Hugh Byrne
Ceist:4 Mr. H. Byrne asked the Minister for Agriculture, Food and Forestry the steps, if any, he will take to redress the large and increasing imbalance between the live trade and the factory sectors of the Irish beef industry. [4768/96]
Ceisteanna—Questions. Oral Answers. - Live Cattle Exports.
Brian Cowen
Ceist:27 Mr. Cowen asked the Minister for Agriculture, Food and Forestry the percentage decrease in live exports of cattle in 1995 and to date in 1996. [4675/96]
Brian Cowen
Ceist:52 Mr. Cowen asked the Minister for Agriculture, Food and Forestry the percentage decrease in the export of live cattle to continental EU in 1995 and to date in 1996. [4676/96]
I propose to take Questions Nos. 4, 27 and 52 together.
Total exports of live cattle to date this year have declined by 42 per cent. Live exports to EU countries have fallen by 68 per cent in the same period.
The decline in live exports to the European Union is due to high calf prices here relative to those in other member states arising largely from strong demand from dairy farmers with milk quota problems.
The fall in live exports to third countries reflects the difficulties being experienced by Irish exporters on the Egyptian market following the various cuts in export refunds since last autumn and growing competition from Australian cattle. I brought this development to the attention of Commissioner Fischler in the context of the meeting of the Agriculture Council earlier this week. In my discussion with the Commissioner, I made it clear that the Commission policy on export refunds risked the loss of traditional and significant markets, such as Egypt.
I pressed the Commissioner for a very early increase in refunds, either generally or on a selective basis, to eliminate that risk. The Commission is considering my request and at the beef management committee meeting tomorrow my officials will press this issue strongly on my instructions. I remain fully supportive of the role of the live export trade in providing fair competition in the cattle sector. Over the past year I have devoted considerable effort to updating animal transport rules in order to provide a sound basis for the maintenance of the live trade.
Is the Minister fully aware of the difficulties faced by 14,000 winter finishers, 5,000 of whom are specialists? Is he aware of the situation of 40,000 beef farmers, who have an average income of less than £4,000 a year, and how does he propose to assist them?
The Fianna Fáil spokesperson on agriculture is, at this minute, meeting Commissioner Fischler and making a strong case for beef farmers. How many members of the Council of Ministers has the Minister met since the last meeting to explain our special case? What response did he receive when he referred to our total reliance on beef exports?
I was in Paris on Monday and I met and had detailed discussions with the French Minister there. I also met the German, Austrian, Greek and Portuguese Ministers. We had a long conversation exclusively about beef and we discussed the need to support consumption in terms of a promotion fund and the need to get prices up through an increase in refunds. I had detailed discussions with the highest ranking official in DG6 on this issue on Monday and I also spoke to Commissioner Fischler.
The situation is difficult. Prices are rising or have not dropped in the rest of Europe and there is no justification for a price drop in Ireland. They advised me that, after next month, the medium-term trend to meet the GATT requirement for the remainder of the GATT year, that is to 1 July, is downwards on refunds with longer validity periods. These are all very difficult developments and we must realise that the value of the beef premium is of the order of 28p to 30p a pound weight. Before CAP reform started, the price was 99p a pound and the premium was 4.5p. Now, the price of beef is approximately the same and the premium is worth almost 30p. The Commission feels raw material prices were to drop.
I am trying to secure a short-term measure regarding an increase in live refunds. In relation to beef, the Commission is unlikely to increase the level of prefixation which has been so heavy in recent weeks. However, we are making a sustained case, in conjunction with the British, to secure an increase in live refunds in Ireland, particularly to restore competitiveness in the Egyptian market. France is seeking a similar measure in relation to cow beef.
There is little solace for beef farmers in the Minister's reply. Will the Minister accept that the fall in cattle prices coincided with the unbelievable decrease in the level of export refunds? Will he accept that in allowing competition to decline he is playing into the hands of the factories? What does the Minister plan to do to restore competition between the live and carcase trades? I do not want a history of the situation but to find out the Minister's plans for the future. How and when does the Minister propose to restore viability to many farmers who, the Minister must agree at this stage, are threatened with ruin?
In terms of getting an increased level of competition, I am trying to secure an increase specifically in live refunds while the slaughter premium is in place to ensure a level playing pitch. The meat factories might pay more if there was increased market activity by the live shippers.
We are keeping the position under very close review. The difficulties of this winter will be a singularly important lesson for everybody that the price of calves and store cattle must move in line with real market expectations in future.
The Minister has changed his tune since last November when he suggested that cattle prices would not fall when export refunds were reduced. Although we had doubts at that time, this led people to believe that prices would not fall. Is the Minister aware that cattle are selling at £1 a pound and that £1.05 is required at least to break even? Will the Minister accept that his action in agreeing to the decrease in export refunds has damaged or perhaps lost the Egyptian market? It is implicit in the Minister's reply to an earlier question that he accepts it is difficult to regain a market once it is lost.
The Minister should stop preaching the fallacy of live horse and get grass. He should not send a heavily damaged industry down another cul de sac. Does the Minister agree the position in relation to the beef industry, particularly winter finishers, is now regarded as an emergency? The Minister has failed and he is telling me he will fail tomorrow to secure an increase in export refunds. Is there any way the Government can assist the many beef farmers threatened with bankruptcy? The matter is in the Minister's hands. The farmers depend on him. He is their only chance of survival.
The point of the Common Agricultural Policy is that national aids are not allowed. I do not have an indication yet as to what the position will be tomorrow. The Secretary in my Department was in Brussels on Tuesday and he held further discussions with the senior officials to whom I spoke on Monday. We are making a sustained effort. I did not say that prices would not fall; I said they should not fall. Meat factories increased their profit margins and did not pay a price which was justified. They effectively swallowed up the value of the slaughter premium themselves and I was most critical of their action. This is why I am trying to get the live trade more in play.
I have had detailed discussions with the live trade and, while there is a difficulty with Egypt, contracts are being signed in Libya. Given there is no intervention — and hopefully there will be no return to it — and a surplus of EU production over consumption of 400,000 tonnes per annum in Europe, the live trade is the best way to pick up matters.
Nobody should be in any doubt about the overall problem. This is the first year of the implementation of the GATT quota. It had implications which some of the best people in the market did not foresee. If the Deputy is trying to blame me, I would point out that we resisted the changes at all stages. However, this issue is within the competence of the Commission; it is not a matter for the Council of Ministers because these aspects were signed away some time ago. We consistently staked out a position, due to the fact that we are 70 per cent dependent on third countries, and we will continue to do so. I am fully aware of the difficulties of individual producers to which the Deputy referred.
Will the Minister give a guarantee today that prices will not fall below £1 a pound?
No, I cannot give such a guarantee.
Given that the Minister appears pessimistic with regard to refunds — although the situation he outlined is not the true position — and the fact that we have lost, or are in danger of losing, the Egyptian market if something is not done about refunds, what efforts has he made to find alternative markets for the cattle destined for Egypt? What progress has he made with regard to Turkey, which I raised on a number of occasions?
In his reply earlier, the Minister stated that Irish prices have dropped while prices in mainland Europe have increased or remained static. What action has he taken to find out the cause of this and to ensure it does not happen again? When the Minister met representatives of the factories earlier this week with regard to hormones, did he raise the pricing structure and the cartel which is now operating?
I have pursued the Turkey issue. It is of significance because it was increased to zone two rate of refunds. I sent the ambassador in Rome to Ankara——
Again?
——and progress was made. They have three definitions of cattle, those for breeding, fattening and slaughter, and quarantine requirements were sought for cattle for slaughter. This was not possible, given that cattle shippers buy them in marts and are not in a position to guarantee quarantine. This condition has been dropped and we are pursuing other aspects of the matter with the trade to try to open up that market. Obviously there are close ethnic, trade and political links between Turkey and Germany, and I am not overstating the market opportunities there, but my Department and the veterinary authority will do everything possible to assist.
In relation to the differential between prices in Europe and in Ireland, our prices are currently approximately 75 per cent of the intervention price and prices on the Continent are approximately 87 per cent of the intervention price. I had detailed discussions with the officials in DG6 about this matter on Monday. They said that was equivalent to a 16 per cent differential in refunds and felt that European traders could source their beef in Ireland because of its cheapness. There is usually a 10 per cent differential between European beef prices and Irish prices based on transport, fat trims and so on. At prevailing prices Irish beef is extremely competitive on all markets. The questions that have arisen can be validly addressed to the meat factories and I have availed of every opportunity in recent weeks to tell them that they could have paid a higher price than they did.
Can I take it from the Minister's reply that current Irish market prices are approximately 6 per cent to 7 per cent lower than what they should be, which is the equivalent of 6p to 7p per pound?
They are more than that. They are approximately 75 per cent or 76 per cent of the intervention price.
I am talking about prices net of transport.
I do not have figures net of transport — some people estimate transport at 5 per cent — but the Commission officials cannot explain the difference between Irish and European prices. It has its own suspicions in relation to the current margins of the meat factories.