I am pleased to open the debate on the current problems in the beef industry because it gives me an opportunity to inform the House about developments in the beef sector since 20 March when the current BSE scare commenced arising from statements in the House of Commons on that date. I hope this debate will clearly demonstrate that the Government has taken decisive and clear-cut actions during that period at national and European level to compensate producers for income losses, to address the fall in cattle prices and to deal with the question of the substantial fall in beef consumption. The resolution of the BSE crisis is at the top of my agenda and that of my colleagues in Europe. Special emergency meetings of the Council of Ministers and the Standing Veterinary Committee have taken place and the reverberations of this crisis have been felt across the world.
Clearly and, perhaps, inevitably third countries responded to the House of Commons announcement by imposing a ban on all beef from Europe while others, intending to impose a ban on beef from the UK, failed initially to distinguish between Ireland and the UK and imposed a ban on Irish beef as well. The announcement also had a dramatic effect on consumption of beef in Europe. In member states beef consumption fell by between 20 per cent and 50 per cent. The difficult situation for Irish exporters was exacerbated by the development of strongly chauvinistic attitudes to beef in many continental member states with various types of labelling systems being introduced in many member states to identify home produced beef from imported product. This development resulted in a natural desire by consumers in these exceptional circumstances for guarantees as to the origin of beef and, in particular, assurances that it did not originate in the UK, as well as natural concern to protect the national beef market in a difficult situation. The overall effect of these developments was to heavily hit beef imports into Europe among member states.
On the position of BSE in Ireland, to date there has been a total of 127 confirmed cases, the first case was reported in 1989. Based on an annual statistic of between 14 and 20 animals out of a population of seven million animals, we have an annual incidence of 0.0002 per cent. Twelve of those 127 animals were imported. Investigations into many of these cases show that the animals consumed imported feed or that they were old animals. All cases have occurred in animals over four years and there has not been any case of a steer animal with BSE in Ireland.
I am satisfied that the control measures now in place in Ireland for BSE are second to none and provide consumers and our overseas customers with all possible guarantees as to the safety of Irish beef. The disease is notifiable in Ireland and a widespread campaign has been undertaken to ensure that veterinary surgeons are aware of the symptoms of the disease. Of particular significance is our surveillance system, which includes ante-mortem and post-mortem examinations in factories and on farms whereby all animals are thoroughly examined prior to slaughter. Furthermore, when a case of BSE is confirmed, the entire herd from which the inffected animal originated is depopulated at full market value and the carcases rendered into meat and bone meal so that there is no possibility that the human or animal food chain can be affected. The carcase of the infected animal is also destroyed. Tracing is also carried out of the progeny of the infected animal and these are also slaughtered.
I am confident that these comprehensive measures now in place can enable consumers, at home and abroad, to have full confidence in the quality of Irish beef. These controls go way beyond what is recommended by the EU, international and other scientific organisations.
I was glad to note that the expert advisory group established by the Government following the rise in consumer concern due to the announcement of the British Health Secretary in the House of Commons last March came to the same conclusion. The group, chaired by the Director of Consumer Affairs, was composed of experts from the medical and veterinary professions as well as representatives from various Government Departments, the grocery trade and consumer interests. The guidelines for consumers adopted by the group left no one in doubt as to the safety of Irish beef and beef products. The OAE guidelines for BSE have been amended within the past week and our control system more than complies with these guidelines.
The reaction at EU level to the developments in the UK was the adoption of a Commission decision on 27 March 1996 which prohibited the export of all live bovine animals, semen, embryos and products containing bovine material from the UK to any other destination, with the exception of those containing bovine material which originated from animals slaughtered outside the UK. Since the adoption of that decision, the House will be aware that a large-scale operation has been in place along the Border with the co-operation of the Garda and Customs to ensure that the UK export prohibition is effective.
I pay tribute to the Garda Síochána and Customs authorities for the effective way in which they have carried out their additional duties. The operation is implemented primarily by the Garda Síochána, backed up by the Customs Service and the Department. It consists of a continuous 24-hour police presence at each Border crossing, supported by mobile patrols, land and foot patrols and helicopter patrols of all Border areas. The BSE operation is effective and it has been reviewed at first hand by the veterinary inspectorates of a number of countries which import Irish beef. The current weekly cost is approximately £350,000, and it is a measure of the continuing commitment of the Government to safeguarding the Irish beef industry. The operation is backed up by controls on meat plants which permit only the slaughter of animals with authentic identification and ear tag numbers. I have no doubt that, if these control measures were not in place, serious questions would exist as to the continued access for Irish beef to many of our export markets. In this context, I hope shortly to announce further controls in relation to the origin of cattle being presented at factories.
Deputies will also be aware that the authorities in the United Kingdom have been pressing strongly for a relaxation of the EU export ban which was introduced on 27 March. The case has been made, in particular, for a relaxation of the ban in the case of gelatine, tallow, semen and other beef derivatives which have undergone certain manufacturing processes. Various EU scientific committees have supported the relaxation of the ban. Ireland has supported the Commission proposal to relax the ban as far as these products are concerned during the discussions at the Standing Veterinary Committee in Brussels. I will also do so next week at the Council meeting in Luxembourg. However, there was a blocking minority at the Standing Veterinary Committee and the matter has now been referred to the Council for decision.
The question of the ban on cattle and beef from the United Kingdom is much more difficult. It is clear that many member states would have fundamental objections to the early lifting of the ban. I hope that during the Irish Presidency we can set out a framework for a progressive and incremental rolling back of the ban. However, nobody should be under any illusion about the lengthy timeframe that will be required for a complete lifting of the ban.
My objectives throughout this crisis have been to ensure that all markets remained open to Irish beef, that consumers in Ireland and in our main markets were reassured about the quality and safety of Irish beef, that adequate support measures were introduced to remove the beef surplus from the market and, finally, to secure compensation from the European Union for income losses incurred by producers arising from the BSE crisis.
The full services of my Department, the diplomatic service and An Bord Bia have been mobilised to reassure the authorities in our export markets of the safety and quality of Irish beef and beef products. High level delegations have visited Egypt and Iran and a senior veterinary official visited a number of Gulf states to discuss at first-hand the specific issues raised by these countries. The approach adopted was to underline the differences between the incidence of BSE in Ireland and the United Kingdom and to highlight the comprehensive controls which have been put in place here. Strong emphasis was also placed on the image of Ireland as a source of clean, green superior quality food based on our extensive grassland production of meat. This concerted approach served to underline Ireland's high standards of public and animal health and to provide the maximum possible guarantees to customers.
While the issues arising from the recent BSE developments are mainly technical, political interventions have also been made where necessary. The personal intervention of the Taoiseach was critical to reopening the Lebanese market.
I have just returned from an extremely successful visit to Russia where I have been promoting the quality and safety of Irish beef and beef products. It has been my strategy over recent weeks to identify the Russian market as by far the most important in two respects. There is potential over the next 12 months to sell 110,000 tonnes of beef — three times the next nearest market which would probably be the UK, followed by other markets such as Egypt, Italy, other European countries and Saudi Arabia. Russia could take a quarter of Irish beef produced over the next 12 months, and that would be pivotal to providing a floor price for beef. Most important, they are taking the cheaper forequarter flank cuts for which there is not a ready market other than intervention. That very much complements what is happening on other third country markets. Particularly for the period September to April next, I will look to the Russian market as the key pivotal market.
I propose to visit Libya as soon as arrangements have been put in place, if the arrangements with the Gadaffi administration were suitable, I would leave this evening for Tripoli. There has been some ill-informed comment about the Libyan situation. It was the Libyan authorities who, two days beforehand, decided to cancel the invitation to me to meet two Ministers on 15 May and for which I had been making arrangements since the week before Easter. It is clear they have not been in a position to lift the ban. The tender for live animals that was anticipated to be for 150,000 animals was reduced to 60,000 animals, and in the past few days this has been cancelled. There has been a level of dissatisfaction with the Australians filling this. I am monitoring it very carefully because I see a window of opportunity. I am redoubling my efforts to get to Libya to try to ensure that the governmental concerns, which are entirely about the safety of beef, can be assuaged notwithstanding the drop in consumption, and there is a greater likelihood of progress.
Iran is the only other market in which there is a major blockage and I have been in continuous contact with the Iranian authorities. They are fully aware of my willingness to travel to Tehran for direct discussions on any suitable occasion. After my recent discussions with Minister Foorozesh, the Minister for the Construction Crusade, I was advised that an exchange of letters answering questions would resolve the issue. That has not proved possible. There was dialogue between our respective veterinary authorities in Paris at the OAE meeting last week and a veterinary delegation is to visit Ireland. If I go to Tehran now I will be told to await the outcome of the technical visit. It is appropriate, therefore, to time that visit sensibly.
Problems are at their most difficult within Europe in terms of the very sharp cutting back on beef consumption. While there was an acute drop in consumption initially, and then some recovery, this has plateaued at an unacceptably low level. My Department, An Bord Bia and I continue to work assiduously to restore consumer confidence in Irish beef. Briefing documents outlining Irish beef and animal health controls and consumer information leaflets have been distributed widely. In addition, consumer advertising and promotion campaigns have taken place in targeted countries. The Minister of State, Deputy Deenihan, and I campaigned in Sweden, Italy, Spain and the UK. The timing of such campaigns is crucial and further campaigns will be undertaken when market circumstances are favourable.
A budget is being prepared in the context of Europe and nationally. It is clear, however, that in spite of these efforts the scale of the decline in consumption, combined with the measures taken by several third countries in banning or cutting down on imports of beef from the European Union, has created major problems for beef producers. I recognised at an early stage that this crisis was likely to have long-term major ramifications for the beef sector and, with my ministerial colleagues in other member states. I persuaded the Commission to introduce emergency intervention measures early in April to cope with the crisis.
The initial emergency arrangements providing for the weight limit on carcases which may be sold into intervention to be increased to 50,000 tonnes were unable to cope with the scale of the problems on the market. When this became evident I, with my German and French colleagues, impressed on Commissioner Fischler the need to extend the scope of these arrangements. The Commission responded to my request by waiving the carcase weight limit and relaxing the grading limits. A court case governs the issue of carcase weight limits — a case we lost in the European Court. Selection will take place tomorrow on the 25,000 tonne tender by the Beef Management Committee. At tomorrow's meeting and next week I will be pressing for a further intervention intake for the month of June of 60,000 tonnes. I will be seeking adequate flexibility in relation to forequarter beef and the carcase weight limits. I understand the Commission will again propose a further reduction in the carcase weight limits. This will be wholly unacceptable to Ireland. This is short-sighted of the Commission because it will mean intervention will not be successful as a way of dealing with the short-term market crisis. However, the increase in refunds of 12 per cent has proved beneficial to Ireland. Not only have we had the tender in May of 50,000 tonnes increasing to a ceiling of 65,000 tonnes, we have had a level of prefixations which shows there is a level of confidence among the exporters of Irish beef that they can find some markets.
Steer slaughterings during the past four weeks have been significantly higher than in the corresponding four week period in 1995 and steer slaughterings this year have now exceeded 1995 levels. I acknowledge that live exports are lower this year than in 1995 and this has to be included in any assessment of the extent of the backlog which still remains on our farms. Slaughterings of cows and heifers have been considerably lower this year and this also has to be included in the equation. I am satisfied, however, that the emergency measures have worked reasonably well and prevented a complete collapse in the market not only in Ireland but across Europe.
Intervention cannot provide a complete solution to the market problems arising from the BSE crisis. There is a GATT ceiling on beef exports outside the Union which is reducing by 60,000 tonnes per annum, and clearly huge volumes of intervention beef overhang the market and will probably have to be included in the quota to be sold outside the Union. Intervention must be seen as nothing other than a short-term stop gap measure. This is well recognised by all interests in the industry. Clearly, it is essential that beef is sold on whatever commercial markets are available. The Irish beef industry has responded extremely positively to the increase in export refunds by taking out licences for some 26,000 tonnes of beef and 5,000 head of live cattle in the days immediately following the increase in refunds. I am paying close attention to the question of the appropriate level of refunds and will monitor it to see if a further increase is necessary.
I have always been conscious given the nature and extent of the crisis that intervention or exports to third countries would be insufficient to support cattle prices at reasonable levels. Since the beginning of this crisis, cattle prices have fallen by approximately 7 per cent on top of a 7 per cent fall earlier in the year because of the cuts in export refunds last autumn. I fully acknowledge that this has created considerable financial difficulties for many producers, especially those who had bought store cattle at relatively high prices in the autumn of 1995. For this reason, I insisted both at the emergency BSE Council during the first week of April and again at the usual meeting of the Agriculture Council at the end of April that provision should be made for compensation to be paid to producers who suffered income losses because of the crisis.
Commissioner Fischler presented his suggestions for compensation in May, suggesting the compensation package should be 650 million ECUs or £540 million. I understand the Commission endorsed specific proposals yesterday which take account of the representations I made not to have a national envelope but to allow each national Government flexibility to target aid to where it is appropriate. Farm organisations and others have clearly identified the winter finishers as a key sector. In the context of the DSP, I will seek to apply of the order of £8 million to winter finishers because those who would have slaughtered at the higher rate of DSP have been worst affected by the 7 per cent drop in prices.
I have to have regard to the technical assessment of those worst affected and it is my intention to avail of the opportunity to administer targeted aid to winter finishers. That is not to say I regard the package of £540 million as acceptable. I will signal at the meetings next Monday and Tuesday that the compensation package is inadequate. While I acknowledge it is a significant starting point payable immediately based on 1995 premium applications and that the broad thrust of the package is correct, I will have to state categorically that my initial reaction, pending full details of what was actually agreed last night, is that the compensation package is not adequate and needs to be increased. I will not only put forward this view to the Commission and the Council but I will have bilateral meetings with my French and German colleagues on Monday morning to ensure that the overall package is adequate and the support is directed towards those who have suffered most. The combination of flexibility and additional resources will be the key points of my response.
The compensation package is designed to compensate for losses suffered by producers to date and for the losses which producers are likely to suffer for the remainder of the year and it has to be balanced between these two categories. What is important is that each category of producer receives an equitable share of the compensation provided from Europe. That the compensation package is designed to cover future losses, as well as those already incurred, reflects the Commission's view that the effects of this crisis will remain with us for some foreseeable time and certainly into next year. Unfortunately, I share that view.
All the indications are that it will take a long time for the beef market to recover from the crisis. Consumer confidence in beef has taken such a battering that it will take some considerable time for confidence to be restored, if it is possible to restore it to the levels prior to 20 March 1996. In view of this, I have called on the Commission to implement a fully funded EU beef promotion campaign and to introduce national flexibilities and de-restrictions of some of the rules governing EU spend on national promotional campaigns. In spite of our best efforts and those of member states, beef consumption in Europe is unlikely to return to previous levels. The real question is to what extent beef consumption will recover, and if it will recover sufficiently to restore the beef market to balance, taking account of the effect of measures adopted by the UK.
The UK decision to destroy meat from all cattle over 30 months and to remove a further 80,000 cattle from the food chain will reduce beef production in the United Kingdom by up to 300,000 tonnes per annum. In addition, the United Kingdom has decided to implement the calf slaughtering premium in order to dispose of 450,000 calves which would have been exported from the United Kingdom to continental Europe were it not for the introduction of the ban. The reduction in UK output will only accommodate a 4 per cent drop in beef consumption across the European Union. If we work on the statistic that beef consumption in Europe was 7.5 million tonnes annually before the BSE crisis and 1 per cent represents 75,000 tonnes it is clear that a drop of the order of 15 per cent plus in consumption would result in significant overproduction. Prior to this, Europe was 104 per cent self-sufficient in beef and that combined with the GATT limitations that we cannot export beef with extensive subsidies into Third World countries shows that more radical reform of the EU beef regime will be necessary.
I will give very serious consideration to the demand for reform by member states during the Irish Presidency. We will consider giving priority to extensive grass based systems of production and cutting other more intensive forms of production might be worthy of aid. This seems to be the clear way forward. On consumption, it is quite clear that price will be a pivotal factor and we must make it more competitive having regard to the price of white meat.
Deputies will recall that on 2 May I sought Dáil approval for a new service to provide emergency temporary financial assistance directly to the Irish rendering industry to prevent a shut down at that time. I stressed at all stages the temporary nature of the assistance. A breathing space was given to the various interests involved to enable them to get together to discuss and agree commercial arrangements. Three meetings took place and by the third meeting it struck me that my role was seen as undermining my position on subsidies with everyone agreeing on one thing, the taxpayer would be wheeled out to pay for another subsidy.
I am pleased that the scheme has worked well. Claims have been made and payments are being issued. I am pleased that the interests involved have now seen sense and that agreement has been reached between slaughterers and renderers. Clearly, failure to reach agreement would have created major problems for producers who, I believe, would not have easily forgiven the renderers for their refusal to negotiate sensibly on this issue. The matter has now been satisfactorily dealt with in a commercial fashion in terms of the disposal of offal. If export contracts pick up, as I think they will, financial terms will be alleviated.
There is a facile view that if the Government showed greater urgency everything would be all right. This is not the view in any other EU member state or in any of the countries outside the Union which I visited. This is a worldwide watershed in the beef market. There is no escaping the fact that beef has been a devalued product since 20 March. Nothing I can say or do can gainsay that. This is a situation from which we must extract the maximum possible. The measures we have put forward have dealt, first, with the short-term fact that in the spring there were 200,000 animals stuck in sheds and no market to which they could go. We have moved on extensively from that situation. We are intensifying our efforts to promote consumption and the reopening of markets. We have made good progress in that there are only two markets which remain unopened — Iran and Libya. We have started down the road to compensation. I acknowledge that what has been provided to date is unsatisfactory. It must be remembered that we are asking Brussels to fund the entirety of this compensation. We are significant net recipients and not contributors to EU funds.
I welcome this debate as an opportunity to discuss constructive proposals. My Department and I do not have a monopoly of wisdom on this issue. I will meet all the farm organisations on Friday to hear their views as to the approaches which would be appropriate in the next series of meetings. I hope, pending a BSE price compensation package being agreed, that during the Irish Presidency we will broker a solution which will alleviate the British problem, reorganise the EU beef regime and provide a sustained focus by the entirety of European governments from prime minister level to the General Affairs Committee. Such a focus is perhaps only possible under our Presidency.
Horizons is taking on a new marketing significance. This will involve the largest ever promotion of Irish food and will take place from 11-13 June. Some 10,000 trade people will come here, including the top 350 worldwide buyers. Representatives of the Mayor of Moscow's office and all the other key people will be here. This event has taken 14 months to plan and it could not be more timely.
The House will focus on what I and the Government can do. There is also an obligation on producers and processors to look at quality assurance programmes and identifying and labelling segments and niches of Irish beef in order to give guarantees about welfare, residue and food safety. This must be all encompassing. The problem simply cannot just be left on my desk. This crisis is facing the entire industry, including producers and processors, the whole economy and the Government. I believe that through a true spirit of partnership and teamwork we will minimise the difficulties.