Dáil Éireann díospóireacht -
Wednesday, 9 Apr 1997

Vol. 477 No. 3

Adjournment Debate. - Farmers' Incomes.

Mr. J. Walsh:

Approximately 150,000 farmers have been affected by the crash in cattle, beef and milk prices. In 1994 cattle prices averaged £1.07 per pound whereas today they average 82p or less per pound. In 1994 milk prices averaged £1.10 to £1.25 per gallon, depending on the constituent of the milk, but today the price of milk has decreased to £1.00 per gallon. Dairy farmers have lost 25 per cent of their incomes.

We are locked out of essential third country markets. According to a recent reply from the Minister, in 1993 we exported 372,000 head of cattle and in 1994 we exported 400,000 head. However, a Bord Bia publication Market Monitor, dated 5 April 1997 states there was a 76.3 per cent reduction in exports of live cattle in the first quarter of this year. Exports have decreased from 53,787 to 12,741. That is the extent to which the farming industry has ground to a halt. We exported 100,000 head of cattle to Egypt last year but we no longer have access to that market. The Libyan and Iranian markets are also closed to beef exports. There is no competition between our factories. In the UK and other European countries farmers are getting a reasonable price for beef, but our farmers are losing money.

Will the Minister embark on an action programme to secure the future of family farms? In an editorial in this week's Irish Farmers Journal Matt Dempsey stated:

The collapse in beef prices that has followed last week's revaluation and cut in export refunds is the clearest indication yet that we have lost our way in the day to day dealing with Brussels and its critical management of the beef market.

He went on to talk about the fact that at least three-quarters of our steers go to third countries which contributes to our unique vulnerability to export refund changes and that beef is very expensive to produce at this time of year. He also stated:

Ultimately the blame for this debacle has to end up on the desk of Ivan Yates. It will take more than recycled compensation announcements to quell farmers' anger and sense of betrayal at this time.

Not only have we lost out to third country markets, we have also lost out this year to continental markets because of inadequate ferry services. Last month the Minister announced a weight limitation of 400 kilos on upper decks which was reversed within two days. I fail to understand how those artificial impediments can be put in the way of exports.

Will the Minister deliver on his commitment to the IFA to pay compensation, to farmers? A press release from the IFA headquarters dated 20 March 1997 states:

Mr. O'Malley said IFA would be holding Minister Yates to the very specific commitment he gave to livestock farmers to deliver National Exchequer funding to match EU monies on Revaluation Compensation. "Farmers are disappointed that the Minister had not succeeded in securing the exchequer funding he promised at the IFA Beef Forum on February 4th before he made this week's announcement."

I call on the Minister to do something for the farming community and not allow Democratic Left and The Labour Party to rule the roost in Government. We do not have to listen to the Minister for Social Welfare, Deputy De Rossa, stating that farmers are rolling in it. That is not true. They are very upset and want the Minister to do something about their problem.

Minister for Agriculture, Food and Forestry (Mr. Yates):

I am pleased to have this opportunity of setting out the current position in the beef market and my continuing efforts to ensure that the incomes of beef producers and, in particular, winter finishers are underpinned. Since the beginning of the year the difficulties as a result of the BSE crisis have been exacerbated by the reduction in refunds made by the Commission.

I am extremely disappointed the Commission has again resorted to this approach in the management of the beef market. I do not believe cutting refunds is the best solution to the problem, which is one of excessive applications for export licences. This, in turn, stems from the GATT ceiling on subsidised beef exports which was introduced some years ago in the context of the negotiations of the Uruguay Round agreement. When this ceiling was introduced there was a reasonable prospect it would not create major problems for the European Union because of an improvement in the beef balance in the EU market. However, the announcement of a possible link between BSE and CJD on 20 March 1996 undermined consumer confidence in beef and precipitated a sharp drop in beef consumption across the European Union. While consumption has recovered somewhat, the unfortunate reality is that in spite of the best efforts of all Governments in Europe, beef consumption is still approximately 8 per cent lower than in 1995. This means the quantity of beef available in the European Union for export to third countries is now substantially in excess of the GATT ceiling and it explains why the volume of applications for export licences is so high. With 25 per cent of the GATT year to go, only 17 per cent of the licences remain. Nevertheless, I do not believe the Commission's approach to the problem, which involves cutting export refunds, is the best solution. I spoke today to Commissioner Fischler about this matter and suggested that a better approach would be to apply reduction co-efficients to applications, as applies to the beef tenders for intervention. I also sought the introduction of a fixed price intervention system, particularly for the forthcoming tenders. I do not want to underestimate the difficulty in securing these changes and I will speak to the Commissioner again in the next few days.

Of course, the long-term solution to the problem is to rebalance beef markets in the European Union by reducing beef production, increasing consumption or a combination of both. As far as production is concerned the European Union took measures last October to reduce beef production in the short to medium term. Member states are now obliged to introduce either an early marketing premium for veal calves or to implement the calf slaughtering premium. The intention is that the combination of these measures will reduce by 1 million the number of calves available for beef production, thereby reducing beef production by approximately 350,000 tonnes per annum.

My immediate concern is to protect the income of beef producers through adequate marketing supports and direct payments. At my request the higher 360 kilogrammes weight limit for intervention was retained. In addition, I succeeded in having the 04 category grade retained. These flexible arrangements allow for some 40 per cent of the Irish steer kill to be eligible for intervention. The achievements I made in improving the DSP eligibility which we would otherwise have lost have been worth £20 million and we secured £100 million through BSE compensation. Payments of the combined BSE and revaluation expenditure will be made in May this year. Notwithstanding the further £11 million which will be payable to the beef sector further to the latest revaluation of 27 March, I am pursuing a number of issues on an ongoing basis.

I wish to take up a number of points made by the Deputy. He spoke about the ferries in relation to European transport. Irish ferries and Pandoro are carrying bovine and sheep animals, all except calves under a few weeks old. I intend to be in Cairo on 6 and 7 May at a major trade fair, at which Ireland will be represented for the first time. We have secured large volumes of beef for export now we have agreed a new certification and the focus is on the live trade.

The combined effects of BSE are complex. When Deputy O'Kennedy was Minister nine out of every ten animals went into intervention and we were shut out from access to some of these markets for three years. I note the editorial in the Irish Farmers' Journal to which the Deputy referred. Any analysis that lands everything on my desk is too facile and it is not a full analysis of the position.

I condemn in the strongest possible manner the exploitation by the meat factories since Easter in dropping the price of beef by 5p per lb when there were prefixations in the system prior to the revaluation to maintain prices for a few weeks and when, with an even stronger revaluation of sterling against the punt, they are paying a higher price in the UK when Irish steers are eligible for the UK market. That is inexplicable. If ever there was an argument that live exports are needed for a competitive balance to avoid abuse of a dominant position by the meat factories, the spring of 1997 has proved that argument. I am determined, notwithstanding the veterinary difficulties, to do everything possible to regain our position in those markets. I am pleased to inform the House that today the Standing Veterinary Committee approved our BSE eradication plan, which will open the door to refunds, rebates and our market prospects.

I thank the Chair for his patience. Unfortunately there are not instantaneous solutions to this problem, but on the question of refunds, intervention, national compensation and market activity, the full resources of the Government will be deployed over the coming days and there is an action plan on my behalf to ensure that all that can be done will be done to restore farmers, particularly beef farmers, to viability.

The Dáil adjourned at 11.15 p.m. until 10.30 on Thursday, 10 April 1997.