JOINT COMMITTEE ON AGRICULTURE AND FOOD díospóireacht -
Wednesday, 15 Jun 2005

Livestock Farming: Presentation.

Chairman

Representatives from the Irish Farmers' Association will today make a presentation on the financial problems of livestock farmers resulting from the 2004 special beef premium overrun. On behalf of the joint committee, I welcome Mr. John Dillon, president, Mr. John Bryan, national livestock chairman and Mr. Kevin Kinsella, director of livestock.

I would draw members' attention to the fact that while members of the committee have absolute privilege, the same privilege does not extend to visitors. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official by name or in such a way as to make him or her identifiable.

Mr. John Dillon

I thank the committee for giving me the opportunity to put forward our views regarding the problems resulting from the special beef premium overshoot. As most public representatives know, we had a meeting to discuss the matter in Portlaoise a week ago which was attended by 1,300 people. Irish livestock farmers face the major financial problem of a €95 million penalty on their 2004 premium payments resulting from an overshoot in the special beef premium application following the change in EU policy with regard to full decoupling. The Department of Agriculture and Food has confirmed that the special beef premium overshoot will be 27% on the nine month bull premium and 23% on the 21 month special beef premium. These cutbacks will apply to farmers who applied on more than 25 animals under the 2004 scheme.

In financial terms, individual producers are facing cuts ranging from €53 to €78 per animal, including extensification premium. A financial penalty resulting from the special beef premium overshoot is particularly unjust in the case of individual producers who applied on the same number of animals in 2004 as in the previous year. When calculated in respect of 29,000 farmers an overshoot penalty of €95 million amounts to an average penalty per farmer of €3,295. Some producers who applied in respect of a large number of animals are facing penalties of up to €23,000. Livestock farmers cannot afford penalties of this magnitude.

When Ireland opted for full decoupling it was made clear by the then EU Commissioner, Dr. Franz Fischler, that no country or farmer should lose out from the policy changeover to full decoupling. The IFA is demanding that this commitment be honoured and insisting that the Minister for Agriculture and Food, Deputy Mary Coughlan, secure a solution to the special beef premium overshoot problem on the following basis. Farmers must not be penalised as a result of the EU policy changeover to full decoupling. Irish livestock farmers cannot afford a financial penalty of €95 million. Premium penalties ranging from €53 per head to €78 per head will, in many cases, exceed the net margins per head, even when taking account of net payments. Ireland unnecessarily conceded over 200,000 head of special beef premium quota rights in 1996 from our national special beef premium quota. The penalty on the 21 month special beef premium plus extensification is flawed and will provide the EU Commission with a windfall clawback on 187,000 animals costing over €37 million. These are the issues and I ask the chairman of the livestock committee, Mr. John Bryan, to go into further detail.

Mr. John Bryan

I thank the Chairman for the opportunity to address the committee on this major problem for livestock farmers. I know the Chairman has been lobbied locally and he has met us already today on this issue. The committee will be aware that a figure of €95 million is a considerable figure for the livestock sector, where most farmers live on a farm family income of half the average industrial wage. It is a low income sector and 29,000 farmers have lost out on €95 million. They cannot take this hit, which for many of them is between €7,000 and €10,000. This leaves them with severe financial problems. As well as the 29,000 farmers who suffer in this way, there are another 60,000 farmers who sell weanlings, particularly in autumn. These farmers are mainly from the western part of Ireland and they are dependent on other farmers to buy their product.

We wish to stress the urgent need for a solution. The last time we had an overshoot was in 2002 and it took a year and a half to find a solution. That leaves farmers in financial difficulty. That time it was a 12.5% cut, this time the figure is 27%, which is so great that it reduces farmers' income by almost 50%.

We are before the committee because we received a clear commitment from Dr. Franz Fischler that if Ireland embraced decoupling it would not lose. Farmers, the IFA and the then Minister, Deputy Joe Walsh, bought into the concept of decoupling despite reservations. This was done on the basis of a clear commitment from the EU. There were between 1,300 and 1,500 farmers present at the recent meeting in Portlaoise. There was frustration and anger and the question of trusting the EU to deliver on commitments was raised. The Minister for Agriculture and Food, Deputy Mary Coughlan, is our representative in Ireland and in the EU. We ask the Minister to treat this with the utmost urgency as farmers cannot take this kind of hit.

Within the figures presented by the president there are three major injustices. The commitment by Dr. Franz Fischler and the Government is not being honoured. Of the 29,000 farmers affected several made no changes on their farms. They made applications based on the same number of animals in recent years. They were operating to the limits of their farming capacity. As well as losing 250,000 animals above our quota of 1,077,000 we were also penalised by losing 185,000 to 187,000 on the second stage. This results in a net loss of €37 million to farmers and the economy. This is a major issue for farmers and one with which the Government has to deal at the highest level.

Mr. Michael Lynch

There is an urgency to deal with this matter. I come from the west and in my county over 1,150 farmers are affected by this cut, even though it affects farmers who applied in respect of more than 25 animals. This problem is widespread in the west. In financial terms the effect is probably greater in the midlands and the east but it has implications across the board. Our farmers will be affected as outlined by Mr. Bryan and Mr. Dillon.

When calves come up for sale next autumn the people who have suffered this financial blow will not be in a position to pay the same level of money as was previously paid. This was an exceptional year and as it was not a normal quota year the normal quota rules could not be applicable and are not appropriate. It was a changeover situation and because of this, the Fischler commitment, and Ireland's position as the leader in the move to full decoupling, we should not be the guinea pigs. Our position should be considered and dealt with in a more lenient way rather than applying a strict interpretation of the rules as they relate to the quota year of 2004.

Deputy Naughten

I welcome Mr. Dillon and the delegation from the IFA. The delegation has made a very strong case and the matter raised will have major repercussions for the beef sector. Some 14,500 beef farmers did not put in an additional claim in 2004 and they will be penalised by the system we have at the moment. There is no doubt this will have a significant impact on the store cattle trade at the back end of this year. If €95 million in purchasing power is removed from the trade at that time there will be significant repercussions for the beef sector. This will bring about a level of volatility that could see farmers packing in commercial beef production. This would not be good for the economy and employment in this country and we must be conscious of this fact.

Prior to Christmas the Department gave the indication there would not be an overshoot. Figures released during the run-in to the back end of the year gave an indication that Ireland would be within the quota. Had the Department given any consideration to the possibility of Ireland going over the quota, and seeking transitional arrangements in that respect, prior to going over the quota?

Mr. Bryan stated that there would be a 50% cut in premia income of affected beef farmers. For many beef farmers profit is the premia, of which they hold on to 60% as profit. Would it be correct to assume the profit for many of those farmers will be literally wiped out? Many of them will borrow to purchase cattle initially and by the time they have paid the banks and so on, they will at best be in a break-even situation, if not making a loss. Will Mr. Dillon comment on that?

Is it the case that there is no quota restriction on the 21-month animals and that if there were, as there is on the younger animals, Ireland would be under quota on both schemes by roughly about 5½% for 2004? In effect a double penalty is imposed on farmers, even though a quota does not exist for the animals in question. Will Mr. Dillon comment?

When interviewed recently on this issue by the Irish Farmers’ Journal, the Commissioner claimed that she knew nothing about the overshoot and its implications in Ireland. What discussions has the IFA had to date with the Department and what reaction has there been? Has the IFA discussed the issue with the officials in the Department prior to their going to Brussels later this week to discuss it with the Commission officials?

Deputy Upton

I thank the IFA for its presentation. I appreciate this is an important issue for a great many farmers, with substantial financial implications for them if something is not put in place to redress matters.

What message did Commissioner Fischler send out when he met the IFA with regard to there being no penalties or disadvantages arising from the decoupling? Was the issue raised? I appreciate that the issue before us might not have been recognised as one which would become so important down the line, but what response was given at the time?

Towards the end of the IFA submission it is noted that Ireland unnecessarily conceded over 200,000 head of special beef premium quota rights in 1996, which may be significant with regard to the current situation. The IFA might explain the relevance of this with regard to the current discussion and the impact it is having.

An important question has already been raised about the interaction of the IFA with the Department of Agriculture and Food and the negotiations regarding its representations to the new Commissioner on behalf of the IFA.

Deputy Wilkinson

I welcome the IFA delegation, which has made its case well. I met the IFA in Waterford, where a similarly strong case was made.

If I remember correctly, when Dr. Fischler addressed this committee he gave an undertaking that farmers would not suffer as a result of the new decoupling procedures. We are now considering one of the first teething problems of that new system. Times are changing greatly in agriculture and I know the Minister is well aware of the situation and has made overtures to Europe. We are to meet the Minister this evening at 7.30 p.m. and the issue is first on the agenda. I understand that the Minister is to travel to Brussels tomorrow to see what she can do. She is well aware of the seriousness of the situation for Irish farmers.

It would be wrong to go back over all the ground covered. The IFA has the full support of the committee and when we meet the Minister we will impress on her the need to get a positive result when she goes to Brussels.

Chairman

Will the delegation reply to questions now?

Mr. Dillon

Yes. Mr. Bryan will respond to most of the questions and Mr. Kinsella will take the remainder.

Mr. Bryan

I will answer Deputy Naughten's questions first. He asked if the Department foresaw the overshoot. The Department has a very elaborate cattle movement monitoring system or CMMS in place and has a substantial database of premium applications and animal movements and so on. Accordingly the Department would have had greater access to information than anyone in the country. The Department did not signal the overshoot at meetings we had with it in October and November last year. I do not know if it foresaw the overshoot.

In the negotiations for the single farm payment, the Department probably should have put in place interim measures for the move from the coupled system to decoupling, to deal with the sort of problem that has now arisen. It is always easier to negotiate a problem before it arises rather than afterwards but more effort should have been put in at the early stage.

I may not have made the matter totally clear in my presentation. The cut is of the order of 27%, which equates to approximately 50% of income. However, in several situations there is a lot of conacre involved, or a great number of weanlings, and if farmers are operating with borrowed money, with winter feeding so expensive, some of those farmers will have no margin of profit at all. In general, however, a 27% cut in premia would equate to approximately 50% of the income. The Teagasc figures bear out the fact that income on family farms is very low.

The quota restriction on the 21-month animals is among the issues the Department should have foreseen. We had a quota of 1,077,000 animals on the first stage, and a cut of 250,000 was applied to that, but a cut of 187,000 animals was applied to the second stage, even though we applied with a base figure of only a million animals. We feel strongly that a major injustice has been done there. In all our dealings with the Department and the EU, we seek fair play and it is not fair play to apply a cut of 187,000 animals. It is easy to say in hindsight, but the Department should definitely have got a concession on that issue perhaps two years ago, when we were in negotiation on the matter.

Regarding the Commissioner claiming that she knew nothing about the overshoot and its implications in Ireland, there was great anger among farmers when that story ran on the front page of the Irish Farmers’ Journal. The story ran on a Thursday. On the previous Tuesday, Michael Treacy and I met some of the Commissioner’s top advisers in Brussels. We had met Paud Evans from the Department on a couple of occasions previously and we also met the Minster that week. Many meetings were in train at that stage. We had a substantial meeting in Portlaoise last Tuesday week, attended by between 1,300 and 1,500 farmers. The outcomes of all those meetings will help advance the Minister’s position in her negotiations in Brussels.

Mr. Kevin Kinsella

I will address some of the questions asked by Deputy Upton and others. I thank Deputy Upton for her understanding of the issue and for expressing her wish that the matter be redressed, because it involves a very difficult financial position for farmers.

Deputy Upton asked what message was sent out by Dr. Fishchler on the losses and on decoupling. To some degree that question was answered by Deputy Wilkinson, who said that when the Commissioner addressed this committee, the message people took away was that no country or individual farmer should suffer any loss as a result of the policy changeover to decoupling. I am not clear if he used those precise words, but we are clear this is the impression he gave. He also gave that impression clearly in the very well-attended meeting he addressed on 7 July 2003 in the Goff's Centre in Naas, when he was the guest at the Irish Farmers’ Journal conference. Every farmer who attended went away more convinced that Ireland should go the full decoupling route, that there was nothing to fear in taking that route, and that, regardless of any changeover difficulties which might arise, farmers would not suffer any loss as a result. At that meeting he specifically said that as agriculture Commissioner he would address the problem with regard to an overrun in 2002, which he did subsequently through the decoupling policy change he brought about. He took account of the matter and made financial recompense to Irish farmers. Mr. Fischler certainly gave the clear impression that no farmer or country should lose out as a result of the changeover to decoupling.

Deputy Upton asked about the relevance of the 200,000 premium quota rights which Ireland conceded in 1996. The real relevance is that at the stage the quota cut was introduced, the IFA made it clear it felt our national quota was being cut back in too tight a manner. There was always the possibility that when our quota was reduced to a little more than 1 million head, we would overrun at some stage. At the time, the Department of Agriculture and Food indicated that the new lower quota it had negotiated would be adequate. The IFA disagreed and indicated that the result would be that Ireland would have quota overshoots or overruns at some stage in the future. The relevance for that today is that if we had that 250,000 head as part of the quota, we would have an overrun of 50,000 instead of 250,000 head, and the bill would be closer to €10 million than €95 million. Therefore, the concession is very relevant.

Mr. Bryan addressed the question of interaction between the IFA and the Department of Agriculture and Food. We appreciate the support for our case, as outlined by the three Deputies who have spoken. What we face is a significant financial problem for the country and a very difficult financial situation for 29,000 individual farmers. As our livestock chairman Mr. Bryan said, the financial returns on livestock farming are very tight. Farmers simply cannot afford to take a hit of anywhere between 30% and 50% in their finances in 2004 or 2005. We appreciate the support of this committee in trying to drive this issue towards a solution.

Deputy Callanan

I thank the Chairman for allowing me to contribute, although I am not a member of the committee. First, I declare an interest. I am a member of the IFA and I am also a farmer who has applied for a special beef premium.

This is a severe cutback and I fully support the farm organisation's effort to secure a resolution. Our Minister is well aware of the situation as rural Deputies have mentioned the issue from time to time. There is a serious problem, particularly with regard to individual producers who have applied year after year for the same amount. It is very unfair that they should have this amount cut back. There are two penalties involved in the cutbacks, one being the special beef and full premia of 23% and 27% and the other being extensification, which is worth €80 to anybody who is under 1.4 livestock units and is almost a premium on its own. There is, in effect, a double cutback, which is very unfair to mixed extensification through the cutback in the premium rights.

I have one question I would like clarified. Is there a quota on the 22 month beef premium or is the quota based on the nine-months premium? The former Commissioner, Mr. Fischler, said at the time that farmers should not lose out. This is the key point on which our Minister should focus. She is committed to this issue and when we meet her this evening we will impress on her the importance of dealing with it.

This quota hits almost every farmer as there are not many who would not seek premium for either nine month or 22 month cattle. Most of them would have more than 25 and, therefore, would be cut. This cut does not affect just one sector of farmers. Those most hit are the calf to beef and weanling to beef farmers whose incomes are seriously cut back. People selling weanlings, of which I am one, would be slightly different as we probably get their price when we sell them.

Whatever happens at the end of this coming year could take the confidence out of the weanling market, which is the problem for our sector. The income of calf to beef and weanling to beef farmers has been badly sliced. Many of those farmers rent land and it is not easy for them to make money because they must have everything on target if they are to make money. People here know that if a farmer makes any mistakes with calf to beef or weanling to beef farming, he will not make money. He cannot afford any cutbacks. The IFA has my total support and the support of the Minister who will try to do something in this regard.

The cutback on the beef premium and extensification should not have been mixed. Extensification payments should have been paid out at the normal rate. The previous cutback was on the numbers, but now it is a cutback on the money. I feel that is not the correct way to do it, but we will have further discussion with the Minister on that tonight. I thank the IFA for appearing before the committee and for representing farmers so well.

Deputy Crawford

I too welcome my former colleagues in the IFA. The current president was on a livestock committee I chaired many years ago. Times have not changed very much and there are still many problems.

Senator Callanan

Which cap is the Deputy wearing now?

Deputy Crawford

I believe farmers should be looked after. The problem is that Mr. Fischler made promises to farmers and I hope his promises are worth more than some of those made before our last election.

Chairman

The Deputy ran quite quickly when we needed him; he might be running again, if he does not have manners.

Deputy Crawford

I do not normally bring politics into my contributions. This is an extremely serious problem. As I said to the IFA representatives when I met them earlier, the most serious problem is that many of the full-time farmers who are totally dependent on premiums to make a living and who did not change their numbers are being caught by these changes. Many full-time farmers who were keeping the maximum number of stock their farms allow did not increase their numbers, but now they are being fined for an overshoot for which they have no responsibility. While we want a change in the overall situation, this injustice must be the priority. A farmer who has been involved in livestock production over many years can be shown to have maintained certain numbers. Now, because of an anomaly in the system, these farmers are the victims.

My colleague, Deputy Naughten, has covered the majority of the issues. I assure the IFA that we will use every opportunity to deal with this. I am glad to hear some members are meeting the Minister later this evening and she has given a commitment to do all she can. The most worrying aspect of this process is that when the Commissioner for Agriculture and Rural Development visited this country and was asked a direct question on the matter by the editor of the Irish Farmers’ Journal, she was not aware of the situation.

The main issue is to make the Commissioner aware of the seriousness of the situation in the limited time we have available. I was concerned to hear one of my Oireachtas colleagues say the other day that the overall budgetary situation at EU level will be prioritised at the forthcoming meeting because it is much more important than the anomaly we are discussing today. I support the position adopted by the IFA and the farming community in general on this delicate issue. The incomes of livestock farmers in County Monaghan are quite low as a consequence of the high costs they face. The full incomes of such people may be at stake in this process. That is unacceptable and needs to be rectified.

Deputy T. Dempsey

I thank the Chairman for allowing me to speak about the importance of the beef industry to County Wexford at this forum, even though I am not a member of the joint committee. I will support the IFA's position at the meeting with the Minister for Agriculture and Food, Deputy Coughlan. The imposition of the €95 million penalty is insupportable — morally because of the commitment made by Franz Fischler and economically because farmers are in an impossible financial position at present. I will state my opinion to the Minister, who is on top of her brief in this regard. I hope this matter will be resolved in a manner that coincides with the position of the IFA.

Mr. Bryan

I welcome the strong support the Irish Farmers Association has received from the members of the committee. Deputies Wilkinson and Callanan said they will speak to the Minister about this matter.

It is unfortunate that the quota, about which Deputy Callanan asked, is based on the terms of the first stage and on nine-month animals. If there was an individual quota on both stages, we would be better off to the tune of 200,000 animals, as Mr. Kinsella said. A reduction of 187,000 animals, from an original total of more than 1 million animals, will be applied to the second stage. Basically, we are getting paid for just 800,000 animals. If we had a quota of 1,077,000 animals, as we had on the first stage, we would be substantially better off. That is flawed.

Deputy Callanan also asked about the flawed reduction in extensification payments. Farmers who were maintaining their stocks had to stay below the level of 1.4 livestock units. In some cases, they had to sell their stock earlier than wanted to ensure they could stay under that level. They have suffered as a consequence of this extra hit. The sheer injustice of the system is clear when one considers that many farmers applied on the basis of the same number of animals as they had the previous year. The IFA appreciates the support it has received from the members of the committee in this regard.

Deputy Crawford rightly pointed out that full-time farmers are taking a severe hit. Most full-time farmers are applying on the basis of more than 25 animals. Many of them are involved in expensive forms of farming with low margins, such as conacre farming. It is devastating for such farmers to have to take such a severe hit on their farm family incomes for 2004. They are victims of an anomaly that is outside their control. Many of them did not make any changes and failed to apply on the basis of additional animals.

Along with the President of the IFA, Mr. Dillon, and the Minister, Deputy Coughlan, I will meet the EU Commissioner for Agriculture and Rural Development when she is in Ireland on Thursday, 23 June. The members of the IFA delegation are delighted to address the joint committee to emphasise that a resolution to this problem needs to be found as a matter of urgency. We need the Commissioner to be well aware of the seriousness of this matter in advance of her arrival in this country. The IFA appreciates the support it has received today.

Deputy Hoctor

I welcome Mr. John Dillon and his colleagues, Mr. Kevin Kinsella and Mr. John Bryan. I have met their IFA counterparts in my constituency of north Tipperary, which is badly affected by this problem. I do not need to remind the delegation of that. The 2004 application was made on the basis of more than 2.4 million animals, of which 1.4 million were quota. The relevant figure in each of the preceding years in which applications were made was 1.9 million. In December 2004, applications were submitted in respect of 930,000 animals, compared to 600,000 animals in December 2003. Applications were made in respect of more than 300,000 animals in the last two days of December 2004. To what extent was the Department aware of the level of applications being made? I have cited the figures issued by the Department in this regard.

Like my colleagues from all parties, I support the efforts of the IFA on behalf of farmers in trying to resolve this serious problem. It needs to be emphasised at EU level that the decoupling offer was accepted on the basis of the promises made by Mr. Fischler at the time. I will attend the meeting this evening that was mentioned by other speakers. I have spoken to the Minister, Deputy Coughlan, about this matter. I fully appreciate the dreadfully serious implications of this issue for farmers, who did not anticipate that it would arise when they were drawing up their budgets. Nobody foresaw the development of this difficulty.

The joint committee will continue to support the work that is being done on behalf of farmers in this regard. The Minister for Agriculture and Food will be told this evening, ahead of her meeting with Commissioner Fischer Boel tomorrow, that this is a very serious issue for Ireland and other EU member states.

Senator Scanlon

I welcome the delegation. I was unable to be present for its presentation because a division was called in the Seanad. All members of the committee understand fully the difficulties which have developed. I was present when the former Commissioner, Mr. Fischler, said that farmers would not lose out under the decoupling system. Deputy Wilkinson mentioned that a meeting with the Minister for Agriculture and Food is planned for this evening. Those of us who will be present at the meeting will make clear that this is a matter of the utmost seriousness, although she is aware of that.

I do not doubt that beef farmers are operating within tight margins. An annoyed farmer contacted me on Monday night to discuss an important related issue. Approximately 100 of his cattle are killed each year and 17 of them were killed in a meat factory last Monday. An average of 70% of his cattle are U-grade. Three of the 17 cattle in question, which were Limousin and Charolais heifers of an average of 390 kg dead weight, were U-grade. It is certain that cattle of that weight were fed cattle. The man knows exactly what he is doing. The cost to the farmer was €1,000. We have spoken about the tightness of margins. I am surprised the man in question has no recourse to appeal. The machine is set and is operated by an employee of the meat factory.

Chairman

The issue being raised by the Senator does not relate to the subject under discussion at this meeting.

Senator Scanlon

I know.

Chairman

I know it is a serious problem. I appreciate the concerns of farmers in this regard. The Senator can propose that representatives of the industry be invited to attend a meeting of the committee in order that the concerns of farmers and members of the committee in this regard can be brought to their attention.

Senator Scanlon

I thank the Chair. This serious issue is related to the matter under discussion.

Chairman

It is. I am sure it will be addressed by the farming organisations and some of the members of the committee.

Senator Scanlon

It is important for farmers to have some recourse to appeals mechanisms. An independent person should be charged with determining whether something is right or wrong. Unfortunately, that is not the case at present.

Chairman

When we invited representatives of the industry to attend a few meetings of the joint committee last year, we found it difficult to get them to agree to attend. Perhaps the clerk to the committee will contact them again to see if they can attend a meeting in the near future to discuss the issue raised by Senator Scanlon and other matters.

Deputy Naughten

We would like to raise a number of other issues with them.

Chairman

Yes.

Senator Coonan

I will be brief because I do not want to repeat the comments made by other members of the joint committee. I welcome the delegation from the IFA and fully support its campaign. I would like to declare an interest — I am from an IFA background. This is a simple case of European Commission and Government bureaucracy gone crazy. Those who made applications in respect of their animals are entitled to their premiums, but they will not be paid in line with the promise that was made. I did not realise that the former Commissioner learnt so much from the Government parties that he expects to get away with not keeping his promises. We need to take a stand in this respect. If the EU fails to pay the moneys which are owed to Irish farmers, there will be an onus on the Government to provide the necessary funds. The majority of those who are being denied their money cannot afford to manage without it. Any failure to pay them will help to drive them out of business. I support the IFA's case.

I would like to get the delegation's opinion on an issue that has not been covered. It relates to farmers who have a diseased herd locked up. These people are being caught on the double. While it may not have been a promise, they were advised to make an application for premiums and they were given to understand that they would be paid. Until the issue is resolved, they will be affected by the extensification premium. They are currently neither getting extensification payments nor their premium payments. This has the potential to drive farmers off the land. This issue must be tackled urgently. A laissez-faire attitude has been adopted up to now, which is not good enough. I support fully the IFA in its campaign.

Senator McCarthy

I welcome the IFA delegation. I apologise for my late arrival as I was detained by Seanad business.

It is morally reprehensible that Commissioner Fischler made a commitment in this very room that farmers would not lose out as a result of the reform of CAP. There is a moral and economic obligation on Europe to fulfil the commitment given to Irish farmers. I recall the debate in this House on the second Nice referendum. One of the selling points in respect of that instalment of the European module was the fact that farmers had benefited substantially from Europe through the years, we had rejected the first Nice treaty referendum and that we would have sent the former Minister for Agriculture and Food, Deputy Walsh, to Brussels with one hand tied behind his back in the context of the negotiations. It is unfair now to attempt to renege on that commitment, particularly in light of the fact that the French and Dutch rejected the EU constitution. If we are expected to ratify it in the future, the agricultural sector in particular is going the wrong way about it. It is financially unsustainable for the many people who are suffering due to declining incomes in the sector in recent years.

I have two questions. First, how should the officials handle the case when they meet the officials in Brussels? In a nutshell, what is their best selling line to prevent the situation from progressing any further? Second, Ireland unnecessarily conceded more than 200,000 head on special beef premium quota rights in 1996 from the national quota. How did this happen?

Deputy Ferris

I apologise for being late and missing the presentations because of being delayed at a meeting. I will work to the best of my ability to try to ensure that farmers' entitlements are delivered upon. I am acutely aware of the margin of profit that exists in the industry and how delicately poised it is at the moment. This policy will be another kick in the teeth and could be detrimental to farmers. Rather than repeating what everyone else has been saying, I fully support the views of the members of the delegation.

Senator Callanan

I welcome the delegation from the Irish Farmers' Association. I apologise for missing the presentations but, as my colleagues said, there was a vote in the Seanad. Those of us who belong to that House had to attend for the vote, for which I apologise.

I was present at Goff's when Commissioner Fischler made what I thought was a very clear and categoric statement. Deputy Wilkinson and Deputy Callanan referred to what he said at this meeting. While the words may not be exactly the same, the interpretation of what he said was quite clear. We must begin from the premise that an assurance was given to Irish farming organisations, political parties and so on that the commitment was made. A change in the Commission should not mean the policy enunciated and set down should change. Our function is to work together. We are meeting the Minister this evening. She is well acquainted with the facts following meetings with the IFA, meetings in the Dáil with Opposition spokespersons and so on. We must be sure that we are all singing from the same hymn sheet on this.

Getting back to the point made by Commissioner Fischler here but, more important, in Goff's where he was speaking to the farming community, what disadvantage was it to farmers——

Chairman

Is the Senator saying that this committee is not important?

Senator Callanan

No, but I am saying that he was speaking directly to producers. I was not understating the importance of this meeting.

Chairman

The Senator did.

Senator Callanan

No. He was speaking directly to producers at Goff's. What he said could have had an impact on farming activities and stock management. Saying it here gave us the political aspect. I am concerned that misleading farming producers may have led to a stock management change. People might suggest that farmers kept extra stock, that stock were brought forward to the 2005 period from the 31 December 2004 period. What about the additional 600,000 bulls that were applied for last year and this year? How did that come about and what was the impact of it? There should be no doubt about what Commissioner Fischler told this committee and the farming producers in Goff's. There cannot be a change, and we must make that case together.

I have the same worry as Deputy Crawford because, as of now, the stability of the agreement reached in the negotiations appears to be challenged once again. This could put at risk all the payments, which means there are worrying times ahead.

Senator Moylan

I welcome the IFA delegates and compliment them on the detail in their flier. I will support wholeheartedly the points made when I meet the Minister this evening. I compliment the Chairman and Deputy Wilkinson on ensuring that Government members got an opportunity to meet the Minister, Deputy Coughlan, prior to her departure for Brussels to impress upon her the importance to Irish farmers of the special beef premium. We are affected by this and we have met many farmers for whom this shortfall will have serious financial implications.

Reports in the Irish Farmers’ Journal were referred to earlier. Many people who took on extra stock in the hope of getting an extra premium, and on the grounds of a prediction of €1.10 plus or €1.20 for beef, now find themselves getting at least 10 cent less for cattle finishing. People who believed what they read at the time are suffering now. We will support wholeheartedly the farmers’ cause. We want to ensure that the Minister will get the best possible deal for farmers.

Someone asked about conceding 200,000 head, which should not have happened. People have snipes at political parties here over promises and many other matters, but that should not have happened.

I thank the IFA for always giving us factual information which we could take to the Department, defend and stand over. I compliment Mr. Kinsella, Mr. Bryan and Mr. Dillon on that. The IFA's local officials in the counties, and particularly in my county, Offaly, have been upright and factual in what they have brought to us.

Deputy Blaney

I also thank the members of the IFA for coming before the committee today and making a presentation. I apologise to the association for not meeting the delegation this morning. I am not long in from Donegal and I got the message only before I came down.

This is a despicable situation and one cannot stand for it. I agree with the sentiments expressed by the other speakers and wish the Minister well in overturning this. Deputy Coughlan is not long in the job but has the ability. It must be overturned. I fully support that effort.

Mr. Kinsella

I thank all the members of the committee for their clear, strong support. I will address some of the questions and Mr. Bryan will deal with some of the others.

Deputy Hoctor asked about the numbers. There was an increase in the numbers of animals for which application was made in 2004. Lest anybody think there was something wrong or untoward about that, if one applies incorrectly in the case of animals, the Department of Agriculture and Food will deem them ineligible. Let us be clear here. All of the animals for which application was made are eligible animals. They are legitimate cases. Farmers had a right to apply in those cases. That is what the CAP allows. We should not fall into the trap of trying to pretend that there was some reason such as a big increase in applications by ineligible producers or there was something incorrect about applying in the case of these animals. That is simply incorrect. Producers were entitled to apply in the case of these animals and that is what they did.

The Deputy suggested that budget provision was not made for the increase in applications. The reality is that the EU beef and veal budget for 2004 is underspent to the extent of €278 million. A budget line is not written up specifically each year for the special beef premium, the slaughter premium, etc. Instead, there is a beef and veal budget. Our exports, particularly to international markets which would be supplied with the benefit of export refunds, are considerably down over the past year, and indeed in recent years, because of our success in penetrating European markets and there is a significant saving in the agriculture budget, particularly the beef and veal budget, in this area. That money is available for 2004 — the last budget year. A budget problem does not exist. The agriculture budget is considerably underspent this year and we should look at it in that regard in trying to recoup a loss of €95 million to Irish farmers.

I specifically refer to the issue of diseased herds, which was raised by Senator Coonan. A specific undertaking and commitment was given to the IFA by the Department of Agriculture and Food that producers who made beef premium applications for restricted herds would be allowed apply in the case of animals above and beyond their stocking rate limits. As such animals were in restricted herds, the farmers were unable to sell those animals and therefore would be unable to get the benefit of the premium in the mart if they sold them as young weanlings or young store stock. We got a clear commitment from the Department of Agriculture and Food, and those producers were encouraged by the Department to apply in the case of those animals and were told that they would be paid in those cases. As Senator Coonan stated, that commitment must be honoured. They simply must be paid in the case of those animals. It is somewhat unfair to attempt to raise the beef premium overshoot or overrun as a problem in that scenario for producers who have already suffered significant financial hardship as a result of being locked up. We hope the Department will be able to honour the commitment it gave to the IFA on behalf of those producers because we specifically raised it with it. Mr. Bryan will deal with the other questions.

Mr. Bryan

Senator Scanlon expressed his full support for us. He highlighted a problem with mechanical grading. We will have a meeting with the Department about that matter.

Senator McCarthy asked how best the officials can handle the case. Basically, there are three main points to our case. The first is the sheer injustice of the €95 million cut. This is based on the commitment we got from former Commissioner Franz Fischler. I appreciate that many of the members expressed how clear the commitment was when former Commissioner Fischler addressed this committee. It was even clearer here than in Goff's. There is a clear understanding that former Commissioner Fischler gave us a commitment.

The second point, highlighted by several members and in our presentation, is that many of those farmers applied in the case of the same number of animals. There was a rise in numbers. As Mr. Kinsella stated, they were eligible animals, but also the numbers relate a little to the number of live exports two years previously. As there were fewer live exports in 2002, there would always be increased application, in particular with the 21 months premium, in 2004. The third point, as we have stated repeatedly, is the way the unjust cut was applied to the 21 months premium as well. Those are the three key points the IFA feels the Department must highlight at all stages.

We appreciate Deputy Ferris's full support. It is the policy change which brought about the whole issue. Senator Joe Callanan stated exactly how clear the statement former Commissioner Fischler made to the committee was. We were in Goff's, not here, but that just strengthens our argument.

The Senator asked how application was made in the case of 600,000 bulls. Throughout 2004, clear advice was given by the Department of Agriculture and Food and at public meetings Teagasc told people to maximise their draw and apply in the case of bulls. That is what the farmers did — exactly what the Department and Teagasc told them to do.

We appreciate the full support of Senator Moylan. The idea of a meeting tonight with the Minister is opportune. We appreciate all the effort the Chairman has made. It is excellent timing for us to be here a week before Commissioner Fischer Boel comes to Ireland.

Deputy Tony Dempsey stated the Minister has the ability. We have great confidence in the Minister to deliver this. We are putting all our resources behind it. Some 1,500 farmers went to Laois only a week ago to strengthen her hand.

Mr. Dillon

This is an important issue for Irish beef farmers. A clear commitment was given by former Commission Franz Fischler that nobody would lose out because of full decoupling. The members and you, Chairman, will remember that the IFA was always against the idea of changing from Agenda 2000. We were against it for the reason that it is bad to change in the middle of an agreement. We went for it because former Commissioner Fischler convinced us that nobody would lose out and this was the best way forward, particularly with the WTO, etc. The primary reason we went for it was that no farmer would lose out. We want that commitment honoured.

The Minister, Deputy Coughlan, in whom we have confidence, must really drive this to the last. We must get a positive answer for Irish beef farmers. We cannot be treated like that just because of an EU policy change. This involves 29,000 farmers. Most of them, those who did not change their numbers of cattle, will lose out — up to €23,000. That is just not acceptable. Whatever is possible must be done. Commitment around the table is fine but, at the end of the day, it is delivery that counts. We can talk until the cows come home, as they say in my part of the country, but if we do not get delivery, we are wasting our time. Delivery is a must. Whatever must be done, must happen.

Deputy Naughten

Dairy farmers, suckler cow farmers, sheep farmers and tillage farmers know their exact quota at the start of the year and the level of production for which hey will be paid. That does not apply in regard to beef farmers. They are the only farmers who have a quota which is not dependent on the number of animals they submit, which it is important to acknowledge.

Is it correct that the Department, with the CMMS and all the technology it has, did not flag this as becoming an issue on the run-in to the closing date last December? Given all the technology available, the Department should have been in a position to do that, if it felt there was a difficulty. Is it the case that the only reason this is an issue at this time is that we opted for full decoupling? If farmers could have applied in 2005 for premia entitlements, this would not have been an issue. Is it the case that there is not an overshoot on the 21 month premium or the nine month bullock premium and that the only overshoot that applies is in regard to the nine month bull premium, which was promoted and encouraged by Teagasc and the Department of Agriculture and Food?

Deputy Carty

I apologise for being late, although I told Mr. Kinsella I might not be here on time. I fully support the delegation. I met the Minister on a number of occasions, as have my colleagues. We know she is working hard on the issue in Europe. There is another meeting between officials on Thursday next and, hopefully, some resolution may come from that.

Mr. Dillon

Mr. Bryan will answer on the premia and I will answer the other questions.

Mr. Bryan

As stated, there was no overshoot on the 21 month premium. Unfortunately, we have not achieved the quota on the 21 month premium. We applied with regard to 1 million animals but were paid for only 800,000 animals, which is a glaring injustice. One could use figures to prove anything but since the MacSharry package was introduced in 1992, that is the lowest number for which the 21 month premium has been paid to Irish farmers, although it was one of the higher applications. One of the reasons for the higher number of applications was the lower number of live exports in 2002. It is a glaring injustice.

Mr. Dillon

On the other two questions from Deputy Naughten, to be fair, the Department did not flag the problem before last Christmas. With CMMS and the new technology available, the Department should know within one month of a male calf being born how many male animals are in the system. However, I will not begin kicking the Department or the Minister. I will do what I can to support the Minister because, at the end of the day, she and her officials are our negotiators. We are not the negotiators; we try to influence decisions and get the Minister to give us the best possible deal.

In reply to Deputy Naughten's question on decoupling, full decoupling is the real issue. If we had not gone for full decoupling, we would not have the issue we have today. I think that answers the question.

Mr. Kinsella

To reply to Deputy Naughten, not alone is it wrong with regard to the 21 month premium but the €37 million clawback on the premium is a windfall profit to the Commission. If there was no decoupling, the Commission would pay that sum to Ireland. It is getting back funding it did not anticipate. The €37 million on the 21 month premium is a windfall profit which highlights the level of injustice in this regard.

Chairman

While I will not go through the detail of all that has been discussed, this matter has been discussed for several months and brought to the attention of the Minister and her officials. Deputy Naughten and I met a group of farmers in March regarding the problem and met members of the IFA in recent months. With members of my party, we have organised a meeting for this evening to impress on the Minister the gravity of the matter. We will all work together in the best interests of farmers. We know dry stock farmers have been in a difficult situation, not just now but for several years. No farmer, particularly a dry stock farmer, can afford to lose this amount of money.

I propose that the clerk to the committee send a resolution to the Minister for Agriculture and Food today outlining the concerns of the farming organisations and the members of the committee and details of the discussion that has taken place at this meeting. I ask that a member second that proposal.

Deputy Naughten

I second it.

Chairman

I thank members of the delegation for attending the meeting. It was a pleasure to facilitate them. I was not sure we would be able to facilitate them but, because of the importance of the issue, I contacted the clerk to bring forward the meeting to suit everybody. I wish the IFA president, Mr. Dillon, a speedy recovery. He has made great strides since I met him at the IFA dinner in Navan. He has gone through a difficult time in recent months. However, he kept ploughing along.

Mr. Dillon

I might be down but I am not out.

Chairman

You can say that again. I also thank Senator Scanlon because, only for him, this meeting might not have happened. At the start of the meeting, a division bell rang for a Seanad vote. While another Senator ran quickly, Senator Scanlon stayed in order that we could proceed with the meeting.

Deputy Naughten

I endorse that.

Chairman

Given that we cannot start a meeting without a Senator present and if a Senator is not present after 15 minutes, this meeting might not have taken place. In his absence, I thank Senator Scanlon.

As there is no other business, we will adjourn until 11.30 a.m. on Thursday, 23 June 2005, when we will meet officials of the Department of Agriculture and Food to discuss EU proposals in regard to exceptional market measures.

The joint committee adjourned at 4.20 p.m. until 11.30 a.m. on Thursday, 23 June 2005.