Adjournment Debate. - Cattle Export Refund Scheme.

Thank you, Sir, for giving me the opportunity to raise this important matter and I thank the Minister of State for coming into the House to respond to the matter. The livestock industry is extremely important to the economy. There will be enormous opportunities for job creation if the correct environment is provided by the Government and the European Community. There is a great deal of anxiety among the workers in the meat factories and there are two such factories in Cavan-Monaghan, the constituency I represent, Meadow Meats in Clones and Liffey Meats. They believe that exporters of live cattle have an advantage because of the export refunds payable on exports to third countries. Some may argue that there is a difference of between £30 and £100 for cattle exported live and those exported in processed form. I realise the importance of the live export trade to underpin the price of cattle and provide competition which results in reasonable prices being paid. However, there is a danger when too great an advantage is given to the dead meat trade or the live export trade that farmers — and the nation as a whole — will suffer in the longer term. We have had bitter experience of this in the past when we had very few live exports.

There is an additional problem that some farmers are afraid to finish top quality cattle for the dead meat trade because of the weight limit on intervention stock. The present intervention limit of 380 kilos will be lowered to 360 kilos from 1 January 1994 and further reduced to 340 kilos on 1 July 1994 and at that stage 60 per cent of our cattle numbers would be ineligible for intervention. This means that many of our cattle, most of which have great potential, are being exported live solely because of the failure of the Minister to have this regulation changed. The worry among farmers is acute as farmers obviously have to think ahead. They realise that without the live trade, the Iranian and other dead meat contracts, the safety net now available is extremely weak. I would urge the Minister to have the export refunds increased for the dead meat trade to bring them into line with the live export trade so that both sectors can compete on an even playing field.

Some farmers are so worried about grading standards that they are inclined to be drawn towards the live trade where they will know exactly what they will get, rather than to the factories. The Minister should make sure that there are opportunities for those who want to work in the industry. With so many people unemployed we need to keep as many people as possible at home. I would rather see people being kept here and cattle being slaughtered and processed here than cattle being exported live, provided a reasonable price is paid to the farmers.

I thank Deputy Crawford for raising this important matter.

Before I deal with the substance of this debate, I want to put on record the policy of this Government in relation to the beef industry. In simple terms, our policy is to encourage the industry to exploit all market opportunities which facilitate the processing of beef to the maximum extent possible and at the same time to ensure adequate returns to the farmers involved. Clearly, it is in the interests of the State that the industry maximises the added value and employment content of our beef exports and this objective underpins the criteria laid down by my Department and the IDA for the provision of grant-aid to the beef sector.

I am sure that the Deputy is aware that competition between the live export trade and exporters of beef has been a feature of the beef industry for many years. Each side has claimed from time to time that the export arrangements confer an advantage on their competiors but both have managed to co-exist reasonably peacefully for the most part. As far as the Government is concerned, while our strong preference is for our beef to be processed to the maximum extent possible, we see a role for a limited live export trade. The reality is that there are some markets in third countries which unfortunately prefer to secure their beef import requirements in the form of live cattle rather than in the form of beef. Furthermore, some third countries simply do not have the necessary infrastructure to handle frozen beef and, since the distance is too great to export fresh or chilled beef, the demand in those countries is for live animals. However, an advantage should not be conferred on the live trade and I would prefer that exports of beef should be encouraged and facilitated over exports of live cattle.

With regard to the position of live cattle and beef under the export refund system, I am aware that the amount of export refund payable on live cattle is higher than that on beef. The extent of the advantage in favour of live cattle depends on a number of factors, most notably the kill-out percentage of the animal and the boneless meat yield of the carcase. As I said earlier, I do not favour giving an advantage to the live trade but I must explain that responsibility for fixing export refunds rests with the EC Commission following a vote in the Beef Management Committee. Other member states and the EC Commission see the live export trade as a useful mechanism for disposing of surplus cattle without recourse to intervention. We have to see this approach against the background of enormous sales into intervention in recent years and intervention stocks of over one million tonnes of beef at the beginning of the year. Indeed, the Commission consider that this policy has been rather successful this year in that sales into intervention both in Ireland and the Community as a whole have only been a fraction of the quantities purchased into intervention in recent years. Clearly, other factors have contributed to this development but, nevertheless, the Commission believe that equalising refunds as between live cattle and beef would result in higher sales into intervention.

As regards the weight limitations on carcases sold into intervention, the Deputy will be aware that we have opposed this regulation with all means at our disposal, including taking the matter to the European Court of Justice. I find it a little difficult to understand the connection being made between the export of live cattle and the introduction of the intervention weight limit, particularly since the bulk of animals exported live have been the lighter animals which were unlikely to reach 380 kgs dead weight even if they were brought to maturity. The Minister is very pleased that the meat factories have been able to cope with the 380 kgs weight limit this autumn. That they have been able to do so is due to the substantial contracts which they have secured for the export of boneless beef to Iran and which take carcases up to 420 kgs. This follows on strenuous efforts by the Minister and the Department to reopen the Iranian market. Nevertheless, I want to congratulate the beef industry on their success in securing these contracts, which have helped to maintain cattle prices at relatively high levels this autumn. Indeed, the beef industry has made magnificent efforts this year to secure commercial markets for their beef and to reduce reliance on intervention.

Some statistics will help to illustrate this point. In the period January to November last year, the beef industry sold some 633,000 steer carcases into intervention and 147,000 carcases on the commercial market. This year they sold 159,000 steer carcases into intervention and 500,000 on the commercial market. In other words, they have increased their commercial sales of steer beef by 240 per cent this year. This was a tremendous performance and I hope that the industry will be able to build on it next year and in the years to come.

In conclusion, our policy will continue to be to encourage the beef industry to fully exploit all the opportunities for maximising the added value and employment content of our cattle and beef industry and, in the context of this policy, we will endeavour to ensure in so far as we can, that the beef industry does not operate under a disadvantage compared to the live trade.