Léim ar aghaidh chuig an bpríomhábhar

Dáil Éireann díospóireacht -
Tuesday, 21 Nov 1995

Vol. 458 No. 5

Adjournment Debate. - Export Refunds.

I raise this issue because of what is happening in relation to export refunds and the impact it will have on beef prices. As late as last week my colleagues and I in the Opposition with responsibility for the Agriculture portfolio raised the crisis which has enveloped the sheep sector. I pointed out on Question Time last Thursday the serious implications of a reduction of 7.5 per cent and 5 per cent, respectively, on export refunds for the beef and live trades. In his reply, the Minister confirmed that he was concerned about this matter and that he would take up the case with Commissioner Fischler as a matter of urgency and would do all he could to alleviate the difficulties that the reduction in export refunds is having on Irish exporters.

On the following day we had the extraordinary situation where the EU Beef Management Committee, at its meeting on Friday, 17 November, decided to cut export refunds further in respect of live cattle and beef by 25 per cent with immediate effect. This is an outrageous situation which the Minister has allowed to happen. It is obvious he does not have the clout to deal with the issue. This is the fourth reduction in export refunds since September. Since then export refunds for live cattle have been cut by 45 per cent, which represents a drop of £29.50 per hundred kilogrammes while refunds on beef have fallen by almost 40 per cent or 47.5p per kilogramme. This is an unprecedented attack on the export refunds system which particularly affects the Irish agriculture and beef sectors. Our beef sector is dependent on 70 per cent to 80 per cent of its produce being exported.

One of the most successful means of maintaining confidence in the market has been the competition between the live and processed trade and the ability of our processors to get markets outside the EU which has allowed for the payment of export refunds. In terms of the industry the refunds are worth £300 million per year. The fact that the Minister. Deputy Yates, has allowed a 45 per cent reduction in export refunds on live exports since 1 September and a 40 per cent decrease in export refunds in our meat trade since 1 September will mean a loss of £120 million to the Irish cattle and beef industry for the coming year.

We have had silly statements from the Minister, Deputy Yates, since then stating that he did not expect the refunds in cuts to have an immediate impact on the export trade or cattle prices. These statements are mindboggling in their naivety. To suggest that the live trade will not be affected immediately is not facing up to reality. The Minister deplored the cuts in export refunds when the reduction was 7.5 per cent and 5 per cent, respectively, for the live and beef trades. This huge reduction of 25 per cent for both the live trade and the meat trade means, to quote the most recent statement from the Minister, that he is "incensed". If the Minister is not careful, he will be heading for an act of self-emulation shortly because he has had no influence whatsoever in dealing with this matter in a coherent fashion when the beef support regime for Third World markets had been practically dismantled under his stewardship since September.

I sympathise with the Minister of State, Deputy Deenihan, that when there is bad news too often he has to face the music. It is the responsibility of the Minister, Deputy Yates, in the Council of Ministers to fight the case for Irish exporters involved in the live and processed trade. Too often the Minister has been seen to create a distance between himself and the tragic situation which is the result of his mishandling of this affair. The fact that the rhetoric does not relate to reality is coming home to roost. We are dealing with a crisis in the sheep sector against the most benign background that any Minister for Agriculture, Food and Forestry could come into office: within 12 months the sheep trade is in crisis, and now the beef sector is in crisis because of the mishandling by this Minister.

I thank the Deputy for raising this issue this evening because it affords me the opportunity first to explain in some detail the background to the Commission's decision and, second, to assuage farmers' concerns about the implications of the decision.

As the Deputy is aware, one of the more important aspects of the GATT agreement is that a progressively declining ceiling has been placed on subsidised cattle and beef exports from the European Union to third countries. The ceiling for the current GATT year is 1.19 million tonnes and it will decline to just over 800,000 tonnes by the year 2000. Compliance with this ceiling is controlled on the basis of export licences issued rather than on the basis of actual physical exports in the course of the GATT year, which runs from 1 July to the following 30 June.

In view of this the European Commission monitors the level of export licences issued on a regular basis in order to ensure that the overall ceiling on subsidised exports is not breached. Over the past few months, the Commission has taken the view that the level of licences issued was excessive and it adopted a number of measures during that period in order to discourage exporters from taking out export licences too far in advance of physical export. These measures included cuts in export refunds and a very substantial increase in the rate of security for export licences.

However, these measures failed to stem the level of demand for licences with the result that by 15 November applications for licences had reached 650,000 tonnes or 60 per cent of the annual GATT ceiling in spite of the fact that we were only one-third of the way through the GATT year, which as I have said ends on 30 June 1996. The Commission took the view that the approach it had adopted over the previous two months had failed to restore order into the export licensing system and that a new approach was required. Accordingly, the Commission put a proposal to the Beef Management Committee last Friday for a 25 per cent cut in export refunds, which they made clear was not based on a technical assessment of the level of refunds required for trade with third countries to take place.

This decision has effectively suspended the export refund system and is designed as a temporary preventative measure to enable the Commission to review the operation of the export refund and export licensing system and to introduce a number of technical adjustments in order to bring about a more orderly approach on the part of the trade to the taking out of export licences.

My Department has continually opposed the Commission's approach on this issue in the Beef Management Committee over the past few months. In addition, the Minister, Deputy Yates, raised the matter with Commissioner Fischler at the meeting of the Agriculture Council last month.

What good was that?

During the meeting, the Minister made it clear to the Commissioner that he strongly opposed the Commission's approach and he put forward a number of suggestions for technical adjustments to the licensing arrangements which he believed would more effectively achieve the Commission's objective of bringing about an orderly allocation of export licences. Those suggestions included the shortening of the validiy period of export licences and the introduction of an optional non-transferable licensing system which would encourage genuine exporters and effectively discourage speculators. I understand that these proposals are now being examined very seriously by the Commission.

I believe that exports to third countries are not possible at the current rates of export refunds and that the effect of the Commission's decision is to suspend the operation of the export refund system. However, I also believe that this situation cannot be permitted to persist for very long and the Minister, Deputy Yates, will be writing to Commissioner Fischler over the next day or so, first, to outline in more detail the proposals he put forward at the last meeting of the Council and, second, to emphasise the importance of introducing these technical adjustments as a matter of urgency so that the recent cuts in refunds can be reversed at the earliest possible date. The Minister, Deputy Yates, will also raise the matter at the next meeting of the Council which takes place in the middle of next week.

The Commission's decision to cut refunds last week was a total over-reaction to what were essentially technical problems with the administration of the export refund system. However, I am satisfied that the decision will not have any effect on the cattle and beef trade over the next few weeks. It is clear from the volume of export licences for live cattle and beef in recent months that there are sufficient licences in the hands of the exporters to enable the export trade to continue as normal for some weeks. During that period my Department will be in regular contact with the European Commission to ensure that export refunds are restored to normal levels as soon as possible in order to minimise disruption to the trade.

I want to assure the House that we are fully conscious of the importance of this issue and no effort will be spared to get the Commission to take the necessary corrective action and to have normal trading arrangements restored quickly.