Dáil Éireann díospóireacht -
Thursday, 6 Mar 2003

Vol. 562 No. 6

Adjournment Debate. - Meat and Bonemeal Sector.

Mr. Crawford

I thank the Ceann Comhairle for allowing me to raise this matter. I also thank the Minister for coming to the House at this late hour to respond to my comments. The withdrawal of €45 million in subsidy to the meat and bonemeal sector has caused chaos. From talking with members of farm organisations and people working in the industry, I understand that not only will there be chaos next week when the measure takes effect, but there will be a complete closedown. Committed winter beef producers are in a serious crisis.

I have a dairy farm with 90 to 100 dairy cows, for which I receive a premium for less than 50. I question whether I should be treated as one of the small farmers who do not have to pay a penalty for overstocking. That is another issue but I want to make clear that I come from that background.

A total closedown is on the cards and that will do great damage to the industry – farmers, workers and the nation. Urgent steps were taken by everybody during the foot and mouth disease crisis. This situation is as serious and deserves similar urgent action.

Has the Minister held meetings with farmers and the industry? Has the Taoiseach been fully informed of the total chaos and the cost involved? This is a Government decision, not a Brussels one. Europe will allow subvention to the end of this year but the Government has not taken steps to allow for the disposal of offal at the lowest possible cost. It is passing on a very expensive means of disposal to the industry.

The Department, the industry and farmers must work together to minimise the cost. In the meantime, the Government must not opt out of its responsibilities. A total of €30 million would make a major difference in that regard. A quick decision could be made by the Government on one aeroplane costing €50 million.

Two or three major meat factory owners have their own rendering facilities, leaving smaller plants totally isolated and vulnerable. I understand some of these plants had to close down for a few days. If this cost is passed on to farmers, the cost per animal will be from €13 to €16, €2 per pig and 10 cent per chicken. I make no apology for reminding the Minister that two thirds of our poultry is produced in my constituency. Beef prices currently range between 80 to 81 cent per pound for "Os" and 85 cent for "Rs". Two weeks ago, the flat price was 90 cent.

This is the worst crisis in memory, as pointed out to me by somebody who has attended farm organisation meetings for the past 40 years. There were cuts of 9% in agriculture in the budget and if the other cuts of 3% are taken into account, that is a 12% cut. There was a further €10 million cut in disease levies and now a €45 million cut in meat and bonemeal.

The Government has lost the support of the agriculture industry, especially young farmers. There was a headline in today's Irish Farmers Journal, “Coalition Policies Rejected by 84% of Farmers”, and a headline in another article read, “McCreevy Denies €300 million Offer”. The Minister told my colleague, Deputy Timmins, that an extra €300 million had been offered but he has already taken €300 million out of the pockets of farmers, as has been put to me by an independent source. The figure for this year alone is €316.5 million as a result of the budget cuts and the other decisions the Minister has made. We are in an absolute crisis.

The cutbacks in terms of individual farmers are very serious. The cost of killing an animal now is approximately €80 per beast. Since the Government was re-elected there have been increases in levies and charges of €15.56, not to mention insurance costs. If a farmer has an animal over 13 months, he incurs an additional cost of €26. If he is a full-time beef farmer with over 50 livestock units, he is subject to a penalty of €45. That is the reason I made my personal comment at the start of my contribution. The total increase in levies and charges amounts to €80.56. How can an ordinary farmer take a cut of €10,000? The Minister argued during the "tractorcade" discussions that they had an income of €45,000 but he knows in his heart that it is €15,000, and these cuts represent a total loss of €10,000. Does the Minister believe any family could live on €5,000 per year?

Will the Minister accept he is looking at the demise of many genuine, committed livestock producers who provide winter animals for the industry, which allows the industry to serve the market 52 weeks of the year? I ask the Minister to come up with a substantial package to save this industry. He did that during the foot and mouth disease crisis and got credit from everybody. The crisis now is equally as bad and he must step in.

Minister for Agriculture and Food (Mr. Walsh)

As a good source of protein, meat and bonemeal was historically used as an ingredient in animal feed and Ireland exported 90% of output for use in animal feed. New European Union wide measures designed to control the spread of BSE were introduced in December 2000 following outbreaks of BSE in other member states and included a ban on the feeding of meat and bonemeal to farmed animals. That ban remains in place.

As a result of the ban, feed grade meat and bonemeal which had been a commercial product became a waste material with a significant disposal cost. In addition, unlike most other member states, Ireland has no approved disposal facilities, for example, incineration or landfill.

In January 2001, to address the emergency faced by the meat sector, my Department introduced a subsidy towards the cost of rendering offal into meat and bonemeal and its subsequent storage and disposal. This was introduced as a short-term measure to allow time for the industry to adjust to the changed legislative situation. It was not the intention that the subsidy would be paid indefinitely and the policy of the Government has been to gradually return financial responsibility for disposing of offal to the industry.

In 2001, Exchequer financial support for the production of meat and bonemeal was €66 million, including €11 million for disposal of 36,000 tonnes. Expenditure in 2002 was significantly lower, at €44 million, due to reductions in the level of subsidy for rendering and lower disposal costs. A provision of €28 million was made to fund the rendering subsidy this year. This amount has been used to fund carryover payments from 2002 and the rendering subsidy up to 28 February of this year. There are now 170,000 tonnes of meat and bonemeal in stores throughout the country paid for by my Department and costing approximately €3 million per annum in storage costs. At current prices and disposal arrangements, this will cost in the region of an additional €30 million to dispose of. The overall expenditure on supporting the production of meat and bonemeal since the introduction of the ban has been €138 million.

The figures I have outlined do not include the cost of other support schemes which involve rendering costs. For example, there was significant expenditure in excess of €400 million on the purchase for destruction and special purchase schemes introduced to support the beef market in 2001 and 2002. There have been other substantial payments to the rendering industry for the rendering of BSE depopulated herds and for fallen animals.

Since the introduction of the rendering subsidy it has been the policy of my Department to gradually reduce the Exchequer contribution and to fully disengage from payments to the rendering sector. From December of 2002 the Department's contribution to the rendering industry was fixed at €410 per tonne for a three month period up to the end of February. That is for a package deal including collection, rendering and disposal.

The Government has been generous and an editorial in The Irish Times two days ago alluded to the fact that the generous support to the livestock sector from public funding of €600 million was paid out without difficulty at a time of crisis in 2001 and 2002. We cannot continue that level of support indefinitely but we are continuing support for the storage and the rendering of depopulated herds and fallen animals.

Since the introduction of the subsidy, the costs associated with disposal have been reduced. The industry has also had the time to arrange outlets for the disposal of meat and bonemeal. It has been a matter of public record since early February that the subsidy would be withdrawn from the end of that month. I am of the view that in the absence of the Government subsidy the industry will achieve greater efficiencies than at present. There are already indications that lower cost disposal options are being actively explored and there is evidence of greater competition in the sector. I expect in those circumstances that rendering and disposal costs can be reduced within the industry as greater efficiencies are achieved. In such circumstances I am not prepared to speculate as to what level of additional costs will fall on farmers. There is, however, every incentive for all the stakeholders in the industry to work towards the achievement of lower offal disposal costs.

My information is that the rendering industry is operating and dealing with all available material from the meat sector. There have been some teething problems, as can be expected when State subsidies are withdrawn and costs have to be absorbed elsewhere. I expect that any difficulties that arise can be resolved by close co-operation between all the stakeholders in the livestock sector especially meat processors, the rendering industry and farmers. I assure the House that my Department will continue to fully implement all regulatory controls relating to the processing of animal by-products and the transport, storage and disposal of meat and bonemeal.

I am well aware that the absence of domestic disposal facilities for meat and bonemeal has the consequential financial burden of disposal abroad. Every effort should be made to make use of meat and bonemeal in a way that extracts maximum value from it. It can be done in other EU member states either in energy production or in industrial use thereby reducing disposal costs. That would be of benefit to the economy generally in terms of reducing the use of fossil fuels and would also be of benefit to the agriculture sector. Any disposal facilities would of course have to comply with the environmental and planning requirements of the relevant authorities.

Mr. Crawford

That is the problem.

Mr. Walsh

The Government has established an interdepartmental agency-committee to examine the disposal options for MBM in Ireland. The committee is currently examining all the options permissible under EC regulations and I expect the report from this committee, due within a short time, will add to the debate on the best way of dealing with meat and bonemeal.