Ceisteanna—Questions. Oral Answers. - Grant Payments.

Brian Cowen

Ceist:

4 Mr. Cowen asked the Minister for Agriculture, Food and Forestry the number of farmers in receipt of slaughter, suckler cow and special beef premia. [10707/96]

To date some 16,434 farmers have been paid grants under the 1995 slaughter premium scheme. With regard to the 1995 suckler cow premium scheme, more than 75,900 herdowners have received grants so far. Under the 1995 special beef premium scheme, payments have been made in respect of 180,254 applications representing in the order of 94,000 farmers.

Do the statistics show that the EU compensation package which relates to an increase in the suckler cow premium and the special beef premium is not going to those farmers who have been in receipt of slaughter premium and have clearly been the hardest hit by the deteriorating beef prices? What will the Minister do about this? What is the point in having a compensation scheme which does not have as its basic criterion the idea that you compensate those who are hardest hit?

No decisions have been made on the detail of the compensation scheme. In Brussels this week there was a great deal of discussion on the margins with the Commission, with the French and Germans, as to what would be the most appropriate way to proceed. I am very sympathetic to the position of the winter fatteners and targeting money there. If we depart from operating the existing premium structure for ten month and 22 month special beef and suckler cow, and have a national envelope of money for which there would be national flexibility to administer to those the Deputy or others might consider the most deserving there is a serious risk that at thetour d'table the Dutch will say that as they have 7 per cent of the animals of Europe they are entitled to 7 per cent of the compensation fund but they only receive 1 per cent of the premium payments, the same with Italy. The premium system greatly favours Ireland, Britain and France in the extensive forms of production and, therefore, I would be very reluctant to agree to any national envelope that would be a departure from the premia structure because Ireland would get far less money.

Once we have it established that there is not a national envelope I will be looking for additional moneys through the DSP. We must bear in mind that that is not paid Community wide and would represent a significant special element for Ireland.

A great deal of the discussion about what affects Irish agriculture seems to be taking place on the margins of meetings and is not getting the sort of attention one would expect in thetour d'table, to use the jargon. I have not asked the Minister to dismantle the premium system nor have I asked him not to ensure payments under the premium system. I have asked the Minister why those in receipt of a slaughter premium have been totally ignored and neglected in the compensation package. Why does the Commission when drawing up its proposal not regard the compensation as applying to the people hardest hit, as everybody in Irish agriculture knows? What influence has the Minister either at administrative or political level in the decisions that are being taken at Commission level to compensate farmers? The evidence thus far is none. If it is a case that the Minister is saying he will see what he can do for those in receipt of slaughter premium, I suggest that that should have been a precondition of any compensation package. Why can Irish farmers not expect a special compensation package? The idea that the deseasonalisation premium is particular to us is of no relevance to the argument. We, as the biggest exporters of beef in the northern hemisphere, have been denied the markets.

We seem to be having a speech rather than proceeding by one direct question.

Why is it that the Minister cannot put a case particular to this country, given the problems this country is experiencing due to our unique position in terms of a small consumer market for our product and that all our markets have been closed to us? The failed negotiating strategy of a Union-wide solution is what brought about the debacle in terms of results for farmers.

I reject the Deputy's last assertion. If he looks at the sheep deal he will see that Ireland has been able to secure——

Have sheep farmers been paid?

They will be paid.

Have they been paid yet?

Please, Deputy Cowen.

The Minister is raising a red herring by referring to the sheep deal.

The Deputy has asked questions and he should be good enough to restrain himself and listen to the replies.

Let us hear them.

This is not an interrogation.

Did I mention sheep?

I referred to the sheep deal in passing — my record in this regard speaks for itself.

The college of Commissioners has approved an overall package of 650 million ECU in producer compensation. No details have yet been agreed and, arising out of this week's discussion, the Commissioner will go back to the college of Commissioners with a detailed proposal. I expect that the Commissioner will state his proposals on how to spend this money at the special Council meeting on 3-4 June and that the Council will try to agree this proposal at the 24 June meeting. Failing that, I hope a special meeting will be held during the first week of July under the Irish Presidency.

We are anxious to support the position in regard to winter finishers. While it is true to say that the recorded losses have been greatest for winter finishers, in six months time Deputy Cowen may be telling me that the store producer, suckler cow breeder or some other category has been worse affected. This is an ongoing issue and a further compensation package may be required.

Correct.

I do not want to move in one direction only to end up hearing someone say, "I got £X for beef in the spring and someone else is now getting £Y". I have to look at the overall issue and my fundamental principle is to maximise the aid for Ireland.

No matter where it goes.

Will the Minister agree that the efforts over many years to ensure continuity in the supply of cattle to slaughter plants during the spring have been badly affected by the substantial reduction in the price of winter finishers?

The deseasonalisation premium is under threat because we no longer qualify as the number of cattle slaughtered on 1 September for the subsequent three month period has been reduced to 35 per cent — the qualifying level was 40 per cent. We are seeking to have the threshold lowered and to include Northern Ireland. This is an ongoing issue in terms of the price package. We must be realistic about the slaughter premium. Earlier this week we saw how Britain tried to stop a blocking minority. We have three votes — we require 58 — and are, therefore, not in a position to insist on an Irish compensation solution to the BSE problem. Rather we must favour grass-based systems and extensification and see how we can get a little extra through a doubling of the DSP. That is our negotiating stance and at all times I will try to get the maximum amount and build a coalition of support with the other countries in northern Europe which do not have an intensive bull beef system and those countries which are net contributors to the Union. I am pleased with the progress made with Commission officials this week but much more work needs to be done.

The Minister has enunciated his negotiating policy at meetings with the European Commission and Council of Ministers on the biggest crisis facing farmers for many years, that is he will agree a Union-wide package and get a little extra for Ireland. Does the Minister know any other member state which has to export 85 per cent of its product in order to stay in business? Is the beef sector as important to gross national product and employment in manufacturing and service industries in any other member state as it is in Ireland? Why has the Minister consistently said that he finds it impossible to get it across to our Union colleagues that our problem is much greater in net value and employment terms than theirs? Is he seriously suggesting that he has thrown in the towel in terms of convincing the other 14 Agriculture Ministers of the inescapable fact that our beef industry will not be able to survive without a change in the present Commission response? Will the Minister agree that the intervention system for 90,000 tonnes, of which we got 10,000 tonnes——

I have given the Deputy some latitude in the matter——

I accept that.

——but I must dissuade him from debating it now. This is Question Time and the Deputy has asked sufficient questions for the time being. I am calling the Minister to respond.

This is a statistical question but I am happy to deal with the issue of compensation.

I put down the question in order to open up the debate.

If he wishes, the Deputy can have a lengthy chat with Ray Mac-Sharry, Deputy Joe Walsh or Senator Michael O'Kennedy.

I have spoken to all of them.

Please, Deputy, this is not a Star Chamber.

They could tell the Minister how to do his business.

The purpose of a common agricultural policy is to ensure that there is no national variation in aid. One of my principled positions will be to oppose member states which wish to deviate from a common European solution to this issue. No one is in any doubt that we are 16 times more dependent on the beef industry than the UK or that beef is synonymous with the Irish economy. Contrary to what the Deputy may be suggesting, our relations with Commissioner Fischler and all member states are excellent and we are in a pivotal position. As is customary, I will visit all member states before 1 July or have a bilateral meeting with them in Brussels at a suitable venue or they will visit Ireland. The Dutch, German and French Ministers will also visit Ireland. I, my senior officials and all our diplomats in Europe are engaged in trying to secure a favourable outcome for Ireland. Good progress has been made and the detail is up for grabs, so to speak. I have indicated to the House how Ireland can maximise its claim. In all the circumstances, I will ensure that we not only draw down the maximum amount of money but also get extra additional measures. I must point out that this will not be the way of the future in relation to the CAP.

Will the Minister agree that we are in an extraordinary position and that the usual responses in the past to changes in the market will not adequately deal with this impending crisis? Does the Minister accept that is the case? It is clear to everybody in the industry. Will he agree that the case for a special intervention package for Ireland is unanswerable? There is no market for cattle, particularly as autumn is approaching. Will the Minister accept we do not have the ability to dispose of these matters by way of normal market mechanisms or the type of increase in premia payments he mentioned?

I am delighted relations are excellent, but unfortunately the benefits of that position are not obvious in terms of dealing with the magnitude of the problem which presents itself to the Minister and the industry. Will the Minister accept that, given the extraordinary circumstances we face, an extraordinary response is required? The current type of Community-wide ideas which are circulating will fall far short of what is required to meet the magnitude of the problems facing the Minister.

On a constructive note I agree that the Deputy's prognosis regarding the enormous difficulties regarding the marketability of Irish beef is correct. Given that Ireland exports 85 per cent of its beef, we are severely caught. The Deputy also mentioned intervention as being the most likely market outlet and this is a correct analysis of the situation. More cattle have been slaughtered in the past six weeks than at any time in the past ten years. Nearly 200,000 animals have been slaughtered during the past seven weeks.

I spoke to meat factories representatives and others this morning and the real problem is the lack of markets. Demand is weak even in markets which have reopened, such as Egypt. Consumption dropped rapidly, recovered slowly and is now plateauing at an unacceptable level. The European promotion fund is due to come into play and hopefully normality will return. For every 1 per cent drop in consumption, a home must be found for 75,000 tonnes of beef which was previously consumed in Europe. GATT states that only one million tonnes may be exported and this quota had almost been reached anyway.

This presents the biggest challenge ever to the management of the European beef regime. If the level drops by up to 17 per cent, even allowing for the fact that 300,000 tonnes of British beef is removed from the food chain as a result of the 13 months of age policy and burned, there is still a surplus of one million tonnes of beef which cannot be exported to third countries under GATT rules. However, even there, consumption is weak. A new policy to curb production must be found or a dramatic increase in consumption is required and this may mean a radical approach to price.

I am to visit Russia next week because it is the only country where there is a real possibility, if prices come down — they have dropped from $2,400 a tonne to $1,700 — that they will buy the beef. They could take 100,000 tonnes, but if the price must drop it has serious long-term implications in terms of the appropriate level of compensation.

In the short-term, intervention will take up the slack. I will vigorously push for an appropriate type of intervention which will provide a market. However, if one million tonnes of European beef are in intervention by Easter, this stock will overhang the market. This will make a market oriented solution more difficult because Russia will say it wants to buy from intervention rather than directly from meat factories. Prior to this crisis, we had succeeded in moving away from that. I am more than willing to listen to suggestions from the Deputy in relation to intervention, specifications, etc. He is right that the key problem is the marketability of beef.

We have dwelt for almost 45 minutes on four priority questions.

It is a most important matter.

This is not worthwhile progress at Question Time. A final supplementary question from Deputy Ellis.

Is the Minister happy with the suggestion of a £20 per unit premium payment when the actual loss per unit is £125? This is the market situation. What does the Minister propose to do to ensure the gap is bridged?

The compensation package should be seen in the context that the financial year for Brussels ends in October. There is an immediate need to have moneys paid, and a budgetary provision next year is also required. The sum of 650 million ECUs is a good start, but it will not fully compensate people for their losses. The figure the Deputy mentioned is not adequate compensation and more is being sought. The breakdown of that in terms of how much for a suckler cow, how much for ten or 22 months old animals, what could be secured for a slaughter premium or what new schemes might be put in place is a matter for debate.

In addition to getting the Commission to propose it, one really needs France, Germany and Spain on one's side in that regard. This is where matters stand at present. Before 20 March, Europe was 104 per cent self-sufficient in beef, but the scenario now suggests a level of 125 per cent if consumption does not increase. This is reflected in the current price. For example, the price of cow beef in Italy has dropped by 40 per cent since this time last year. As matters stand there will be no intervention in areas where there is no premium support, such as heavy heifers and cull cows. Mince has taken a large cut in consumption and I am most concerned for those producers. However, nothing is coming forward from the Commission because it has never supported female meat.

I am happy to receive suggestions and consider how matters can be tailored to deal with the fundamental nature of the income crisis in this area. However, this package, which I hope will be wrapped up at the end of June or early July, is a good start. It is an initial package and it must, as the Deputy said, be followed up.