I thank Deputies Brendan Smith, Boylan and Brady for raising these matters. Regarding the issue raised by Deputy Smith, our disappointment with the current level of cattle prices paid by meat factories has been made clear on a number of occasions. The disappointment is two-fold. First, we regret that cattle producers have had to accept extremely low prices and the inevitable consequent economic hardship. Second, we are disappointed beef processors have not passed on the full benefits of the improved market support arrangements negotiated in the autumn.
It is appreciated that the loss of the Russian market has created considerable difficulties for the Irish beef industry. Irish beef exports to Russia amounted to 70,000 tonnes in I997 and were expected to reach similar levels in 1998. There was always awareness that the loss of such an important market was likely to have an adverse impact on cattle prices and it was for this reason that, early in the Russian crisis, strong representations were made to Commissioner Fischler for the introduction of a more effective intervention system and increased export refunds. He responded positively to those representations by increasing the maximum carcase weight for intervention to 360 kg and by extending intervention purchasing to grade 04 steers. Furthermore, export refunds were increased on two separate occasions by a total of 9p per lb. for beef from male cattle.
The response of the beef processors to the concessions secured has been disappointing. The quantities offered into intervention were significantly lower than expected and little, if any, of the increase in export refunds has been passed on to producers. While intervention should be used sparingly, more effective use could and should have been made of the concessions negotiated. It is difficult to understand why a proportion of the increase in export refunds has not been passed on to producers. I acknowledge that, because of the difficult market situation, prices fell in many third country markets. Nevertheless, I do not believe they fell by the equivalent of 9p a lb.
Cattle prices on the EU market have remained strong throughout autumn despite the Russian crisis. That the EU market has remained strong is because beef production in the EU has fallen significantly this year as a result of calf slaughtering measures adopted in October 1996. This fall in production has created market opportunities for Irish beef exporters, and it is evident from the quantity of export licences issued to Irish beef exporters that a significant quantity of Irish steer beef is currently being exported to EU markets. It is disappointing that the benefits of selling in these high priced markets are not enjoyed by Irish beef producers.
While we are disappointed the full benefits of the concessions negotiated are not passed on to producers, I am satisfied that, without these concessions, cattle prices in Ireland would be lower than they are at present. Cattle prices were in virtual free fall before these measures were introduced and a huge backlog of cattle was building up on farms. Since the introduction of the measures, cattle prices have increased slightly and the backlog has been more or less removed. The concessions have been effective in protecting Irish farmers from the worst effects of the Russian crisis.
Market conditions in the EU have improved in recent weeks and this should continue. This means there is increasing scope for processors to pay higher prices for cattle. There is no reason cattle prices in Ireland should remain indefinitely parked just above the safety net level and, as recently as last Friday, I called on processors to pass on to producers a fair share of the improving market returns through a meaningful increase in prices. I repeat that call now.
Regarding the matter raised by Deputy Boylan, under current arrangements for the disposal of reactor animals, farmers receive salvage values for carcases from meat factories and compensation related to animal types from my Department. As regards the former, my Department operates a weekly tendering arrangement in respect of reactor animals whereby meat plants make quotations for different categories of stock. The quotations selected reflect the type of reactor animals disclosed, while the prices quoted tend to follow the prices available for the different categories of cattle involved. Apart from this, my Department also pays for a reactor collection service which provides transport for cattle to the selected meat plant free of charge to herd owners which can result in a significant cost saving to them.
Reactor quotations from meat plants are generally lower than those for the general run of cattle and the difference can be significant at certain times, especially when outlets for beef are reduced. Recently large numbers of cattle have been coming to the market and unfortunately, despite our best efforts, prices paid by factories for all types of cattle remain low. Concurrent with this is the significant and regrettable increase in the number of reactor animals being disclosed at tests which must be slaughtered. We anticipate the current relatively low prices for reactors will improve when the current heavy slaughtering concludes and when prices available generally improve.
The prices received by farmers from factories are supplemented by means of the appropriate reactor grants paid under the non-statutory scheme operated by my Department. The level of grant rate payable can be substantial. In the case of dairy cows, up to £600 may be payable by way of grant currently. Reactor grant levels are reviewed and reset periodically, having regard to the cost of equivalent replacement commercial animals. Having regard to overall price levels, the current combined factory prices and grant arrangements cover the costs of such cattle. I will continue to keep the position under review. The Deputy said he would give me the names of people affected after the debate and I will ensure their situation is examined.
