Dáil Éireann díospóireacht -
Tuesday, 2 Feb 1999

Vol. 499 No. 3

Adjournment Debate. - Pigmeat Sector.

Mr. Boylan:

I thank the Chair for the opportunity to raise this urgent and serious matter. As the Minister is undoubtedly aware, there is a serious crisis in the pig industry. This is more profound in the constituency I represent, Cavan-Monaghan, because of a serious fire at the Lovell and Christmas plant in Northern Ireland and the fact that McCarren's bacon factory in Cavan was closed at the same time. Thankfully, McCarren's has since reopened, but it will take some time before it reaches maximum output.

The fire in Northern Ireland, the closure of McCarren's and a downturn in the market means the pig industry has totally collapsed and small to medium size pig units are facing bankruptcy. It is vital that the Government immediately comes to the aid of these family units. Debts of over £300,000 to banks and millers are not uncommon. Unless the Government acts, the end result will be that these people will lose their farms. Through no fault of their own, these debts have mounted over the last six months, but further credit facilities from banks and millers are at an end.

I am aware of a number of units which were unable to procure feed for their pigs last weekend. It is expected that an upturn in the market will come about by mid-summer. Therefore, the Government should act and give financial assistance to units of up to 400 sows in size to help keep them in business until this upturn takes place. I suggest that £200 per sow for the first 100 sows, £100 per sow for the next 200 sows and £50 per sow for the remaining 100 sows should be provided, giving a fund of £45,000. This would help to stave off financial ruin for many of these family size units.

It is imperative that the Minister signals the Government's intention to immediately ward off the banks and the millers which are seeking to recover their debts, causing further misery to hard working, decent people who were working to an agenda set for them by Teagasc and Bord Bia. They told them it was necessary to increase production from three million pigs per annum to at least six million. Following those guidelines, during the good years family size units have increased from the usual 100 to 150 sow unit to approximately 300 to 400 sow units. They were becoming more economical and doing a good job. The constituency I represent, Cavan-Monaghan, has some of the best pig husbandry people in the country but they are now facing financial ruin.

I regret that the Minister of State, Deputy Ned O'Keeffe, is not present because he would have a full understanding of the terrible problems besetting the industry. However, I am sure he had an input to the Minister of State's reply and I look forward to a positive response.

Mr. T. Kitt:

I apologise for the unavoidable absence of my colleague and I will try to deal with the issues raised by the Deputy. I am glad to respond on behalf of the Minister for Agriculture and Food.

The difficulties in the pig sector are not alone being experienced in Ireland but are affecting the entire EU market. A number of reasons brought about these difficulties, the main one being, as the Deputy is aware, over-production in the Community as a whole. This over-production came about as a result of an outbreak of classic swine fever in the Netherlands, Germany, Spain and, to a lesser extent, Belgium. A slaughter policy was introduced to halt the spread of the disease. Over ten million pigs were slaughtered which created a shortage of raw materials in the industry and pushed up market prices to record levels.

This in turn encouraged increased production, eventually leading to an over-supply on the market which has led to the current low prices being experienced. At present the EU market is about 108 per cent self-sufficient. Other factors contributing to the difficulties include the Japanese market which was sluggish in 1998 and did not take as much pigmeat imports as usual. Russia, which usually takes about one-third of all EU pigmeat exports, virtually closed in the latter part of 1998 because of the financial crisis there. Consumption of pigmeat in the EU has been virtually static and this has not helped matters. Ireland's position was exacerbated by a fire which broke out in a plant in Northern Ireland that was taking about 5,000 pigs a week from pig producers in the Border region.

As a result of all these factors, Irish pig producers are experiencing a drop in income because of the low prices on the market. The Minister for Agriculture and Food is fully aware of this but, under EU rules, direct financial assistance is classed as a state aid and as such cannot be granted as it is seen to give a trading advantage to the recipients. This avenue, therefore, is not open to the Minister. Any aid to producers must come from the operation of the instruments available under the common organisation of the market for pigmeat, namely, export refunds and aids to private storage.

In that context, the Minister for Agriculture and Food has taken every legal option open to him. A number of important initiatives to deal with the current difficulties in the pigmeat sector have been taken. On four occasions last year he secured increased export refunds from the EU Commission, the most recent being in November when a 75 per cent increase was given for exports of certain pigmeat products to Russia. These increases have been of considerable help to the market.

Last September he succeeded in gaining agreement from the Commission for the introduction of an aids to private storage scheme under which EU funding is provided for the storage of pigmeat for a maximum period of six months. The scheme is still running and to date about 200,000 tonnes of pigmeat have been temporarily removed from the market throughout the Community. Ireland has over 1,000 tonnes of pigmeat in storage under this scheme.

Towards the end of last year the Council of EU Ministers decided on a food aid package to Russia. This package included 100,000 tonnes of pigmeat. The EU Commission has recently put in place a regulation for the supply of the first tranche of pigmeat destined for Russia as food aid. This tranche consists of 30,000 tonnes of the total quantity of 100,000 tonnes. Under the regulation, the supply of the meat is to be decided by means of a tendering system which is open to operators on a Community wide basis. The Minister for Agriculture and Food looks forward to a positive response from the pig trade in Ireland in submitting tenders for the supply of this meat. In any event, removing 100,000 tonnes of pigmeat from the EU market must have a positive effect.

Due to the continuing difficulties in the pigmeat sector, at a recent Council of Agriculture Ministers meeting the Minister for Agriculture and Food, with many of his ministerial colleagues, requested the EU Commission to hold a special working group as soon as possible to discuss positive actions to address the current weakness in the market. This meeting will take place on 10 February and hopefully proposals will emerge on the best way to bring about improvement in the market.

In late December last year, the Minister for Agriculture and Food met with the banks and pig feed suppliers to discuss the difficulties in the pigmeat sector. Both organisations expressed their willingness to continue to assist pig producers in every way possible for the duration of the current problems in the sector.

The Minister has made, and will continue to make, every possible effort to alleviate the situation in the pigmeat market. He is confident that the measures which have been already put in place regarding export refunds, APS and the Russian food aid programme will result in an improvement in pigmeat prices, leading to a better balance in the pigmeat market, and give all sides of the industry better returns.