Dáil Éireann díospóireacht -
Wednesday, 30 May 2001

Vol. 537 No. 3

Adjournment Debate. - Beef Exports.

Mr. Crawford

I thank the Ceann Comhairle for allowing me to raise this important issue and the Minister of State, Deputy Ó Cuív, for coming here at such a late hour. The crisis that the livestock industry has come through since BSE closed most of our export markets was further compounded by the disaster of foot and mouth disease. The crisis is being exacerbated by the Government's failure to allow sufficient numbers of steers into the destruction scheme.

In the last two weeks, records made available to me have shown that in the week ending 12 May only 3,320 steers were taken by meat factories and only 3,220 steers were taken the following week. A letter from the Taoiseach on 9 May to the Joint Committee on Agriculture, Food and the Marine stated that the intake into the purchase for destruction scheme has decreased from 20,000 cattle per week to 10,000. This is due to commercial opportunities in Britain and the Netherlands as a consequence of foot and mouth disease. Up to 19 May, 97,000 fewer cattle had been slaughtered than during the same period in last year. Up to the same date, 185,000 fewer cattle had been exported live, so that by the end of this week there will have been a drop of 300,000 in cattle exports, whether live or dead.

All cattle going to the United Kingdom have to be under 30 months old and only top quality heavy cattle are going to Holland. There is no market for most Friesian cattle over 30 months old. I understand that Lebanon is demanding cattle 24 months old or under and I would not be surprised if Egypt were to demand similar terms when it resumes imports from Ireland. Farmers all over the country are begging factories to take steers into the destruction scheme, but there is and has been a massive backlog. One local agent has about 120 steers belonging to about 20 farmers, but he can only get about ten cattle away per week for each of the next four weeks. Another agent has over 300 steers on his waiting list but is unable to offload more than 30 to 35 per week. If he can only dispose of 130 cattle during the next few weeks, where will the extra cattle find a market in a small area?

Many farmers wanted to sell their cattle a long time ago but could not do so. The Minister for Agriculture, Food and Rural Development promised 20,000 cattle per week would be included in this scheme up to the end of June. I do not like the scheme and many farmers hate the fact that having looked after and fed animals for up to three years, the cattle are now being destroyed. The scheme was introduced as an income supplement support. I believe that if 30,000 extra steers were taken into the scheme a serious problem would be removed and the present price of about 90p per pound would be maintained. If the price drops by 10p per pound after 1 July and stays low for the rest of the year, the nation will lose between £100 million and £150 million.

I know of a small farmer with 13 steers who has being trying since April to have the animals killed. Only this evening he was told by a major factory that it would not know until Friday whether it had a quota for the destruction scheme next week. This was the third factory he phoned today. He also contacted agents. I welcome the Minister's announcement that Spain, Italy, Russia and the Lebanon are now open for business. Can he tell us when cattle can be moved and if and when the Egypt market will re-open? I and my Fine Gael colleagues encouraged and supported the Minister during the foot and mouth disease crisis. I beg him now to use the last four weeks of the destruction scheme to the best advantage and thus avoid a further crisis. The intervention price would be a disaster, and only cows are being allowed into the scheme after the end of June. Department officials have asked why farmers did not sell their cattle earlier. The records show that they tried but many had no choice but to hold them in order to utilise their grass because they were not allowed to buy other cattle. I urge the Minister to use the last four weeks to the benefit of all.

Éamon Ó Cuív

The purchase for destruction scheme referred to by the Deputy was part of a package of measures adopted by the European Commission in late December 2000 in response to the substantial decline in consumption and the loss of major third country markets as a result of the confirmation of BSE cases in a number of EU member states. In particular, Commission Regulation 2777/2000 required member states to implement by 1 January 2001 a BSE testing programme for animals aged over 30 months destined for human consumption and a purchase for destruction scheme for animals aged over 30 months. The regulation also provided that the European Commission would refund 70% of the purchase price of cattle sold into the scheme, with member states carrying the balance plus the ancillary costs associated with the destruction of the entire carcase.

The prices at which animals are purchased under the scheme are based on average market prices for the month of November 2000. However, in order to ensure that the scheme provided a more satisfactory floor price for beef producers in Ireland, the Minister took advantage of the option in the regulation to pay an additional 5% over and above these prices for steers and heifers.

As far as implementation of the scheme in Ireland is concerned, slaughtering under the scheme commenced in early January and, to date, approximately 239,000 animals have been killed under the scheme at an estimated cost to the Exchequer of about £180 million. The application of the scheme has caused particular operational difficulties in Ireland due, for example, to the absence of incineration facilities for the disposal of the meat and bone meal produced under the scheme. Having regard to these difficulties, I have no doubt the Deputy appreciates the fine effort of the Government, notwithstanding other recent pressures, in ensuring that almost 50% of all purchases throughout the EU under the PFD scheme have occurred in Ireland.

The purchase for destruction scheme has underpinned cattle prices in Ireland since the beginning of the year at a significantly higher level than that provided by intervention. This is clearly evident from the fact that prices for young bulls in most member states have fallen on average by more than 20% since the BSE crisis of last autumn whereas steer prices in Ireland have remained relatively stable over the same period. The effect of the destruction scheme has been to overturn the traditional relativities between Irish and European prices. For example, last October, Irish steer prices were 86% of the EU average price for young bulls but are now 109% of average EU prices for this category. Therefore, the Government and, by extension, the taxpayers have more than played their part in supporting cattle prices.

This is a complex scheme operationally and it is enormously expensive. It is incumbent on my Department to operate the scheme in a cost-effective manner, taking account of the level of cattle supplies and the needs of the market. As far as the market is concerned, the FMD in the United Kingdom and the Netherlands has reduced beef production in those countries and this has created additional market opportunities for Irish beef. Because of this, the industry succeeded in finding commercial markets for an average of 12,000 steers per week over the past month. With regard to supplies, we are now entering a period of seasonal decline in steer slaughterings. During the month of June last year, steer slaughtering averaged approximately 10,000 head per week, which is 16% less than the number of steers marketed commercially over the past month. I accept that a proportion of the June steer kill will be steers of more than 30 months, for which it will be difficult to find a market. However, based on the trend over the past month, the proportion should be relatively modest. Accommodating this number under the destruction scheme should not present any major difficulties. I am confident, therefore, that the PFD scheme and commercial markets should be able to absorb the likely supply of steers over the next month. The situation will be kept under review.