Agricultural Policy or that would adversely infringe on the compensatory aids flowing from the Common Agricultural Policy reform. Notwithstanding the fact that the GATT negotiations have been ongoing for five years, wide differences still remain between the Community on the one hand and the United States and CAIRNS Group on the other hand. Any progress in the negotiations in the short term will require a much more realistic approach on the part of the United States and the CAIRNS Group than they have been prepared to take until now.

I shall now return to my specific remit. Again, I should like to thank the committee for highlighting the importance of the food industry to both the agricultural community and the Irish economy as a whole.

The report refers specifically to the difficult challenge that the industry faces in adapting to the changes being brought about in the restructuring of the Common Agricultural Policy. The challenge is posed to the Irish food industry not alone by the reform of the Common Agricultural Policy but also by the advent of the Single European Market, the GATT negotiations and the ever-increasing scale of competitiveness of the food industry worldwide. These changes have been recognised by the Government and certainly, as far as I am personally concerned in my capacity as Minister for Food over the past four years, I have directed all my energies towards building up an internationally competitive food industry, one which will be able to meet the challenges of the marketplace. I have continuously stressed in all public fora — sometimes to a cynical audience — that they cannot rely indefinitely on artificial arrangements as an outlet for their products. They say to me that they get a better return from intervention; they do, of course, in the short term. But that is no way to establish a sound basis for taking advantage of a single Community market and the tremendous potential there is for the high quality products we produce. There is no doubt that we have had an over-reliance, a short term over-reliance, on Community artificial arrangements which, if we do not address and confront rapidly, will put us in quite serious trouble and do a disservice to our producers, particularly our farmers. If we want to maximise a return on our premium products — here our image as a green country is of such great advantage — if we do not make a decisive shift rapidly we will be in quite serious trouble in the immediate future.

In order to achieve the aims of establishing an internationally competitive industry the Government and various State agencies have been assisting and contributing to providing the encouragement and financial resources to ensure that the type and quality of company and organisation is established here which will be able to compete internationally. We have been endeavouring to create the most favourable climate for change but the bottom line is that change will come about from within the industry itself. The industry will have to gear itself to being dependent on quality decisions, quality products, quality management, on its ability to react and provide the products consumers seek. I am confident that we have that kind of management and orientation.

There have been developments in recent months which augur well for the future. In relation to the encouragement of the industry over the past few years I am very pleased that the EC have substantially assisted this programme. For example, in the past three years since the reform of the Structural Funds was undertaken, over £44 million in FEOGA processing and marketing aid has been made available to the Irish food industry. This was part of a total programme of investment of £113 million towards which national aid of almost £20 million was provided. This investment has resulted in substantial upgrading of plant, increased processing capacity and greatly enhanced food quality and hygiene controls. The net result of this strategic investment, by and large is that Irish processing facilities for the major food sectors compare favourably with those of our competitors.

In my travels to other countries I have observed that we have quite a modern, up-to-date number of plants and factories here that can compare more than favourably with any I have seen abroad. We have the personnel and technology. All we need is the innovativeness and imagination to go to the consumers, to the major supermarkets and compete with everybody else. We are well able to do so. In the quality area we have quite an outstanding programme of quality support for our food industry. In the research and development area there are the National Food Centres at Dunsany and Moorpark in Fermoy. It will readily be seen that we have contributed very substantial support nationally and by way of FEOGA grant aid to both of those facilities to underpin the technological changes taking place.

Therefore, we are reasonably well set in terms of capital investment, plant and equipment, in terms of graduates, management and workforce in our food industry, to avail of the potential of the single European market of 340 million consumers. The push by the reform of the Common Agricultural Policy will be helpful to the industry in that area. I have no doubt but that we can take advantage of it.

To sum up, the overall picture of today's Irish food industry is very encouraging. I have no doubt that the measures taken by this Government have afforded the industry the momentum to establish it as a force not only within Europe but worldwide.

Mr. Clohessy

On behalf of the Progressive Democrats I warmly welcome this report. I should also like to congratulate the committee and its chairman, Deputy Barry, on the work they put into this vital study in recent months.

Clearly this report reflects the potential of specialist committees to study key areas of national interest. To this end the Progressive Democrats are particularly satisfied that the new Programme for Government commits this Government to the establishment of a European affairs committee along the lines proposed in Report No. 7 of the Joint Committee on the Secondary Legislation of the EC, extending the right of audience at meetings of that committee to Members of the European Parliament. That is a development long overdue which will greatly assist this House in the task of analysing and debating comprehensively the momentous changes taking place in Europe and our response to them.

My great regret vis-à-vis this report and/or this debate, is its timing. This report was published at the end of July last. Yet it has taken well into November before this House has had an opportunity to consider its findings. As far back as July last, when this report was just being published, the European Commission indicated to the Council of Ministers that sufficient time had been provided for discussion of the proposed Common Agricultural Policy reforms and for the submission of counter-proposals from interested parties and relevant groups. I trust that this debate will prove of value to the forthcoming debates in Europe on the final shape of the reform package. One must ask: would it not have been much more beneficial to all concerned had we debated a report of this nature at an earlier date, ideally before the summer recess? This is yet another example of the self-imposed ineffectiveness of this Chamber which must be tackled head on by this Government as an immediate priority.

The commitments contained in the new Programme for Government, when implemented, will greatly assist this House to face up to the realities of a modern Legislature.

If any one sentence of this report can be highlighted to demonstrate the importance of this debate it is the first one in its conclusion which reads:

Irish agriculture is of fundamental importance to this Irish economy.

That is a simple statement many people will perceive as merely stating an obvious fact. Nonetheless it is a fact which has got buried in a debate which has been reduced, in the eyes of many people, to an argument between different farming sectors on which sectors will gain and which sectors will lose out as a result of the proposed reforms. The reality is very different. The current debate on reform of the Common Agricultural Policy will have an impact way beyond the agricultural sector, will affect every sector of our economy, communities and individuals throughout this State.

The figures speak for themselves in that 14 per cent of our labour force, or 160,000 people, are directly involved in agriculture while thousands of others are employed in ancillary agricultural activities, such as processing. In addition, 18 per cent of Irish GNP is represented by the agricultural sector, with a minimum gross value of over £3.2 billion in agricultural output, 15 per cent of total merchandise exports and a massive 67 per cent of our net exports being accounted for by agriculture. Those are phenomenal figures.

It has been a cherished tradition to pay lip service to the importance of agriculture to our economy but the figures I have just quoted demonstrate the hard facts that what we are dealing with, when we discuss this subject and debate these reforms, is of fundamental importance to our entire economy. These discussions will have a direct impact on the future development of our economy, particularly on our rural economy. The figures mentioned above increase further in importance when focused on rural Ireland. There are frequent criticisms of the growing differences between urban and rural Ireland and the reform proposals will obviously impact hugely on this equation and set the shape of the future for rural Ireland for decades to come. Nobody should be in any doubt as to the seriousness of the issues or of the need for this country to respond with a coherent, consistent and determined approach to future discussions.

The report recognises the need for reform of the Common Agricultural Policy. The Progressive Democrats accept that reality. If the present proposals were never before us, we would still be obliged to undertake reform of the Common Agricultural Policy. The ongoing GATT talks underline this need but even without GATT internal pressures dictate the need for a new approach. The continued build-up of EC surpluses and the growing cost to the European taxpayer are unsustainable. There must be a shift towards a market-led approach.

I thank the Committee for the work they have put into this report and wish them well.

Mr. Kavanagh

I join with other speakers in welcoming this report on the reform of the Common Agricultural Policy. It is welcome for many reasons. It gives us an opportunity to debate our most important industry, a debate which has been long overdue. This report sets out the problems and concerns of the agriculture industry, the fears for employment in that sector and its associated industries.

I welcome also the fact that a Friday sitting is being used as an opportunity to debate a report of a joint committee. All such reports should be debated in this House. I am vice-chairman of the Joint Committee on Commercial State-sponsored Bodies. We have produced many reports which lie gathering dust in the Library never having been debated. If our reports dealing with, for example, Aer Lingus and the Sugar Company had been debated, perhaps some of the difficulties we are facing might not have occurred. I look forward to debating the reports of all committees, including the committee with which the Acting Chairman has been associated for many years. The meetings of these committees are attended by some members of the press but very seldom by any members of the public. If the reports were debated here, perhaps more people would be interested in the work done by Members outside this Chamber. The work done by the chairman and members of this joint committee is to be complimented and they are to be congratulated on this report.

I join with Deputy Ellis in condemning the use of illegal growth promoters which have been the cause of some very damaging publicity in our markets abroad. It is timely to begin moving against the people who have been engaging in this illegal activity. The number of such people is small and I believe the number of farmers involved is also miniscule, but the damage which can be done is out of all proportion to the numbers involved. The legislation governing the use of drugs in agriculture dates from 1957, almost 15 years before we entered the EC. Regulations continue to be made under that Act. In its day it was forward-looking but we must understand that many of the decisions taken now are as a result of directives promulgated in Europe. A new Bill should be introduced to update the legislation. Pehaps the Minister will indicate that this will be done. Recently I, and my Labour Party colleagues, met the Federation of the Irish Chemical Industries. They voiced their concern that they are attracting odium in respect of certain illegal activities and demanded that legislation be updated to protect their interests. They are concerned about good practice and about the licensing of their activities. This is all part of the problem the industry is suffering.

Agriculture is in crisis. Anybody who travels through rural constituencies will know that the concerns and problems of the farming industry are having an effect on the economy. A significant statistic emerged in the recently published labour force survey indicating that from April 1990 to April 1991 there was a drop of 12,000 in the numbers directly employed in agriculture. That is a worrying statistic. The average reduction in agricultural employment was in the region of 3,000 a year to the end of 1989 and was due mainly to increased mechanisation and more efficient use of machinery. In one year we have seen a huge reduction, from 167,000 to 155,000 in the number of people employed in agriculture. If that does not sharpen our awareness of the dangers that beset the industry, nothing will. It is the result of Government policy and of the changes that are taking place in European policy, as well as the general attitude in this House to the problems of agriculture.

This is the first time for years that we have had a debate on the Common Agricultural Policy. We know that the Minister is involved in many discussions in Europe and is also concerned about what is being considered in Dublin Castle in regard to happenings in agriculture and certain asssociated industries. Over the past few months the Govenment did not devote enough attention to agriculture, our largest industry. They failed to highlight the problems in this industry or to put forward proposals which would restore confidence in it.

In October, the four main farming organisations, the IFA, the ICMSA, Macra na Feirme and the ICOS, published a document entitled The Farm and Co-Operative Organisations' Response to the Common Agricultural Policy Reform Proposals. It is fair to say that those organisations are very familiar with what is happening in their industry. It is worth quoting from their quantification of the impact of the Common Agricultural Policy reform on Irish agriculture. They said:

The four organisations conclude that the value of agricultural output would fall by about £560m or by one-sixth from its 1990 level as a result of the Commission Common Agricultural Policy reform proposals; in addition the 1991-92 decisions, which can be considered as the first instalment of Common Agricultural Policy reform, have resulted in an annual reduction in the value of output of £124m giving a total loss in agricultural output in excess of £684m annually or a 20 per cent decrease.

Farm income, including compensation, would fall by about £160m as a result of the Common Agricultural Policy reform proposals. In addition, the 1991-92 decisions have resulted in a farm income loss of £120m, for which no compensation was provided. Thus the total farm income loss would be £280m annually.

That quantification of the impact of the Common Agricultural Policy reform on Irish agriculture by those very reputable organisations requires an answer from the Minister. I should like him to indicate in his reply whether those figures are actual. If this is what the future holds for Irish agriculture then the Minister has to do something about it.

During the debate on the Estimates for the Department of Agriculture and Food earlier this year speakers on this side of the House in particular referred to the serious problems in agriculture. We appealed to both the Minister, and the Taoiseach, to visit other member states to point out the serious consequences of Common Agricultural Policy reform todate. Our economy will not be able to survive if Common Agricultural Policy reform and the GATT negotiations lead to further reductions in income for farmers and a further flight of farmers from the land. The matters which are at present filling the minds of the Government, the media and, indeed, parties on this side of the House, are very minor when compared with the damage being done to our agricultural industry by Common Agricultural Policy reform and the GATT negotiations.

I have been a Member of this House for 22 years, which precedes our membership of the EC in 1973. I was one of the first Irish members of the European Parliament and remained a member until 1981. During that time I was a member of the agricultural committee. It is worth recalling at this stage why we decided to become members of the EC in the first instance and the attraction which led us to vote in such large numbers in favour of membership. Some members of the Labour Party were opposed to the conditions of membership and the terms of entry. We pointed out many of the dangers to which membership could give rise for this country. In our rush to become members and avail of the benefits perhaps we ignored the fact that, when a member of a club, the rules may be changed and may not always suit. We were told of the great benefits to agriculture which would emanate from membership of the EC but I wonder, if we had the same knowledge then as we have now of the problems in agriculture, would we have been so enthusiastic to join.

Obviously, one of the main attractions of membership was Article 39 of the Treaty of Rome which dealt with the objectives and principles of the Common Agricultural Policy. It is worth repeating those five objectives — increase agricultural productivity; ensure a fairer standard of living for farmers; stabilise agricultural markets; guarantee regular supplies of food and ensure reasonable prices of food for consumers. Those objectives were based on three principles: a single market where agricultural commodities could move freely between member states; Community preference where priority would be given to EC produce over that of other countries and financial solidarity where the cost of the policy would be borne by the Community rather than by individual member states. Those were certainly attractive objectives.

I welcomed the Minister's statement today that he would not accept any arrangements which ignore the basic Common Agricultural Policy principles laid down in Article 39 of the Treaty of Rome. At first sight that statement seemed to indicate that the Minister was going to uphold those principles. However, I am concerned about the word "ignore" in that statement. Of course, we do not expect the Minister to ignore those principles but it would have been better for him to say that he intends to defend Article 39 of the Treaty of Rome. That would be a much stronger way of putting it. I am worried about the word "ignore" because our membership of the EC is based on these objectives.

The four farming organisations to which I referred earlier have come up with new principles and objectives for the Common Agricultural Policy which are not in line with the objectives laid down in the Treaty of Rome. I do not think for one moment that the objective of the Common Agricultural Policy will be replaced by the objectives put forward by them. Therefore, I would prefer if we were united in our defence of Article 39 of the Treaty of Rome. These principles appeared to be there to be exploited by the agriculture industry. In those early years we were inclined to choose those that suited us and to ignore or interpret differently those articles and objectives which did not suit us. I blame both farming organisations and politicians on all sides of the House for what happened in the early seventies. For example, the first objective was to increase agricultural productivity. At the time everybody seemed to be confused about what was productivity and what was production. We followed that objective by producing as much as we could, ignored markets and whether or not we produced too much and depended on intervention. That is not what is meant by increased agricultural productivity. I understood that to mean a far more efficient approach to agriculture. That was ignored. The other objective that was ignored was that which ensured reasonable prices for consumers and now we have to take account of those difficulties which we brought on ourselves.

There are many things we could say in this debate. The GATT negotiations are very serious. The fact that we have a Commissioner for Agriculture who must defend the Community in toto is, perhaps, not good for this country. Previous Commissioners have never held this particular agriculture brief and we did very well without it. It is a mistake, because he is not defending Irish interests; he is defending Community interests. Nevertheless, he should see that President Bush wants to get an agreement before the presidential elections. He should take every opportunity to use the softening approach which the Americans are using in the GATT negotiations to exploit that position.

During the last three years the Government and this Minister have brought agriculture to a very low base. I hope, whatever emerges from the debate over the next weekend, we will see a much stronger advocate of the agriculture industry in that Department. That is one of the greatest things that can be done for the agriculture industry in Ireland.

Mr. Connor

There is a good side to everything.

Mr. M. Brennan

I will use only five minutes. Deputy Hyland will have the remaining 15 minutes. I would like to speak briefly on these talks this morning. Unlike the previous speaker I consider we are lucky to have an Irish Commissioner for Agriculture in Europe and, in particular, a Sligo man, a former Member of this House, a former Minister for Agriculture and a former Minister for Finance. Regardless of what the previous speaker has said, we are lucky to have him as Commissioner. Can we continue in Europe with a situation where 20 per cent of farmers are getting 80 per cent of the grants? That cannot continue. The Commissioner realises that fact, as does the Minister for Agriculture and Food. It is sad that our cattle prices have fallen, but we must ask ourselves why that has happened. Cattle prices have fallen because there is overproduction of beef and we are paying enormous sums of money to have our beef stored in intervention. That money could be put to much better use.

I welcome the Minister's recent announcement that he is entering into negotiations with Libya to ensure we get a live market for our cattle. If we cannot get a live market in Libya, Iran and other countries, where we had a substantial market, there is no hope for Irish agriculture. Agriculture is still, and hopefully will be, our principal industry for many years to come. It is more than an industry; it is a way of life. It is the most stable way of life we can offer our people in the nineties and into the 21st century. It is vital that we do everything possible to provide assistance for our rural communities. It is rural communities and the farmers who support the towns of Ireland.

I welcome the announcement by the Commissioner to give real help to farmers, especially to small farmers in disadvantaged areas. No small farmer can exist at present without help. Indeed, we are getting considerable assistance at present from the Minister for Social Welfare who has introduced the family income supplement as well as from the small farmer's cattle prices. This is a step in the right direction. In my county alone we have 5,200 herd owners in beef production. However, there are a number of small farmers engaged in dairying who need help. I welcome the Minister's decision to give them substantial grants to modernise their dairy premises for milk production. Unless they receive substantial help from Europe they will not be able to modernise their dairies to European standards. This is the type of support the Commissioner is giving.

Mr. Hyland

I welcome the opportunity to speak in this debate and to put on record my views regarding the challenges facing Irish farmers, the agricultural industry and the effects of the proposed changes on our entire economy. Schemes which limit production are alien to the profession of farming. Irish farmers have always responded to incentives to increase production. It is sad that they are now victims of their own entrepreneurial skills. The fall-out will have very serious consequences not only for the agriculture industry and individual farmers but for the economy generally. The extent of that fall-out is highlighted in the recent figures published by the ESRI and also by the ICOS which reveal that somewhere in the region of 38,000 jobs will be lost in the agricultural service industry — in other words, in the overall employment content of the agricultural services industry. That in itself is an alarming figure when one bears in mind the existing high level of unemployment.

I thank the Committee on Secondary Legislation of the EC for their in-depth and thorough study of the possible consequences of the proposed changes. This report was prepared and published in order to acknowledge the contribution of the farming organisations in assisting, highlighting and identifying the extent of the problem and also the contribution of the various farming publications which keep us alert to the consequences of the proposed changes.

We must accept that both the GATT negotiations and the reform of the Common Agricultural Policy are for real and that not any amount of wishful thinking will eliminate them. We must accept that reform of the Common Agricultural Policy is necessary to provide some level of protection for our agricultural industry because of our dependence on agriculture and because of the numbers who derive their livelihoods from the agricultural services industry. We have an unusual farm structure in that we have a large number of small farm families dependent on agriculture for their livelihood. The social fabric of Irish society could be seriously affected if the proposals are implemented.

I was pleased to note the reaction of the Minister for Agriculture and Food and of the Taoiseach to the proposals when they were first announced. They clearly indicated that the proposals are totally unacceptable to Ireland in their present form. The Minister's speech in the House this morning reiterated their original reaction to the proposals and I have no doubt that that will be their continuing stance on the proposals. The Government must not weaken in their resolve to achieve a satisfactory outcome.

As things stand I am not totally convinced that there is awareness at European level of the importance of the agricultural industry to Ireland. I say that, despite the best efforts of the Minister and the Government to make Ireland's case. The Treaty of Rome makes special provision for the protection of small developing countries like Ireland particularly when there is a vital national interest at stake. For the first time since our entry into the Community a vital interest is at stake. The Government, and the Minister for Agriculture in particular, must take whatever options are available to ensure that our future as a nation is secured as was guaranteed in the Treaty of Rome when we joined the enlarged Community.

It is vitally important that the European Community protect the European market for European producers and that in doing so special provisions are made for the nations of Europe, like Ireland, who have a greater dependence on agriculture. We do not have a large industrial base. Industry to a large extent is based on agriculture mainly in the food processing area. Any effort to restrict agricultural production will have immediate effects on employment in the agricultural processing industry and there will be serious social consequences for our country and for the European Community in relation to such a development.

The Minister should take whatever steps are necessary to ensure the protection of the European market from external imports. American demands on the European Community for the purpose of protecting the market in terms of agricultural production do not make sense while at the same time the American Government are providing various supports and subsidies for American farming. That is totally unacceptable. We should not allow the Americans to dictate to us in relation to restrictions we should apply in the European Community.

I realise that there have to be some restrictions and that there must be some form of market control. It is absolutely vital that our negotiators successfully bring about a scenario where the European market is protected. I realise that we have to deal with the reality of over-production and that we have over-produced many important agricultural products. I realise that we have to have some controlling mechanism and that, whether we like it or not, we have to have a quota system. I accept the principle of quotas, but the people who make the decisions at European level should recognise that some nations have a greater dependence on agriculture and the quota system should be designed to accommodate the needs of states like Ireland.

It is from that point of view that we should try to renegotiate a more favourable agreement in relation to the overall application of quotas. Another point in relation to quotas is that the products which are affected by the system as administered from Europe have far more serious consequences for the industry here than for any other European countries mainly because we are talking about our prime products like milk, beef and sheepmeat. The application of the system is, therefore, unfair because of the variation between the lines of production vis-a-vis the different European countries. There is certainly room in that area for further negotiations.

The disadvantaged areas scheme and all the other EC schemes are very important to Ireland. Because of our location as a small island nation on the periphery of Europe a case should be made for the designation of our entire country. We are at a geographic disadvantage and we have all the other disadvantages vis-a-vis the industry which I referred to earlier on.

Mr. Sheehan

We missed the boat badly.

Mr. Hyland

We negotiated the best deal we could under the disadvantaged areas scheme. I do not want to be party political, but if anybody missed the bus, surely it was Fine Gael during their period in Government when they did nothing to promote the disadvantaged areas scheme, nobody on that side of the House can contradict that fact. Perhaps Deputy Sheehan can say, when he is contributing, what his Government did when they had the opportunity to extend the disadvantaged areas scheme and compare their achievements with the result of the latest Government submissions.

I am not satisfied that all the areas which meet the criteria for designation are now included. It is for that reason that I make a special plea to the Minister to expedite the appeals system so that we can maximise our position vis-à-vis our entitlements under the disadvantaged areas scheme.

Mr. Sheehan

The Minister has failed hopelessly.

Mr. Hyland

I am sorry the Deputy chooses to interrupt me. My final point is in relation to another report which indicates the increasing level of rural poverty. That problem will have to be addressed. Social welfare schemes are not the total answer although I must acknowledge that the Minister has relaxed restrictions in the administration of social welfare schemes to deal with hardship cases. The reality is that the farmers of Ireland want the opportunity to earn their living. It is not in their nature to look for hand-outs. I hope that we can successfully negotiate the Common Agricultural Policy and also the GATT.

Proinsias De Rossa

Not for the first time in this House, a Cathaoirligh, I stand feeling somewhat like the youth in the emperor's court declaring that the emperor has no clothes while everybody else declares that the emperor has a beautiful suit of clothes and that under no circumstances should he change it. Who is the emperor?

Mr. Creed

We will have to wait until Saturday.

Proinsias De Rossa

We will have to wait until Saturday evening to find that out. In any event, there is a number of peripheral points I want to make before I go into the main body of what I want to say on this report on the Common Agricultural Policy.

Deputy Ellis suggested that he felt there was a problem of a rural/urban divide in Irish society and argued that there should be a united approach to the question of reforms to the Common Agricultural Policy. Of course, that is continuing to seek to maintain the myth that the interests of farmers, the interests of consumers, the interests of PAYE workers, housewives, farm labourers, etc., are all common, which they are not, except in the most general sense in that obviously one sector of the economy is related to the others. There are clearly differences in terms of the needs of all of those sectors. I would ask Deputy Ellis and anybody else who feels this way in relation to the urban/rural divide to address himself to the clear divide in relation to how various sectors of the community support one another.

The reply I received on 16 October from the Minister for Finance with regard to tax, indicates that in 1990 the average tax paid by the PAYE worker was £3,292; the average tax paid by the self employed was £3,092 and the average tax paid by farmers was £608. There is a clear divide there as to the contributions made by different sectors of the community. The major difference is between the self-employed non-farming community and the self-employed farming community.

Another thing is this idea that in some way everybody who lives in a rural area is a farmer, which is nonsense. Thousands upon thousands of people live in rural areas who are not farmers and do not depend on farming for an income. The view that everything outside Dublin is rural is also a nonsense. The reality of Irish society today is that we are an urban society. The majority of our citizens live in towns and cities.

It is striking that we have had two fairly major debates on this issue of the Common Agricultural Policy which directly affects 160,000 farmers. Again I would argue that the interests of all farmers are not the same. The interests of the small farmers in this State are not met by arguing on behalf of the large farmers of this State. The question of the urban/rural divide and the attempt to create some kind of large family in support of either the existing Common Agricultural Policy or in opposition to the MacSharry proposals in some kind of false unity will do nothing for the general population of this State for the future.

Some other points were made that I want to refer to. The spokesman for Fine Gael, Deputy Deasy, said that he expected there would be a loss of about 38,000 jobs and that would be a very serious consequence. On the other hand, the Confederation of Irish Industry estimated that there would be a loss of something like 10,000 jobs. That in itself would be a serious consequence. However, let me draw everybody's attention to the fact that since 1984 in the food processing industry there has already been a loss of 4,000 with the present Common Agricultural Policy situation in place and even if Common Agricultural Policy were to remain as it is without any change whatsoever there would be a further loss of 5,000 jobs over the next five years in the food processing industry.

Clearly Common Agricultural Policy is not addressing the question of our food processing industry as it stands. It is spurious to bring forward global figures in relation to job losses and argue that, therefore, we must not fundamentally tackle Common Agricultural Policy. Although everyone says we must reform Common Agricultural Policy nobody wants any fundamental re-assessment of how it operates in the interests of the total community on this island and not just one small sector of it.

There is one final point I want to make that arose in contributions here this morning. When Deputy Dukes referred to the opinion which Mr. Cushnahan, MEP, prepared for the regional committee on the Common Agricultural Policy proposals in the European Parliament he claimed that Mr. Cushnahan had produced an opinion which supported the concept of eliminating regional disparities. The reality is that the opinion produced by Mr. Cushnahan totally ignored the question of cohesion and the remit of the regional affairs committee. It was amendments in my name which, unfortunately, had to be put forward in my absence as I was present in the House for the confidence debate on the Taoiseach, Deputy Haughey, and which were carried by the regional affairs committee which raised the questions of regional disparities and cohesion which are not addressed by the Commission's reports on the Common Agricultural Policy.

That brings me to the main body of what I want to say in this debate. The European Commission, in both its documents on the Common Agricultural Policy on which the report we are debating today is largely based, fails to make any mention, that I can find, of their responsibilities with regard to economic and social cohesion and the impact that the present Common Agricultural Policy or indeed a reformed Common Agricultural Policy would have on the pursuit of that objective. This report should have been asking the reason why, and this House should be insisting on an answer. This aspect of the Treaty of Rome's responsibilities has not been addressed.

The importance of this derives from the fact that a study has been commissioned by the European Parliament, for the conference of regional authorities which is to be held in a few weeks time, entitled "A New Strategy for Social and Economic Cohesion After 1992". That study is very illuminating on these topics of cohesion and the Common Agricultural Policy. It points out that approximately 12.5 per cent of the Community budget is spent on structural operations to assist the four poorest countries — Ireland, Greece, Spain and Portugal — compared to 55 per cent or 35,000 million ECUs that goes on agricultural price support.

An earlier study also commissioned by the European Parliament found that 70 per cent of these price support payments, that is, 25,000 million ECUs and a full 40 per cent of the entire Community budget, actually works against the Community's own objectives of reducing regional disparities. The same study also concludes that an analysis of the regional allocation of guarantee payments shows that they are regressive for the lowest 40 per cent of the population ranked by income. Add to this the additional cost to the consumer of higher food prices variously estimated as amounting to in the region of 1,000 ECUs or £780 per annum for the average family of four. Since lower income families spend a disproportionate amount of that income on food the result is, as the study commissioned by the European Parliament puts it in their usual Euro-speak, "the discohesive effect on disparities is reinforced". In other words, it moves in the opposite direction to cohesion. That is what the Common Agricultural Policy is doing at present.

In general terms there is a need to take a long term view of Ireland's developmental needs. There has always been too much "short term-ism" in Irish economic policy and this report reflects that limited view. It is worth looking back at the original intention of the Common Agricultural Policy and then comparing those objectives with the way in which it has worked out over the past three decades.

The European Community's Common Agricultural Policy was devised in the sixties with a view to realising three objectives, as pointed out in the report: to enable the Community to become self-sufficient in the main consumers food products; to provide regular food supplies to consumers at reasonable prices and to provide the Community's food producers with a decent standard of living. It is quite obvious that the outcome of the Common Agricultural Policy has deviated a long way from these initial objectives. The inevitable consequence of guaranteed high prices has been a chronic tendency towards over production at a very high cost to the Community's taxpayers. It would be difficult to describe food prices in the Community as being reasonable, given that butter prices are over four times greater than world market prices with beef prices almost five times greater. These artificially high prices are a particular burden on those on low incomes for whom food, as I said earlier, takes up a large proportion of the household budget.

At the same time the Common Agricultural Policy has not solved the problem of low incomes among the great bulk of the farming population in the Community. Instead, the Common Agricultural Policy has led to increased polarisation between the minority of large efficient producers and the majority of small producers who have not had the resources to make the most of the opportunities provided by the Common Agricultural Policy. In essence, most of the money has gone to those least in need of it.

The Common Agricultural Policy has resulted in high levels of agricultural production for which there is no market. Storing these food products in intervention has added still further to the overall costs of the Common Agricultural Policy. At the same time for many citizens in the Community purchasing basic agricultural produce, such as meat or butter, has become a luxury they simply cannot afford. Various studies have indicated that, in fact, as I said earlier, the Common Agricultural Policy has added up to £15 a week or £780 a year to the average consumer food bill.

There have been other, perhaps unforeseen, negative consequences of the Common Agricultural Policy. Intensified production has led to undesirable environmental impacts in many areas. The incentive to expand production has also led to the insertion into food products of materials which can or do threaten the health of consumers, there is the scare about angel dust at present.

Dumping of surplus food stockpiles on world markets has helped to undermine the agricultural economies of many poor, under-developed countries. It is essential that Common Agricultural Policy reform must be structured and implemented in a way which does not militate against development of the agricultural sector in the African, Caribbean and Pacific countries. I have heard no-one so far in this debate make any reference to that aspect of the Common Agricultural Policy. It is a fact that dumping has greatly depressed local farming structures in those countries. It is to be hoped at least that higher world prices, which are likely to result from Common Agricultural Policy reform, should benefit Third World producer countries. Nevertheless, there will still be adjustment problems for many Third World economies as a result of Common Agricultural Policy reform, and the European Community must be prepared to offer developmental assistance to allow Third World countries develop viable national agricultural sectors.

From a variety of viewpoints therefore, including justice, fair play and personal and environmental well-being there can be little justification for retaining the Common Agricultural Policy in its current form. There is the argument, from a specifically Irish point of view, in favour of keeping things as they are. This is that because Ireland is a net exporter of agricultural products the Common Agricultural Policy provides a sizeable annual transfer of funds to this country from the rest of the Community. About 70 per cent of the annual flow of European Community funds to Ireland comprises food subsidies from the Common Agricultural Policy and these subsidies account for almost 5 per cent of our annual gross national product but this, to my mind, is to concentrate unduly on the perceived threat of Common Agricultural Policy reform and to ignore the opportunities that will arise which I hope will become clearer as the debate develops.

There can be no doubt that the Common Agricultural Policy has made an important contribution to the Irish economy. However, one may still ask fundamental questions about the nature of this contribution and whether in the long run it has worked in the best interests of Irish agriculture or Irish people generally, whether as workers or consumers.

It is generally agreed that the Irish farming sector has fallen a long way short of the level of performance which was predicted for it in advance of Ireland's accession to the European Community. While a minority of farmers did respond to the higher price regime by expanding their productivity the great majority continue to stagnate. Indeed many farmers faced with the prospect of having to increase investment in equipment in order to survive in relatively intensive areas, such as dairying, opted instead for less intensive forms of production. As a result, as elsewhere in the Community, there has been a growing polarisation in Irish agriculture with the bulk of subsidies going to the minority of larger producers while the majority of farmers continue to experience low incomes with many living in conditions of abject poverty. However, even those farmers who have increased their efficiency and production levels have done so in ways not in the best long term interests of either Irish agriculture or the Irish economy.

Rather than seeing EC membership as providing access to a huge consumer food market Irish farmers for the most part have seen it as providing easy money for short term gain. Irish agriculture, as we know, relies disproportionately on the intervention system for disposing of its output. With only 1 per cent of the Community's farmers, Ireland accounts for one third of all intervention butter stocks and one quarter of beef stocks. The bulk of Ireland's agricultural exports end up being sold outside the Community at knock-down prices heavily subsidised by Common Agricultural Policy funds. As a result there has been little tendency towards developing more secure and lucrative markets within the Community. The bulk of our food exports takes a basic commodity form with little value added. The major actor in the Irish meat processing sector in recent years — Goodman International — was built entirely on the exploitation of the EC export subsidies to serve extremely unstable non-EC markets. This, as we now know, was a foundation built on sand. Almost 20 years after joining the EC, Irish agriculture remains a sector of undeveloped potential. In this light The Workers' Party see the proposed Common Agricultural Policy reform not as a threat to Irish agriculture but as an opportunity to redirect its future development along avenues which can make a stronger overall contribution to economic growth and employment creation.

We must look imaginatively beyond the immediate losses which the proposed reform entails to the potential for future expansion which they can provide. As the agricultural journalist, Michael Dillon, remarked, Irish farmers are like the paupers who wept when the workhouses were closed because they did not realise they could make a better life elsewhere. The Common Agricultural Policy reforms should not be seen as an end in themselves but as the harbingers of an entirely new approach to agricultural development. For too long agriculture has been looked upon as an economic sector in itself. Too many farmers have only been concerned with maximising their own short term profits without regard to what happened to their produce when it went beyond the farm gate. Too few farmers have looked to the future and seen the long term advantages of finding secure markets and supplying them on a year round basis with high quality and disease free produce. The development of consumer oriented value added food products offers the twin advantages of providing farmers with secure markets and generating spin off employment in research, processing and marketing. It is vitally important that agriculture should be developed on an integrated basis with the emphasis on how to maximise the sector's contribution to the overall development of the economy.

Apart from sectoral integration there is also a need for greater territorial integration in the future development of agriculture. In other words, agriculture must be seen as just one component of the rural environment and not the be-all and end-all of rural life, which is the way many farmers see it at present. As I have such a short time left I will conclude as quickly as possible. The report places a heavy emphasis on continuing control and restrictions of markets and on maintaining high prices, which are against the consumers' interest. The standard argument, which the report endorses, is that because Ireland is a net agricultural exporter it is in the national interest to maintain high prices and therefore a large net inflow of funds to this country. However, I argue that the high proportion of the EC budget which is spent on agriculture restricts the amount which can be spent in other areas which would be more in the long term interest of our unemployed and of the poor, which includes thousands of small farmers and their families.

The Workers' Party have in particular emphasised the need for more funding for industrial development and have called for the introduction of a common industrial policy with a major remit to strengthen the industrial sectors in the peripheral regions. Industrial development offers a much greater prospect of significant employment growth than continued overproduction in agriculture. I welcome the debate today and I look forward to seeing an equally major debate on the question of European policy on poverty, regional development, industrial development and job creation, all of which affect far more numbers in our economy than the Common Agricultural Policy.

Mr. Jacob

I am very pleased to have the opportunity to contribute briefly to this debate. I very much welcome the report; it is a very good document which has been put together efficiently and comprehensively. I ask the chairman and members of that committee to accept my appreciation and congratulations.

After the strife and acrimonious behaviour in the House in recent times it is refreshing to witness the unified approach to this very important debate as almost all parties seem to be in agreement on this important issue, which is so vital not just to the farming community but to our economy. Deputy De Rossa seems to be the exception to the rule in this regard. He must not be aware of the situation in some areas of the farming community or he would not have made some of his comments earlier on. I personally know of farming families who are literallty on the bread line, they are hungry——

Proinsias De Rossa

I said so.

Mr. Jacob

I know the trauma such families are going through. I am sure other rural Deputies would endorse my statement. Since the reform of the Common Agricultural Policy was first mooted it has exercised — to the exclusion of other matters — the minds of farmers, farming organisations and all involved in the agriculture business, including the food industry. Among those organisations there is now something approaching panic, a real feeling of terror, that people's livelihoods and those of their children and future generations will be grossly and permanently affected. I put some of this down to the hysterical, exaggerated and unreal reaction of some organisations. Indeed, I am on record as criticising some of these people for their irresponsible approach, which has more to do with certain individuals projecting their own aims and ambitions than having the genuine interest of agriculture and farming at heart.

However, there is a real need for concern and a need to address this issue positively and aggressively. I firmly believe that what was originally proposed by the Commission six months ago would never come to fruition. Extraordinary and alarming costings and projections have been put forward in some quarters, but great attention must be paid to the reliable and reputable people who have laid before us their reading of the situation. I have particularly in mind the ESRI, whose economists have projected pertinent and alarming facts. They say that the proposed cutbacks will result in a fall of 1.5 per cent in gross national product, that there will be a drop in farm income of £190 million and that farm output will drop by £530 million. They also say that there will be huge job losses throughout the agri and agri-food business and in many downstream and peripheral areas.

It could of course be argued that we walked into these difficulties with our eyes open. Since we joined the EC in 1973 we entered very seriously the area of advice, especially to farmers. We gave them financial and agronomic advice and indeed they were very receptive in this regard. They were exhorted to increase production, to borrow, so that they could invest to this end. The net result, as we all know, is that we have succeeded in entering the realms of severe over-production. The pillars on which our agricultural economy is built are foundering. There is overproduction of milk, beef, sheep and cereals. We are now over dependent on the intervention system and EC support. This position does not apply as far as many other European countries are concerned, particularly those on the southern part of the Continent. The impact of the proposals will be negligible on those nations, and we in Ireland will be most affected. It is with this realisation that the matter must be tackled. Another important concern is the potential impact of the Eastern European bloc. Those countries have huge potential for a high level of production. This fact, combined with their need and desire for hard currency, poses a major threat.

We hear suggestions regarding alternative farming, new farming methods, new products, deer farming and rabbit farming. They are unrealistic and are certainly not the answer to the problem. I agree that a small percentage of farmers will embark on these alternative forms of farming but in terms of tackling the problem they are certainly not the answer. Agri-tourism is probably the best proposition. We should develop it, and, indeed, we are doing so. This again can complement agriculture but it is not the answer. What is required is a firm guarantee that the existing funding will not be replaced by something that is short-lived, something that will exist for a year or two and will then be removed, leaving our farmers, particularly our small and medium sized farmers, in the lurch. We must have guarantees.

Other unrealistic suggestions put forward include the set aside proposals and early retirement arrangements. However, they again are not the answer. They are not what Irish farmers want. They would upset not only Irish agriculture but the entire rural fabric of the country. I worked in the agri-business for nearly two decades and in that time I met with farmers, farming organisations, co-operatives and merchants throughout the country, in the UK and continental Europe. I do not profess to be an expert in agriculture but I know the requirements of Irish farmers. I have always found him to be very independent, and the early retirement package is not what he wants. The Irish farmer wants to be able to work his land and get a fair day's pay for a fair day's work. He wants to raise his family and to have something to hand on to them, to provide for a decent future for himself and his family.

The stocking rate for disadvantaged areas is much too low. It is ludicrous to apply a stocking rate of 1.4 livestock units per hectare in disadvantaged areas as compared with two units per hectare outside those areas. This is very important as it relates to my own county of Wicklow which has done rather well in the recent extension of disadvantaged areas. We can boast that 84 per cent of County Wicklow is designated as disadvantaged and that is a great improvement. Apart from the western seaboard it is the county with the highest percentage of disadvantaged areas in Ireland. In a mountainous county like Wicklow this is very welcome. However, I hope for a further improvement in this regard in the post appeals period. I want to put on record that I am very grateful to the Minister for Agriculture and Food, Deputy O'Kennedy, for his great work in putting forward these proposals for extension and reclassification of disadvantaged areas. The changes will improve the lot of Irish farmers generally. I am firmly convinced that no restrictions should apply to disadvantaged areas. They are, by definition, disadvantaged and, therefore, restrictions should not apply. It should be our positive aim to remove any such restrictions.

The proposals relating to quotas are also alarming. Ireland is particularly dependent on milk and livestock, and these products are being targeted. Beef and dairy products together with cereals account for 95 per cent of Irish production. Interference with these products would not only seriously affect the agricultural sector but would have deleterious effects on the Irish economy. Other difficulties facing our farmers include the EC hygiene and health regulations. These will make matters very difficult particularly for the small farmer. In the application of these regulations, substantial grant aid must be forthcoming.

Farmers have also experienced problems with headage payments. I am sure other Deputies have been approached by farmers, particularly small and medium sized farmers, for help when they made a genuine error in filling up an application form. The result of such an error is that the application is cast aside until some suitable time when it can be dealt with. A penalty is also imposed and the farmer can lose payment for two years. This is too severe and something must be done to improve the position. Such a penalty is draconian. It is unrealistic and unacceptable. I ask the Minister, and those concerned, to try to bring about an improvement in that regard.

The GATT discussions must be addressed very seriously. There is little point in negotiating a satisfactory arrangement in the Common Agricultural Policy reform if the GATT discussions lead to further reductions. Any suggestion that there be a reduction of production in Europe and an increased production outside the Community is ludicrous and must be vigorously opposed.

I am pleased with the recent announcements with regard to Libya. There is a market there for live cattle and it would be very welcome if we could avail of that market. I am aware of the Minister's efforts at present to secure other Middle East markets and I wish him well in this regard. The sooner success is achieved in that area the better.

I am very satisfied with the Minister's approach to the issue that is the subject of this debate. I am satisfied also with the Taoiseach's response and the commitment he has given to it. I am very pleased and proud that Commissioner MacSharry represents us in Europe. Regardless of what anybody says, I am totally convinced that, because he is an Irishman who knows what it is like to be a small farmer, he will have the interests of the Irish farming community very high on his list of priorities. Having listened to the Minister, Deputy O'Kennedy this morning — I have had private discussions with him and took part in our party's committee on agriculture discussions with him — I am fully convinced he will do an excellent job in the ongoing negotiations. I wish him well. I am sure he will ensure that Irish agriculture will emerge unscathed from the forthcoming reforms, and the Irish farmer is entitled to no lesser representation, consideration, co-operation and assistance.

Here at home we could be doing a little more to assist the Irish farmer in the present hard pressed circumstances. In particular, the banks and lending institutions should seriously examine how they can be of assistance to the farmer in these hard pressed times. I believe this is in their long term interests and represents sound commercial judgment. Perhaps the banks could relax their policies with a view to helping the farming community at this time. In the longer term, this would be in their own interests.

Mr. Creed

I wish to share my time with Deputy Sheehan.

Acting Chairman (Mr. M. Barrett)

Is that agreed? Agreed.

Mr. Creed

I welcome the report. For the first time we have a concrete national response to the difficulties which will confront us as a result of the Common Agricultural Policy reforms and the impact of the continuing GATT negotiations which are critical to Irish agricultural interests.

Deputy Ellis' presentation of the report was comprehensive and displayed a great grasp of the issues involved. When I was doing my research for this debate I came across a submission from the North Connacht Farmers — NCF — Co-operative, to the Taoiseach on reforms of the Common Agricultural Policy. One of the more frightening aspects of their submission was that they estimated that losses to agricultural incomes in their area of activity would amount to £7 million. Of course, the consequences of reforms in the Common Agricultural Policy will be far more comprehensive and will impact not only on the immediate farm incomes but on the economy in general. It illustrated a very telling tale. Deputy Ellis was a constituency colleague of the then Deputy now Commissioner MacSharry, and the divergence of opinion certainly raises the question of credibility of Mr. MacSharry's view on the impact of his proposals, which is totally out of touch. That would seem to be the view of most Members who have contributed to this debate. However, this does not take from the fact that Members and indeed all informed commentators, accept the necessity for change in the Common Agricultural Policy.

I welcome the acknowledgement in the Joint Programme for Government of the need to set up a European affairs committee. This committee will have the capacity to invite outside bodies to make submissions. The manner in which all political parties are willing to put aside their political differences in the national interest is proof of the role committees can play in matters of great national interest.

The context in which we debate this report is all important: the state that Irish agriculture finds itself in, our participation in the EC trading bloc and the GATT negotiations. A recent survey of a substantial number of farmers in Agri Post shows that 80 per cent were quite worried about their future. In trying to grasp the magnitude of what is involved for Ireland in a reform of the Common Agricultural Policy, it is important that we restate at the risk of being repetitive the importance of agriculture to the Irish economy. We have approximately 160,000 farmers and approximately as many again, if not more, directly involved or employed in the agri-business — in the supply of inputs to agriculture or the processing of agricultural products. Agriculture accounts for one-third of our exports. In 1990 the Common Agricultural Policy transfers accounted for 90 per cent of farm incomes. These are just some of the plethora of statistics that highlight the magnitude of agriculture's contribution to the Irish economy and the serious impact that the proposed reforms could have on Irish agriculture.

It is an extraordinarily difficult time to be a farmer. Expenditure on agricultural inputs is escalating yet farm incomes are falling. The substantial financial resources available to the Common Agricultural Policy are not reaching the farmer but are being siphoned off by the owners of grain silos and freezer ships and we have stores full of beef. It seems that everybody and anybody but the farmer and the consumer is benefiting from the Common Agricultural Policy, as at present structured. Consequently it is a very difficult time to be involved in agripolitics.

The Commissioners' task is enormous and the task of the Minister for Agriculture and Food to protect the Irish national interests in the negotiations is very difficult and, should we be convinced that he was on the right road, requires the wholehearted and unanimous support of the political system. It is because of that that debating this proposal here today is to a certain extent akin to closing the stable door after the horse has bolted. A great many decisions have already been made and at this stage it is very late to be taking up a national stance on this matter of great national importance. We have been told all along that since Mr. MacSharry's appointment as Commissioner, his responsibilities no longer rest solely with Irish agriculture but with European agriculture. It is clear from his proposals that he takes this very seriously and that the impact his proposals will have on Irish agriculture are of no real significance to him because he is concerned with balancing budgets and reducing expenditure. It seems to be, to hell with the consequences for Irish agriculture — and the consequences are horrendous.

The debate on the Common Agricultural Policy should be not merely of interest to farmers but it should be of immense importance to consumers and taxpayers throughout the Community. The Common Agricultural Policy has now reached the point where expenditure is going through the roof, farm incomes are in free fall. Many products are too expensive for the consumer and overproduction gives rise to mountains of beef, shiploads of butter and lakes of wine held in intervention while millions of people are starving throughout the world. Surely that is proof positive that reform is necessary. However, we are not satisfied that the proposals in place will rectify that problem. Many of us can recall from our study of the Famine in our history books that boat loads of grain were being exported from this country whilst millions were dying of starvation. We will find it very difficult to explain to generations to come the actions of the EC in holding mountains of food in intervention stocks while millions of people are dying of starvation throughout the world.

A positive food aid policy will have to form part and parcel of the Common Agricultural Policy reform programme. There must be an ongoing multi-annual food aid project. It is very difficult for the EC to dispose of stocks to Third World countries where people are crying out for food because there is no procedure for the annual distribution of surpluses. If we are not to be looked upon with the same jaundiced eyes with which we looked upon our English landlords of the last century then we have to accept that a food aid policy must be part and parcel of any reform of the Common Agricultural Policy.

In the context of reform it is also obligatory on the Commissioner to take into consideration the unique position of Irish agriculture to the Irish economy and within the EC. Parallel to that analysis, it is also imperative to analyse the quantity of our contribution to the present difficulty faced by the Common Agricultural Policy. Ireland's dependence on agriculture is something that cannot be overstated. As I said, in 1990 we had 160,000 farmers, thousands of PAYE jobs and a large service industry linked with agriculture, agricultural products constitute one-third of our exports and transfers from the Common Agricultural Policy accounting for 90 per cent of farm incomes. The Common Agricultural Policy reforms as proposed have been the subject of independent analysis for several months past and commentators estimate that a minimum of 20,000 commercial farmers will be forced off the land, 14,000 PAYE jobs will have to go and the Government tax take in order to maintain the debt-GNP ratio as it currently stands — which is not in an altogether healthy position — will simultaneously have to increase by £700 million.

It might be worth while enumerating the more serious MacSharry proposals with regard to Irish agriculture. One involves cutting grain prices by 35 per cent. It is interesting to note with regard to that proposal that one of the bedrock principles on which Commissioner MacSharry bases his proposals for reforming the Common Agricultural Policy is the necessity to encourage environmentally friendly agriculture. It is my opinion, and the opinion of many informed commentators, that a cheap grain policy will in fact have the reverse effect. It will undermine our grass based production and give a competitive advantage to cheap feedlots that are dependent on grain as a primary source of feed and consequently will have detrimental effects on the environment.

A 10 per cent cut in milk prices and a 4 per cent cut in milk quotas, with 1 per cent to be reallocated to smaller producers, will have an immense impact on Irish agriculture if the proposals come to fruition. A cut in our quota of that magnitude would be the equivalent of closing down a co-op of the size of Lakeland Dairies. We would also suffer the consequent effects of unemployment for those involved in milk production and in the processing and service industries associated with it. A cut of 15 per cent in beef intervention would also have horrendous consequences for Ireland.

My biggest criticism of the Minister for Agriculture and Food in his role in all this is not that I doubt his understanding of the seriousness of the issues involved but rather that he is completely reactionary — and that is a hallmark of the Government in all of their dealings with the EC. The Minister cannot be taken seriously in these debates if he does not come up with positive alternative proposals. Merely to go to the table of the Council of Ministers and object to proposals without having concrete positive alternatives is a very poor response. To paraphrase Tone: it is time for this country to take its place amongst the nations of the EC, and not to be apologetic or equivocal in our approach.

We in Ireland want to be good Europeans and as committed Europeans we must rally now to the Common Agricultural Policy and the Treaty of Rome. We must stand firm against bureaucrats who wish to return to national governments the question of agricultural policy where the relative strengths of national economies determine the support available to national farmers. That would result in Ireland's agricultural industry perishing. A renationalisation of Irish agriculture is not in the best interests of Irish agriculture or the EC for political, social and economic reasons. Already the Germans are subsidising their agricultural industry to the tune of £2,000 million per annum. We simply could not compete in that scenario. If the Minister for Agriculture and Food and the Government are not prepared to take that case to the Competition Commissioner in the EC then perhaps it is time for the agri-business sector to seek a ruling from the Commissioner on these uncompetitive policies.

Article 39 of the Treaty of Rome embodies the Common Agricultural Policy, one of the objectives of which is to increase agricultural productivity. It has succeeded in doing that. Internal supply management is one area in which we could make a concession in the GATT negotiations. It also sought to ensure a fair standard of living for the Community's farmers, to stabilise agricultural markets, to guarantee a regular supply of food and to ensure reasonable prices for the consumer. The latter objective has not been achieved. In fact, consumers now find many of the products stored in intervention to be beyond their purchasing capacity, which is an indictment on the Common Agricultural Policy. Those objectives were to be achieved by a single market with Community preference.

The concept of Community preference has been completely eroded for political reasons. We have witnessed the infiltration of Eastern European products into the Community and a blind eye being turned to that by the Commission for political reasons. That practice is unacceptable. The restoration of the principle of Community preference is essential in any reform of the Common Agricultural Policy. In Ireland we are being asked to bear a disproportionate share of the burden in any reform procedure.

In deference to my colleague, Deputy Paddy Sheehan, I will conclude by making one point. This crisis demands comprehensive and cohesive political response from our representatives on the Euro stage. The disgraceful behaviour of Government members of the European Parliament on this issue demands an immediate response from the Taoiseach. Their incoherent babblings on the Euro stage is interpreted as support for the MacSharry proposals and has done inestimable damage to the national cause. The mind boggles when one considers that one of those MEPs is a former head of the IFA. He finally found a home in Fianna Fáil, where the concept of tadhg ar dhá thaobh rests easy.

The Minister this morning, and in all his dealings in European affairs to date, confirmed my estimation of him as one suffering from an inferiority complex. We are equal partners in Europe and it is about time that the "yes Sir, no Sir, three bags full Sir" approach ended. This report heralds a positive step forward and should form the basis of a national response to a very serious issue confronting Irish agriculture.

Acting Chairman

I must advise Deputy Sheehan that he has four minutes only of the allotted time remaining.

Mr. Sheehan

The current proposals submitted to GATT by the United States and CAIRNS Group of countries, that is, Australia, New Zealand, Canada and a number of South American countries, to eliminate all protection and support for agriculture in the European Community over a ten year period must be rejected by the EC. Clearly the purpose of those proposals is to dismantle the EC Common Agricultural Policy and replace current product price levels in the EC by world prices. Acceptance of the United States' proposals by the EC would result in an income loss of £900 million per year or 60 per cent of farm incomes to our farmers and major losses to our economy. The world price proposals of the United States and CAIRNS Group would sound the death knell of family farms in Ireland and throughout the EC and destabilise supplies of food to Irish and European consumers.

Clearly it is evident that the purpose of the United States and CAIRNS Group proposals is to gain free access to Europe's food market. The impression given by the United States and their counterparts is that farmers in the EC are highly supported and protected while United States farmers produce under free trade conditions. That is far from the truth. In reality United States farmers' incomes are directly supported by deficiency payments in the case of cereal production and price supports for livestock, dairy and sugar products. In addition, the United States actively subsidise their exports through an export enhancement programme. For example, the total State support paid to each United States farmer averages $22,000 per annum whereas the average EC farmer receives the equivalent of only $10,000 per annum.

The United States Administration recently published a new farm programme for the years 1991-95 which it is estimated will cost United States' taxpayers an exorbitant figure of $80 billion over the next five years and at the same time, they are advocating to Commissioner MacSharry and the EC the total elimination of protection and support for our farm products within the European Community.

Any long term agricultural policy within the EC must continue to recognise the fundamental role of the family farm as comprising the basic unit of production, the backbone of rural society. Any EC price policy for farm production in this country must take full account of the cost structure of efficient family farm units and provide farmers with incomes in line with those obtaining in non-agricultural activities.

It is recognised also that farmers with inadequate land and small incomes in less-favoured, disadvantaged areas throughout the country must be provided with alternative income supports. Clearly it is evident that our EC negotiators on the GATT must not make any commitment which would undermine or erode the basic component of the Common Agricultural Policy. The stabilisation of markets and producer incomes is of paramount importance to the EC. The continued policy of the EC must be to demand the right to protect its producers from low prices and fluctuations in world markets, as agreed under the GATT, over two decades ago.

Ireland produces approximately 500,000 tonnes of beef and 1.1 million gallons of milk annually, 80 per cent of which is exported. It must also be remembered that our dairy and beef industries' supplies are of a very seasonal nature. The peak to trough difference in the dairy sector is approximately 14.1 per cent, the lowest weeks of supply being in December and highest in May. The peak to trough difference in the beef industry is 10.1 per cent, the lowest weeks of supply being in March and the highest in October and November. The present Common Agricultural Policy proposals are unlikely to change our position as a commodity trader in those sectors.

Most European countries export a small proportion of their meat and milk production only whereas we export 80 per cent of our total output. If our farmers can be convinced to reduce seasonality, thereby enabling meat and milk producers maintain a continuity of supply of fresh products, they should be compensated therefor by the receipt of a counter-cyclical payment on all milk delivered in the period October to March, in addition to a slaughter premium for all cattle marketed between the months of January and June. If our farmers can be dissuaded from seasonality production, it would lead to the attainment of 15 per cent added-value for beef and dairy products — adding approximately £200 million more to the value of our meat and dairy products and, the maintenance of 10,000 more jobs within the industry.

There is no doubt that Irish farming is a long way behind that of our European counterparts. For instance, Holland — as big as Munster only — have a milk quota more than double ours and a pig production in excess of 60 times larger than ours.

Our contribution to the dairy and beef product mountain in the EC is a very small proportion when compared with that of our EC counterparts. Yet, we are extremely dependent on agriculture, fishing and tourism for our livelihood.

Because we are now the only island nation in Europe automatically we should be given preferential treatment by our European counterparts and our friends across the Atlantic Ocean.

We cannot tolerate a system under which agricultural factory farmers are allowed to expand and capitalise on increasing agricultural production while traditional small farmers are annihilated. The retention of export refunds is vital to our agricultural industry which relies heavily on exports to Third World countries.

It is true that European Community states need to engage in dialogue. Individual member states must be given a guarantee of safeguards, a right to protect their existence. Let us not build a Community that is too centralised. We Europeans should not impose federal solutions. We should be careful not to transfer or impose the American image and model to the EC. We do not want to create a second United States in Europe. We must be seen to be close to the people and not adopt a bureaucratic image.

Mr. Leonard

First, I should like to congratulate the Joint Committee on Secondary Legislation of the European Communities on this report, a committee of which I was a member about ten years ago. That committee does, indeed, serve a useful purpose, their members being afforded opportunities to meet departmental officials, representatives of the Revenue Commissioners, producer groups and compiling useful sets of statistics in all of their reports. I have often thought it would be useful that the interim reports of that committee be debated.

In debating reform of the Common Agricultural Policy it appears to be unanimously agreed that there cannot be a continuation of the massive intervention storage of milk products and beef. My fear would be that the small farmer in Connaught/Ulster will suffer most. A farmer with a large acreage can reduce his fertilisation while maintaining adequate supplies. The small farmer, with a limited acreage, who uses expensive fertilisation and inputs — in the event of the value of his products dropping — will be placed in an almost impossible position to maintain his small family farm viable. It is the small family farm with which I am most concerned.

There has been much discussion of stocking rates, quotas and so on. Within the discussions on the reformed Common Agricultural Policy proposals it is utterly unrealistic to talk about 1.4 livestock units per hectare for severely disadvantaged areas. That is just not on because many farms within those areas would come within the two livestock units per hectare category. Within those proposals I am satisfied there is room for negotiation. It would be my hope that that concession would be extended to the two livestock units per hectare category, which would leave us in a much stronger position.

Of course, milk quotas would have to be negotiated as would a reduction in prices and consideration given to the long term future of agriculture under the reformed Common Agricultural Policy proposals, in respect of which the Minister and his Minister of State have been asked to make a supreme effort. I do not think there is any need for them to do so because, over the past four years, they have delivered more than any of their predecessors in that portfolio at any time over the past 20 years since I entered this House. Here I might compare the performance of these Ministers over the past four years with that of their predecessors when, in 1983, practically every grant, aid or whatever was taken from farmers in one fell swoop. The present Minister and his Minister of State have endeavoured to get every last pound in beef premium for qualifying part-time farmers, without any restrictions on those in disadvantaged areas with incomes in excess of £10,000 per annum. There were also anti-pollution grants. All these were of great benefit to farmers. The Ministers have a fight on their hands to ensure that we get the last ounce from these proposals and to guarantee the continuation of the family farm, which is the backbone of agriculture in the Connacht-Ulster counties.

Deputies are inclined to relate these matters to their own constituency. When I looked at the proposals I considered that we might benefit. My constituency has a good record in food processing, with primary production of beef, poultry, pigs and so on. We have a very adaptable and efficient workforce and probably the best labour relations in any county. About 1,000 people are employed in poultry processing and another 1,000 in beef processing. There are great opportunities to expand in those areas. While there are restrictions on production, we must turn to down stream processing and try to get the last hour's work out of every turkey and every side of beef. We are meeting that challenge in my constituency. A terrific effort is being made in the export market.

A previous speaker referred to the reduction in the price of grain, saying it would militate against grass production. Certainly that will be the case, but in my area large amounts of feed are purchased and I can see great opportunities. There will be substantial reductions in the price of cereals and corresponding reductions in the price of compounds. There is a great opportunity to develop jobs by making the best use of the reduced grain prices.

People in my area have very high borrowings due to investment in poultry units and so on. Grant aid is not available to the primary producer. I would ask the Department to concentrate on the expansion of existing industries which have a proven track record rather than depend on greenfield enterprises. Departments of State and development agencies love to see banner headlines announcing new ventures which will create, over time, perhaps 200 or 300 jobs. I would urge them to be wary and to concentrate on the expansion of existing businesses. Before setting up a greenfield enterprise one must be certain that the market is there for its products and that there is no competition with existing processors. When people come to the Minister of State looking for grant aid, I hope he will keep that point in mind. Almost every poultry processing plant requires substantial funding to meet the very stringent EC regulations which will apply in the Single European Market. Approval by the IDA is necessary to qualify for FEOGA aid and I hope the IDA will give the required approval without causing undue problems for processors.

A number of speakers referred to problems regarding applications for beef premiums. If a farmer makes an error and includes one tag number on which a premium was due the year before, that will not only debar him for that year but will disqualify him for the following two years. I have to agree that the district veterinary offices sent a warning about this but many people were not aware of the necessity for the utmost care regarding these tags. I know of a case involving a young farmer who has 29 animals. He included two tag numbers inadvertently and now finds himself in difficulty. The Minister cannot solve this problem because the scheme is funded 100 per cent by the EC who are imposing very strict conditions.

There will have to be a change in regard to meat and dairy products. One of the most lucrative businesses is the building of cold storage accommodation. About 150 firms are involved in this business and are making great profit. Eighty per cent of our prime bullock beef and a far greater proportion of our butter goes into cold storage. Those involved in the milk and meat businesses should use their energies to find markets rather than send these products into intervention. The Minister spoke recently about the demand for good quality steer beef in Germany. The problem is that exporters here cannot compete with intervention. In the 1970s we were sending 40,000 tonnes of beef to Germany annually but in 1990 we sent 12,500 tonnes, one third of that amount. This is an indictment of slaughterers and processors who are dumping their beef into intervention.

The use of illegal substances could have a devastating effect on our beef industry. It will have to be stamped out. The British authorities have complained on many occasions about the use of these substances here. However, we should not give them cause to make those complaints. It is both irresponsible and criminal for people to use those illegal substances in order to promote growth in their livestock.

One of the most striking statements in the report was that over the past 12 months the Community increased funding by more than 32 per cent. It should be pointed out that the income of farmers in most member states fell during that time. That is one of the major problems facing us. Though funding is being provided farmers' incomes are still falling, and they will continue to fall until such time as efforts are made to rectify the problems. So far as I am aware this funding has not been allocated to those involved in production. Therefore, it must have been directed to those involved in processing, sales and marketing.

I wish to refer to the Structural Funds. People in my constituency submitted a well researched and costed application for funding. If this application is accepted, as I think it will be shortly, it will be of great benefit to the people. They propose to increase the value of agricultural products by improving quality, further processing and better marketing. Much of what we will achieve in the years ahead will depend on these objectives. Those people carried out feasibility studies to identify appropriate projects and linked projects with other funded measures in a viable development plan. They propose the provision of appropriate training for advisers, local leaders and beneficiaries. The leadership aspect is very important. I hope their application attracts the necessary funding. Such projects can be of great benefit to people. For example, farmers in my constituency who participated in courses run by Macra na Feirme are in a better position than most farmers to deal with the problems facing them today.

In their submission the local people assessed the potential for the development of rural tourism, improving amenities and marketing products in co-operation with existing bodies. A previous speaker referred to the emphasis now being placed on agri-tourism. People in my area who have developed waterways and lakes are making a fairly good living from those facilities. There seems to be further opportunities for development in this area. They estimate in their submission their proposals will increase revenue in the area by 40 per cent. We should be stressing the importance of these programmes which can provide alternative employment.

Many of those proposals may not be viable but others are such as potato production which has great potential for development. We now have a market for CARA ware potatoes in Sweden, something unheard of before. I was involved in this line of business for many years before I became involved in politics. It is one market we should never have lost control of. Up to the late sixties there was high production. However, after that imports started to flood into the country. We forgot about export substitution and concentrated only on exports. Over the years successful efforts have been made to turn this trend around.

Mr. D'Arcy

In view of the negotiations which will take place shortly I welcome this debate which will give us an opportunity to make our views known to the Government, the Minister and his Minister of State. I am somewhat disappointed at the contributions by the Minister and his Minister of State in regard to the conditions prevailing in agriculture. I sincerely hope that the Minister will take the points made by speakers into consideration in the negotiations.

While I agree that the Common Agricultural Policy needs to be reformed, I do not think we should penalise Irish farmers in that process. Unfortunately, that is what is happening. When we joined the EC we were told that we would be able to avail of unlimited markets in Europe. In the seventies farmers built up their stocks and modernised their farms because they were told the sky was the limit. I accept that Fine Gael were in Government for part of that period.

The Treaty of Rome specified that the poor regions of the Community would be brought into line with wealthier regions. However, that has not happened and the proposals now on the books — I accept that all of them will not be implemented — will not make it happen. If the proposals, known as the MacSharry proposals, are implemented in their present form they will devastate rural Ireland and its provincial towns. In a very short period they will leave a trail of disaster after them with serious social consequences. They will damage the fabric of rural life as we know it. Unfortunately, many people do not realise that this will be reflected in every large town and even the city of Dublin. People seem to think that these proposals will only affect farmers. This is not the case. Even now business people report that their turnover has been cut by 20 to 25 per cent.

Irish agriculture is unique in the following respects: our high dependency on agricultural exports, the dominance of livestock, particularly cattle and sheep, feed off our grassland and the proportion of our grassland under pasture, roughly about 90 per cent, as opposed to cultivated crops. Beef and milk account for about 72 per cent of output and together with sheep they account for approximately 80 per cent of total agricultural production.

Over the past 12 months I listened carefully to Commissioner MacSharry making the case for his proposals. Reputable people have estimated that if these proposals are implemented there will be a reduction of £500 million in the amount of money allocated to agriculture. On top of that, the compensation proposed will be in the region of £250 million; the ESRI report informs us it will be about £190 million. It is impossible to judge accurately what the figures will be. One thing about which we are absolutely certain is that the figures will be between £200 million and £250 million — that will be the cash reduction for Irish agriculture. Let us explain the effect it will have on the capacity of farmers who still have to carry out some modernisation in buildings. If we cannot continue to invest in agriculture we will not make progress. We must keep up with our European competitors who have a far better agricultural structure. A greater deal of investment is still needed but with that type of reduction there will be little or no investment.

These proposals seem to be dictated by the big players in the field and appear to be designed to phase out of agriculture 40,000 farmers. This will have an awful impact on rural life. Through the years we have heard the arguments about natural advantage. Our natural advantage is grass based agriculture which is made up of milk, beef and sheep. The Germans did not allow anybody to interfere with their steel industry, their motor industry or anything of that nature. The French did not allow anybody to interfere with their industries. After we joined the European Community many of our industries, for example, Fords of Cork and Dunlops, closed down. Our agriculture industry — mainly grass-based — is the only advantage we have but now that is being attacked from practically every angle. A serious effect of these proposals is a loss of confidence in the agriculture industry.

I take this opportunity to refer to the uncertainty which has been created by the financial institutions, particularly in the last 12 months, and which is seriously damaging confidence to invest in agriculture. Following ten years of high interest rates, averaging 15 per cent, plus service charges of 2 per cent in some cases, the priorities of the financial institutions and banks refusing borderline cases, plus pressurising hard pressed farmers for the credit they require, seems to be profit, irrespective of the social problems they create. We all like profit. Financial institutions have had good years from agriculture and farmers but now there is the prospect of difficulty facing this industry. I appeal to these institutions to continue to finance viable farmers. They will say they are financing viable farmers but that is not the case.

I attended a farmers' meeting in my constituency last night. A gentleman stood up and informed us that a farmer in his area, who had paid all his loans and had cleared his overdraft accommodation over the 30 days was about to renegotiate for the following year. However, he had received a letter in the post that morning informing him that his overdraft accommodation had been withdrawn and his cheque book had been cancelled. He said his wife had been so devastated that it took three hours for her to recover from the news. Coming from a rural constituency, you, Sir, will realise that that type of letter would devastate any family. I warn financial institutions that this is an unacceptable practice.

Overdraft accommodation in any business, big or small, is very important. One cannot carry on without it. This is the only form of cheap money people can obtain but the financial institutions have made a decision at central level regarding the provision of finance for agriculture and the local people have no say. In the past those who made decisions were faceless people, but, as I have remarked previously, and I do so again, now we are dealing with heartless computers.

I should like to say a few words about the management of supplies. I am prepared to accept, as are most reasonable people, that we must manage supplies but we cannot let pass the present situation. The payment of all ewe premiums should be based on current numbers. I make that point in view of the fact that since the Community is only about 82 per cent self-sufficient, there should be no reason to restrict the production of sheep: if based on the present numbers it will probably remain at 82 per cent. What I continually object to is the fact that cheap New Zealand lamb is imported into England at a time when the market is overloaded — the proper description for that is dumping. I put this case not to the Minister of State at the Department of Agriculture and Food, Deputy Walsh, but to the other Minister of State at the Department of Agriculture and Food about a year ago. He refused to answer the case I put to him that the importation of New Zealand lamb should not be allowed, that it should be controlled on the English market in the months of October, November and December when we have cleared our own supplies. That would prevent a great deal of confusion and solve many problems for sheep breeders. That should be normal practice. Here we have proposals for sheep which are unacceptable. I ask the Minister of State, Deputy Walsh, to have the point made to the EC. Why should the English be allowed import New Zealand lamb when our market and theirs are loaded? It makes no sense. It depresses the price, it causes much damage and overloads the market. I appeal that that approach be taken.

I turn now to beef which is in a worse position. As regards intervention the processors and the beef factories did not do their job down through the years; they depend on putting beef into intervention. They did not work up their markets and, to some extent the Minister of State at the Department of Agriculture and Food, Deputy Walsh, is responsible for marketing and I am reluctant to say he has not made any impact on the market. I appeal to him to get those markets for our farmers. It is terrible that we have to ship beef to intervention in other countries. Last year we had 800,000 tonnes of beef in intervention and we imported from countries outside the EC 800,000 tonnes of beef. Where is the sense in that? Here again the control of supplies should be examined.

The Germans are buying beef from Eastern Europe, previously that beef went to the Russian market. I understand Russians do not have the money to buy it, therefore we give them the money and sell them the beef we imported into the EC. To an ordinary person this makes no sense. At this stage I appeal to the Minister to deal with this problem.

I turn now to the question of cereals which, if one looks at the record, is almost as bad. The importation of grain and cereal substitutes amounted to about 57 million tonnes in 1990, making a major contribution to surpluses. Cereal substitute imports have increased from 7.9 million tonnes in 1976 to 17.3 million tonnes in 1990 — imports have doubled in the space of 15 years. The price cut is excessive and prices to farmers would fall by 45 per cent if the present proposals are accepted. Income would then become largely dependent on direct aid compensation as the price would be below EC production costs. This would undermine the competitive position of grass based production vis-à-vis competing sectors and would further disadvantage milk, beef and sheep production which are of vital importance to Ireland — milk, sheep and beef make up 80 per cent. If we allow that area to be attacked, which is our only natural advantage, then further damage will be done.

I ask that we proceed by way of the principles of the voluntary programme set-aside 1991-92 linked to the exemption from the co-responsibility levy. We have had the argument down the years about the importation of cheap fillers into the EC, but it was never as bad as it is at present. Cereal growers, who include beet growers are an important sector. If these proposals are accepted that sector will be devastated. That is very serious. This problem can be overcome if we deal with imports. There is not any doubt that the EC are turning a blind eye to imports. Some of the eastern countries in particular require hard currency to pay their loans and the only way they can get it is by using the EC markets. That happens in Poland, Czechoslovakia, Hungary and Romania. I accept that these are political decisions but Ireland should look for a derogation in many of these areas and we should not interfere with the present system.

Milk production represents a huge part of our economy. A price cut of 10 per cent is proposed and a cut in quota of 2 per cent in the first year and 1 per cent in the following two years. That would have a terrible effect not alone on milk producers but on the dairy industry. It would affect the beef industry also because there would be a sudden reduction in the number of cows in the national herd. There has been a 10 per cent reduction in the national herd since 1983. There is nothing more important than the national herd which stands at about two million cattle. It is the basis of our agriculture economy and any interference with it will have a devastating effect.

Commissioner MacSharry argues that support will be taken from the bigger producers and given to the smaller producers. How does the Commissioner answer the co-operatives in the north east who are making the case that they will lose millions of gallons of milk under his proposals? On the one hand quotas will be reduced and on the other, herd numbers will be reduced. That is unacceptable. I appeal to the Minister to seek a derogation for this country or else the proposal will seriously damage the economy.

Responsibility for stabilising world markets rests not alone with the EC but with other non-member countries. Non EC countries would also gain from market stability. Reduced volumes of output by the EC must be matched by a commitment from others to do likewise. A reduction in prices alone will not stabilise the markets. The Americans seem to be leading the charge in respect of the GATT negotiations. I understand that the Americans have an agreement to guarantee their farmers a minimum of the equivalent of £1 per gallon for their milk for the next five years, along with other guarantees. In the light of that, how can they argue for cut-backs in Europe? In California milk production was increased last year by 14 per cent. In the meantime they are asking us to confine ourselves and reduce prices. That does not make any sense. We have to stand up to the Americans and refuse to reduce the number of farmers and their net income, just to please the Americans. Last year the Americans gave $29 billion to their farmers and they will find a way to do that next year irrespective of the outcome of the GATT negotiations. When I was in America I studied what was happening there and it was very serious. It will not be a laughing matter for the Minister when thousands of farmers begin drifting into towns that do not want them.

According to Eurostat figures, the average income of EC farmers showed an increase of 5 per cent in 1990 and Irish farmers' incomes reduced by 11.5 per cent during the same period. We must make it obvious that we are prepared to protect our vital national interests at all costs and we must press our views with sincerity and vigour. The importance of agriculture to our economy is the essence or our argument. If we lose the argument we face not just an economic crisis but social upheaval which will be brought about by a huge increase in unemployment and lower living standards.

Acting Chairman (Mr. Roche)

The next Government speaker has indicated that he wishes to give way to Deputy Blaney. I am sure Deputy Ferris will cooperate with that.

Mr. Blaney

I thank all concerned. I was interested in participating in this debate, first because I welcome the report that has brought about this discussion. It should be helpful and should support the stand of the Minister for Agriculture and Food vis-à-vis the Common Agricultural Policy reform proposals about which we have heard so much and done so little. Politicians, not only in this Parliament but in the European Parliament, have done little in relation to these proposals.

Common Agricultural Policy reform has been sought on a budgetary basis for the last ten or 12 years mainly inspired by the UK who had the fortune, over the previous century, to have a cheap food policy under which they were fed for little or nothing through the sweat of people like our ancestors and of people in poorer countries which were their colonies. I do not doubt that there is a basis for budgetary restraint but, at the same time, the case being made that the Common Agricultural Policy is costing such a large proportion of the EC budget loses sight of the fact that it is the only full policy that the EC had, has, or is likely to have. That was not an accident. My theory, which is as good as any other, is that the Six who were the nucleus of the European Community came together for self protection, not for trading, not for the Common Agricultural Policy or for anything else. I say this with some little authority because in the early fifties I was a member of the Council of Europe from which sprang, through people like Paul Henry Spaak and other big names in those days, the whole impetus that gave us the nucleus that has now developed into the European Community.

In the years following the Red holocaust of the last war they decided to get together to protect each other by being together. It was more a military alliance than anything else but they recognised that this in itself was not sufficient to have an enduring effect in Europe. In the early sixties they set about implementing the Common Agricultural Policy and it has been the only policy since then. Why should it not use the greater part of the Community budget? What else would they use it for? It was said it was costing an undue amount of money without doing much good to those who needed it most. I have always agreed with that. I agreed in the European Parliament, and here, that the amount of money provided by the Community has never been less than would do the job if it was done properly but it never has been. We have come to the days when we have been overtaken by mounting surpluses. The milk lakes of the early eighties brought about a temporary quota on milk production, which I fought tooth and nail because I did not believe in it. It was the worst thing we ever did. It was a stopgap measure which, by its misapplication since then and its uniform price support, has been a disaster. Our surplus is greater today than it was when this panic decision of taking temporary quota five year period which has since been extended was brought into being. In the last 12 months approximately one 1 million tonnes of dairy products are supposedly surplus. By the same token, however, we imported approximately the same amount from outside the Community. We have 750,000 or 800,000 tonnes of beef in intervention of which we contributed a great deal, but it was our right to do so and anybody who says otherwise does not realise that our joining the Community had obligations and also benefits, that being one of them. We imported over 500,000 tonnes of beef from outside the Community during that year, the last for which we have full figures.

The whole story has not been told. We imported young live animals by a number that when matured in the Community represented another 350,000 tonnes of beef. So, our 750,000 tonnes alleged surplus was in fact totally imported, plus 100,000 tonnes.

Our cereals stood at 19 million tonnes in store. The crying, the weeping and the gnashing of teeth that has gone on about that would sicken one when one considers that our imports during the same period amounted to 35 million tonnes.

Looking at these figures one realises that the justification for our budgetary situation as it relates to the spending on the Common Agricultural Policy sounds hollow, because of the cost of disposing of those three major elements, and they are repeated each year. I am sure we are importing some of the three products if not all we have a surplus of. We not only pay a vast amount of money for the storage but there is the money represented by the purchase, the interest. The banks, naturally, do not lend money for nothing and they make sure they get it back, and rightly so. These costs are staggering when one realises that those storage costs, those purchase costs, those interest costs in any given year, together with the selling off at giveaway prices of 25 per cent of what the actual cost in store is for butter, cereals, beef and so on, are false figures because the actual cost figures are topped up by the in-store costs I mentioned.

What happens is that out of every £4 or every 4 million ECUs, or every four billion, only one billion actually goes in the farm gate of all the farmers in the Community. Seventy five per cent of the entire total moneys put to the debit side of the agricultural account are accounted for not by payments to the farmers or the producers but by this mad operation that sees us importing what we do not need and storing it at costs we cannot afford, and yet it is put in the ledger of the Common Agricultural Policy.

That has been going on for years and we are told the following in justification of it: "we, as a big entity, must trade". Of course they have to trade, but it is surprising that these imports are increasing despite the fact that we are under pressure to reduce our production which we were encouraged to bring up in order to meet one of the requirements of the early architects of the Common Agricultural Policy in the sixties, to provide a sufficiency of food so that we would not be dependent on any outside source in a war in the future. That is really what we were about and that is what we still should be about.

When I hear the attitude of the Americans at the GATT negotiations, and the Australians to a lesser degree, and other members of the CAIRNS group talking about reducing support to our farming community in the Community, I look at their situation. The Australians, I agree, have wiped out practically their entire farm support system, but the Americans, let us not forget, those who are making a song and dance of this issue, are today and were in the past year, paying more by way of farm support than is the EC. We should remember that they are paying more than we pay in the EC in total, including that three-quarters that goes into the stores that has nothing to do with farming. They pay it to two million farmers while we pay what we do pay to over ten million farmers. They are the people who are saying we must scrap all supports. I wish to put a suggestion to the Minister, as I done it to the committee on agriculture of which I have been a member for the seven-and-a-half years I have been in the European Parliament. The next time he is talking to the Americans, and they come the heavy on him as they have done in the last five years in these negotiations that he ask them, if they get their freedom of movement of goods and services they say are so absolutely necessary, will they also open their borders to the displaced persons with no visas who will arrive as a result of the free movement of their surplus agricultural production into the Community. If the Minister makes that request I do not think he will get agreement on it even if he tells them to send everything they had in the morning. If there are goods and services moving, it is only fair that people should have freedom of movement.

I fully agree with those who have pointed out that Article 39 of the Treaty of Rome is a very special Article and is the basis on which we built our belief that we should join when we held a referendum on membership. Article 39 was what we based our entire hopes on because of the importance of agriculture to us and the undertaking in the original Treaty — it still exists — to keep people on the land. We are not doing that. We have not being doing it. The haemorrhage of small farmers from the land in the Community will accelerate in the years ahead if the only thing we have are the reforms proposed by the Commission. I say that with regret meaning no disrespect to the Agriculture Commissioner, a former colleague of ours in this House and ex Minister for Agriculture, but because I believe he grasped the nettle and convinced his colleagues that 20 per cent of our farmers were getting 80 per cent of the benefits and 80 per cent of our farmers were only getting 20 per cent of the benefit. He convinced himself and his colleagues in the Commission of that and how wrong he has gone since then. What he is proposing suits neither the big nor the small countries. It does not suit the big countries, the providers of the wherewithal to pay for the Common Agricultural Policy, because it will increase the budget costs rather than reduce them. Instead of taking care of our small farmers on a permanent basis we will be driving them off the land. Small farmers, if this reform goes through, will live as social welfare farmers. That is all they will be. It is a certainty that their sons and heirs will not take it up after them. We will haemorrhage to such a degree that the social fabric will break down in those areas we are depending on to boost tourism on which the country will depend very heavily in the future in the knowledge that our agricultural industry is under the hammer at present and may take a worse hammering in the future.

The biggest weakness in the approach to this matter — and this applies to the Minister for Agriculture and Food, the Government, this House, the Committee of Agriculture in Europe and the European Parliament — is that despite the grave dissatisfaction with the proposals, no alternative has been put before the Commission and there will not be any unless something is put before the Parliament during the next few months. If no alternative is proposed, the proposals will go through. As Mr. MacSharry said in his statement, to which I have had to listen on three occasions in recent months, the proposals form a package and it will not be possible to pick the best and leave out what we do not like. These proposals have been costed on the basis that they amount to one big deal and if we do not like them we need not have them, but it will not be possible to pick and choose. Therefore we have got to look for an alternative.

In my humble opinion, the true alternative is what I have been seeking since before quotas were introduced — I sought it then and in the years I was in the Parliament up to 1984 — that is, differentiated support related to volume of production on a tiered basis. Not only is this the way to preserve the smaller and family farms throughout Europe, but it is the way to ensure over-production is curtailed at the top and not across the board, which is the case at present. Uniform price support, which has been practised since the introduction of the Common Agricultural Policy, is the rock on which we have perished, given that the bigger are getting bigger and the smaller are disappearing. It is a bonanza for the big producer.

In the real sense, we do not have any big producers. There are no 2,000 or 3,000 cow herds in this country which never see the light of day, except through the slats in a wall, and whose owners do not own a single acre of land, except for the ground on which the building stands — and this is probably leased. They do not feed the cattle with bales of hay or anything that is grown in the Community, rather their feeding stuff is shipped in. In one notorious case the cattle were fed by a belt from the port to the lot where 3,000 cows were housed each of which produced 1,750 gallons on average per year. That is the kind of thing that is happening and for those people this is a bonanza. Of course, these people would leave agriculture in the morning if this bonanza disappeared. We must get rid of this type of producer. If differentiated price support was introduced it would put the squeeze on them and they would go back to those enterprises they are best at and leave farming to the farmers of Europe.

This is something that could be perfected. I do not possess the expertise nor do I have the necessary research facilities at my disposal to be able to do this, but the Commission does. Given the urgent need to find an alternative to Mr. MacSharry's proposals, if the Minister and the Government used pressure, the Commission could come up very quickly with the answer to the way the differentiated price support could work or be made work and the benefits to be gained. I believe this is what we would go for as it would be the saviour not only of the farming community in this country but the farming community throughout the 12 nations, and others who may join in the future.

That is my belief and it stands alone because there is no other alternative to what Mr. MacSharry has proposed. We have already agreed, given the surpluses and the cost of storing them, that we must reform the Common Agricultural Policy. However, if we have no alternative to offer we are only wasting our time talking to Commissioner MacSharry. I appeal to the House, the Minister and the Government to go for the alternative I have proposed and to have a fair debate and, ultimately, a decision by which we will have to abide.

Mr. Ferris

It is appropriate that the House should get the opportunity to avail of the expertise gained by Deputy Blaney over the years in this House — he is a former Minister for Agriculture — and in the European Parliament where he is a member of the Committee of Agriculture. He made some very provocative suggestions which I hope the Minister of State will take seriously and convey to his senior Cabinet Minister. The same views were ably expressed by Deputy Liam Kavanagh, our spokesperson on agriculture this morning. He has similar attributes to Deputy Blaney and has long experience in this House — he, too, is a former Minister — and in Europe. Deputy Kavanagh outlined the principles enshrined in the Treaty on which the Common Agricultural Policy is based.

As a member of the committee, I would like to congratulate its chairman, Deputy John Ellis, for the way he prepared and presented the report to the House. I would also like to pay tribute to the clerk of the committee, Mr. Paddy Judge, and his assistant, Miss Una Connolly. These reports require a lot of work and dedication on the part of the members of the committee and the staff of the Houses of the Oireachtas assigned to the committee. It is pleasing to note that for the first time in many years we have been given the opportunity to discuss in an advisory capacity what amounts to a very important report at what is a crucial time. We are in the run up to the final agreement which will follow in the footsteps of the Commissioner's proposals.

The Commissioner, to everybody's surprise, introduced the so-called MacSharry plan during an informal discussion with the major parties in the GATT negotiations which took place at Dromoland Castle in June-July 1989 when he suggested the Community might be prepared to see a cut of 30 per cent in aggregate support over the ten year period from 1986. It is interesting to note that he suggested that more than half the cuts had already been achieved, leaving our Community partners and ourselves to find a 15 per cent cut in the GATT negotiations, which have serious implications for the Common Agricultural Policy.

He followed this with his reflection paper which was presented to the Council of Ministers in Brussels on 4-5 February 1990. This marked the first step in the process leading to the presentation of precise figures. However, the Labour Party maintain that the first question that should be asked in relation to the MacSharry plan, is will it work and, in an Irish context, will it work for Ireland. Will it strengthen or weaken Irish agriculture? Will it impoverish farmers or will it eradicate poverty on family farms throughout rural Ireland? Will agriculture continue to play a central role in the economy and will agri-business continue to be viable? Finally, and this is perhaps the most important question, is Ireland's vital national interest at stake?

The Common Agricultural Policy proposals have major implications for farmers. Everybody concedes this, including the Minister. The food processing sector and the economy in general will suffer. The challenge posed by the changes to EC farm policy and the GATT is of fundamental importance to all of us as it threatens the future viability of thousands of Irish family farms. As Deputy Spring, the Leader of the Labour Party, said in the House earlier this year, the social and economic consequences of the MacSharry proposals for this country in particular are so serious there must be a consensus among all political parties and Independents in this House.

I am glad that the report achieves a consensus. It also raises a number of fundamental questions which must now be addressed by the Government. The first reading of the Commissioner's proposals makes it clear that the immediate answers to these questions must all be couched in the negative. This is a plan aimed at getting farmers out of farming as painlessly as possible from the point of view of the European Community and their budgetary problems. The essence of the plan is to ask the milk producers to produce less milk, the same applies to beef producers and cereal growers. The net effect of the full implementation of this plan will mean that Irish agriculture — and its output — will be significantly smaller than at present. The main reason for this, in the words of the plan, is that without the reforms proposed by the Commissioner and now adopted by the Commission, annual surplus production will be "well in excess of foreseeable export outlets"; in other words, the markets are not there; intervention cannot be tolerated any longer and, therefore, farmers must be got out of farming.

In terms of a contribution to economic output agriculture is extremely important to Ireland. It is 3.6 per cent more important to us than to any other European country. Agriculture contributes one quarter of the gross exports from Ireland and, when this is adjusted for the low import content of agri-exports, the contribution of our net exports is about 40 per cent to our economy. As the agriculture industry contribute about 11 per cent of Ireland's GDP compared to 3 per cent within the European Community, one can see at first hand that if these proposals are followed through in their present dimensions Ireland will be a net sufferer.

I wish to refer to agriculture and its direct employment for the rest of the community, this includes beef, milk and cereal production and the processing industry, and it means that thousands of people in this country are directly dependent on agriculture, its production and processing. The contribution of the food industry, even if it was handled correctly, fairly and honestly, would be almost 20 per cent compared to 8 per cent in the EC. From these figures it is clear that the Irish food and agriculture industries and those allied to it have the most to gain through the Common Agricultural Policy. If there is a change in the Common Agricultural Policy they will have the most to lose. Indeed, this is what is happening in this alleged reform package presented by Commissioner MacSharry.

These figures indicate that agriculture is a central part of our economy with important links in terms of employment and income to other sectors. The indirect effects on these sectors include declines in inputs of materials and services to agriculture, in outputs of raw materials and processing in an economy which is already showing a fall in farm incomes. We estimate that this will have a serious effect on the economy and we want to be constructive about it. The Minister for Agriculture and Food — I am pleased he is in the House — promised that he would emphasise to the Council of Ministers the reliance of Ireland and its economy on agriculture. His attempts to date to have Irish interests heeded have been very weak considering that they have not been represented in this package, unless there are alternative proposals as suggested by Deputy Blaney.

The Commission's proposals will cost the Irish economy £180 million to £250 million, depending on which expert report you look at; it will certainly cost millions even after the MacSharry compensation comes into operation. In the House today the Minister for Agriculture and Food tried to assure us that the Commissioner said there is no doubt about the permanence of these compensatory payments. Will the Minister provide budgetary proof through the Council of Ministers and the Commission that this is correct? This country, with its staggering unemployment rate of 20 per cent, cannot afford the losses which would result from the Commissioner's proposals. It is estimated that the Common Agricultural Policy reform will lead to a further 16,000 people at present employed in the agri-food industry losing their jobs. How could the Government allow the Minister for Agriculture and Food to continue to negotiate on behalf of agriculture when it became very clear that he had neither the ability nor the foresight to realise the disastrous effects which the cuts will have, even if there is compensation?

As I have already stated, the Irish economy is dependent on the agriculture industry, indeed we have the greatest dependence in Europe. Everyone is in agreement that a review of the Common Agricultural Policy is necessary; however, nobody except the Government agreed that the Common Agricultural Policy cuts before us are the only option. I have not seen any alternative options and, as Deputy Blaney said, if we do not have counter proposals then the Commissioner's proposals will be implemented. The Minister said previously that he did not disagree with the principle of the reforms but that he was worried about their intricacies. The Minister seemed to accept defeat from the beginning.

The Common Agricultural Policy must bear some responsibility for the inadequacies but to try to convince consumers — as some people have tried to do — that they will benefit from these proposals is not in accordance with the facts. As outlined by Deputy Spring, the economic consequences for people in agriculture will be catastrophic. I wish to remind the House that specific regulations were laid down in the Treaty of Rome and in an agreement on milk quotas in 1985. However, the Minister said earlier this year that the MacSharry proposals were acceptable in principle.

A referendum will be necessary as a result of the Intergovernmental Conference on European Monetary Union in Maastricht and the Government could run the risk of alienating the whole agricultural community. It could mean the Government being defeated in the referendum with the consequent complications. This morning Deputy Deasy mentioned live exports. We are all anxious that beef should be processed, as much as possible, within the country and adding value to it. However, farmers should be able to export their cattle to Libya — now that they have said they are not supporting terrorist organisations — we could avail of live exports to Iraq for their food aid programme and we could also have markets in Iran if this Minister, or perhaps another Minister who might be appointed after tomorrow's meeting, went to those markets——

Mr. O'Kennedy

Will Deputy Ferris put his name forward?

Mr. Ferris

So the Minister is resigning? It is very interesting that the Minister for Agriculture and Food has offered his resignation to me, of all people.

Mr. O'Kennedy

I thought I should offer it to a fellow Tipperary man.

Mr. Ferris

Whoever is in the Department of Agriculture and Food should encourage the live exports of cattle which are not suitable to be processed in Ireland. Indeed comments of that kind were made in the House of Lords in relation to this subject. I refer the Minister to a debate on the Common Agricultural Policy in the House of Lords on 17 October. Farmers and all the workers in related industries have a vital interest in the future of the Common Agricultural Policy. Many Members have experience of the freedom of voting on issues such as Common Agricultural Policy which has benefits for Ireland. We know that people in Ireland are dependent on the Common Agricultural Policy and the continuation of the fundamental principles of the Treaty. The people will suffer if Common Agricultural Policy is dismantled in an ad hoc way, and that is what will happen if the Minister accepts the principles but not the details of Common Agricultural Policy reform. The economies and social structures of every part of this island will be damaged, particularly the family farms which are dependent on a certain income rather than on dole money. It is the same principle that underlies the compensatory measure initiated by Commissioner MacSharry and accepted by almost everybody, the principle of giving money to people for doing nothing, for leaving their land fallow and no alternative source of income. That is not the way forward for Irish farmers, small or big, and certainly it is not the basis of the traditional Irish farmers who want to live in the countryside and have a fulsome, happy and healthy lifestyle. They want to work for themselves and be compensated by way of producing goods.

This brings me to the conclusions of this very significant report and I am glad the Minister has welcomed it. We hope he will take its suggestions on board and use it to strengthen his hand in the Council of Ministers. The report states:

Irish agriculture is of fundamental importance to the Irish economy. The development of the Common Agricultural Policy in recent years has given rise to problems, but these are due to a variety of factors, and Irish agriculture has contributed little to them. Nevertheless, the evidence before the Joint Committee (the joint committee included Members from the Government side, Fine Gael, Labour and The Workers' Party) shows that Irish agriculture is very exposed to the impact of these reforms and will suffer disproportionately. For these reasons the Joint Committee rejects the proposals.

The Minister should take note that the joint committee representing all parties reject the proposals from Commissioner MacSharry. They suggested alternatives and they hope the Minister will take these on board in the near future. Perhaps he will do so before the end of the year and before Commissioner MacSharry reaches agreement with the Americans whom he is meeting today.

Mr. O'Kennedy

The Deputy should remember what Shaw said about alternatives.

Mr. Ferris

These alternatives will increase the chances of survival of the Irish family farm and commercial farm alike and of the many thousands of jobs in industry and services which depend on agriculture. The joint committee, in laying this report before the Oireachtas, urge the Minister for Agriculture and Food and the Government to note its contents and to take action on the issues discussed which are of such critical importance to the future of agriculture in Ireland and, indeed, to the whole Irish economy.

They are the conclusions of the report which is not a Government report but one based upon the view of all of those who contributed in a constructive way to ensure our national interests are protected. The report is intended as support for the Minister. He needs support and more courage than he displayed in the past. He should take Ireland's case to the Council of Ministers where an alternative must be provided to Commissioner MacSharry's proposals. When he made these proposals Commissioner MacSharry was not reflecting the views of Irish agriculture.

Mr. Cotter

I am very happy to have the opportunity of contributing, and I wish to share my time with Deputy Hogan if that is agreed.

An Ceann Comhairle

Is that satisfactory? Agreed.

Mr. Cowen

How much time does the Deputy have?

An Ceann Comhairle

The Deputies have 20 minutes between them.

Mr. Cowen

Therefore, these are the last two speakers in the debate?

An Ceann Comhairle

Yes, and I hope to call Deputy Ellis to conclude the debate at approximately 3.55 p.m.

Mr. Cotter

It is generally agreed that the effects on Ireland of Common Agricultural Policy reform would be entirely negative. The value of our gross national output would be reduced by up to £510 million. We would face the loss of up to 35,000 jobs and what really concerns me is the likely uneven spread of the job losses. Every country and Government recognise regional disparities and tailor their policies accordingly, but this is not the case with the Common Agricultural Policy proposals. They are blanket proposals for the whole Community with no concern whatsoever for Ireland's special reliance on agriculture. We are being asked to commit a kind of hara-kiri in the interests of Common Agricultural Policy reform. We are being asked to agree to a significant reduction in our gross national product and in our jobs pool. Commissioner MacSharry refuses to accept the arguments and he has flam-boyantly dismissed all claims which are contrary to his own opinion.

I wonder have the Government or the Minister researched the effects of the Common Agricultural Policy reform on various parts of Ireland. For example, what will the effects be on my constituency? The average milk supplier in County Monaghan produces approximately 15,000 gallons. A huge proportion of these people will be side-lined when the Common Agricultural Policy reform is complete. Those farmers will have very little to do except wait around for the compensation cheque. The stocking rate proposals will have a particularly devastating effect. Being a county of small farmers the producers in Monaghan have worked very hard over the last decade or so. They have invested quite an amount of money to increase stocking levels in order to become viable. The policy of extensification which is now advocated will most certainly wipe them out.

My constituency will lose heavily from these reforms. We face job losses on a scale we cannot cope with. Does the Minister think that the rural development programme, or the agri-tourism programme as it is often called, will solve the problems for the people in County Monaghan? There is no doubt that it will be very helpful to some counties, coastal counties and counties that are well placed to take advantage of tourism, but it will not help Monaghan. It will be very insignificant in the amount of development it will create in that county.

Since the Minister took office in 1987 the population of County Monaghan has decreased by approximately 3 per cent. Of course, as everybody knows, the dole queues have lengthened appreciably also.

Mr. Ellis

Whose fault is that?

Mr. Calleary

I have heard everything now.

Mr. Cotter

The Minister has not heard everything. I am giving the facts. It was Deputy Brian Lenihan who opened the gates when he said we have to get rid of as many people as possible from this country because Ireland is too small for them. He made that statement in early 1987 as soon as he took office. That was the philosophy and it worked because our population is now 3 per cent less than it was then. There is no doubt that present developments will also affect those statistics.

An analysis of the structure of County Monaghan has suggested that there will be fewer jobs in food processing and, therefore, in our high street shops. There will be fewer jobs in our offices, banks and schools and there will be less need for services because fewer people will require services. I put it to the Minister for Agriculture and Food and the Government that they are the effects that will be wrought on my county and on the people there. I ask the Minister what proposals he will put forward to prevent that from happening.

Ireland has always been a good European. We campaigned for and signed the Single European Act. The Single European Act enshrined in the Treaty of Rome that a major objective of the Community should be the reduction of regional disparities. I am glad to note that in recent times the Minister for Foreign Affairs, Deputy Collins is aligning himself with other peripheral nations to ensure movement towards European political and monetary union which does not exacerbate rather than reduce regional disparities.

Minister of State at the Department of Foreign Affairs (Mr. Calleary)

We started that.

Mr. Hogan

I am acknowledging the important contribution the Minister, Deputy Collins, is making.

It is ironic that an Irish Commissioner for Agriculture has made a savage attack on the Common Agricultural Policy. In my opinion Commissioner MacSharry has gone too far and has shown that he does not understand fully the impact his proposals will have on the Irish economy and the Irish producer.

Basically, Mr. MacSharry is proposing a cut of 15 per cent in the price of beef, a 10 per cent reduction in the price of milk together with a reduction of quotas, and a 35 per cent cut in cereal production, a savage cut for cereal farmers.

It is undoubtedly because of these proposals that throughput will be dramatically reduced and there will be huge rationalisation in the agri-business sector. An independent body, the ESRI, have stated that because of these reforms gross output for the country will be reduced by 1.5 per cent which runs very much counter to the growth arguments being made in a "bullish" way by Ministers over the past few months.

Taking account of the Common Agricultural Policy reform and the GATT negotiations and their likely outcome, it is difficult to be optimistic about the future prospects for producers in the agri-business generally. This has been confirmed recently by a further survey by the ICOS on Common Agricultural Policy reform. This survey estimates on a case by case basis the impact of the reform in the catchment areas of multi-purpose co-operatives with a particular focus on dairy and related sectors. Participation in the survey is regarded as being representative of the total dairy sector accounting for 74 per cent of the country's total milk quota. The results of this survey show that the value of milk output at farm gate prices will decline by £200 million in comparison with 1990 value. This is effectively a reduction of 20 per cent, and, in addition the losses in the value of calves and cow beef coming from dairy herds will amount to £40 million and £23 million respectively.

Taking account of compensation in respect of cow premiums, and savings in input costs, the effect of the reforms on dairy farm incomes compared with 1990 would be a loss of £170 million. In a postreform environment which is dependent on market supports, this is equivalent to a loss in income of £3,500 per dairy farm on average, even allowing for compensation. In fact, in the Commissioner's own area, where the North Connacht Farmers Co-operative is very strong, the NCF estimate that the loss would be £7.6 million, not taking account of the loss of jobs.

Avonmore is the regional co-op in my area and they estimate the loss at £12 million in addition to a loss of 700 jobs. This will have a huge impact on any co-operative area and I view it very seriously. I am glad that the joint committee have shown in their report how seriously they regard these devastating proposals.

The ICOS are the umbrella body for all co-operatives in the country and are a very hard working and reputable organisation. I am sure they can stand over these figures.

If the Commissioner is intent on playing off the consumer against the producer, he will certainly fail. Every consumer should be worried about the tremendous losses in employment, and the ICOS estimate the figure will be 10,000 nationally. Irish consumers more than consumers in any other member states should be aware that we have not the effective powers of competition or the mechanisms in place to ensure that prices are reduced. Even though we export three-quarters of all our agricultural produce, any savings in terms of cheaper food will flow to European consumers rather than to Irish consumers. The loss to the national Exchequer from lower agricultural prices will be over three times greater than any potential gain to consumers. Ireland is unique in this respect in the Community. Irish consumers should not be fooled into thinking that this will be a bonanza in terms of lower food prices. Commissioner MacSharry and others are being dishonest when they make statements to the contrary.

I wish to congratulate farm bodies and co-operatives on their recent response to the Common Agricultural Policy reform proposals. Four farm organisations have come together and have drawn their conclusions on the impact of these reform proposals. What is most disturbing about the Irish case and the Government performance in relation to reform of the Common Agricultural Policy is the lack of any alternative proposals being put forward. Ireland is a small peripheral nation with a difficult financial position and is not endowed with the ability to fund direct income supports. No other member state should be allowed to finance directly income aids for producers out of a co-ordinated scheme in the Community. We either have a common policy or not.

It is essential that the EC must monitor and control preferential and legal imports of agriculture and food products taking full account of the balance of supply and demand and the Internal Market. This is critical in view of the huge increase in imports from Eastern Europe which go undetected at the behest of the Commissioner. There are no restrictions on supplies from Eastern Europe at present. We cannot afford to turn a blind eye to these imports any longer. All reform measures must be fully financed by the EC budget, otherwise we are in danger of renationalising the Common Agricultural Policy which will be to the advantage of the more industrialised states. The phasing in of the reform measures must be more gradual than those proposed and a minimum five year transition phase would not be totally unacceptable.

When the final whistle has blown.

Mr. Ellis

That has often happened, Deputy De Rossa, and we all know that many fine reports have been prepared after the day, when the whistle has long gone. The approach has been changed and the debating of this report in the House demonstrates that.

Again I wish to thank those who have contributed to the debate. I thank the Minister, the Minister of State and Deputies from all sides of the House. I am glad that Deputy Hogan, who is a member of the committee that prepared the report, now recognises, that the wisdom that was imparted to the committee by the various specialists who came to us over the period of preparation is of benefit to this country. It is of benefit in relation to the stance that will be taken by the Minister for Agriculture and Food at all further negotiations.

This evening we should send one message loud and clear from this House. That message should be that the Commission proposals as they stand at present are not acceptable in so far as Irish agriculture is concerned in view of the fact that we are a country that has special problems. I am not talking in the context of the begging bowl, as has been suggested by some Members. We are not there with a begging bowl. We want the pitch to be levelled so that Irish agriculture is able to compete. It is unfair to say that Irish farmers are large. At this time the largest Irish farmers would be classed as small farmers by German standards, and I mean very small farmers. We do not have too many cow herds of 1,600 or 2,000 in this country, but that is what we are competing against. We are competing against factory farming on an unfair basis. We have to stress that to the Commission and to the Commissioner, who is well aware and who in my opinion is doing his utmost to try to deal with the situation. The Commissioner needs the support of the Houses of the Oireachtas, including this House. He also needs the support of our MEPs, and I have no doubt that Deputy De Rossa will support him in his proposals.

Proinsias De Rossa

No, I will not.

Mr. Ferris

Not these proposals.

Mr. Ellis

The Government hope that the debate that has taken place in the House since 10.30 this morning will be of enormous help in strengthening the hand of the Minister for Agriculture and Food when it comes to proceeding with the negotiations in the months ahead.

Dáil Éireann díospóireacht - Friday, 8 Nov 1991