I thank the Chairman. I am delighted to address the joint committee for the first time, as it is a very important part of the Oireachtas system. I was delighted to hear the discussion earlier because, as members said, it was directly related to the issue we want to discuss with the committee.
Deputy O'Keeffe is correct when he talks about the need for proper labelling. One of the biggest problems we face in this regard is presented by the issue of substantial transformation. To take the example of chicken, companies are importing chicken and adding breadcrumbs, which in theory adds value. Under European law, they can then describe the product as Irish chicken. The same is happening with other meats, with some being cut up and repackaged in smaller packets. The substantial transformation issue must be tackled.
All our organisation has ever sought is a level playing field and equivalence of standards in respect of our competitors. That is the challenge we face in regard to Mr. Mandelson's proposals at the WTO talks. The chairman of the WTO agriculture negotiations, Mr. Crawford Falconer, published his proposals on 19 May in Geneva. They were slightly worse than we had expected. The reform of the Common Agricultural Policy undertaken by the former Commissioner for Agriculture and Rural Development, Mr. Franz Fischler, was completed in June 2003. Mr. Fischler made it clear at the time that this represented the European Union's final offer for the WTO talks and that it would go no further. Five years later, however, the Commissioner for Trade, Mr. Mandelson, has blatantly disregarded and reneged on that commitment. As a result, we are facing another reform of the CAP which effectively amounts to its destruction. One cannot have a common agricultural policy under the regime Mr. Mandelson is seeking to put in place. The two cannot co-exist.
The food industry is the largest component of our manufacturing sector, accounting for more than 50% of exports from Irish owned companies. Food and drink exports were worth €8.6 billion in 2007, representing 17% of Ireland's net export earnings. Farming, the food industry and service industries depending on agriculture provide 300,000 jobs, or 25% of all jobs outside the greater Dublin area. The WTO deal on offer in Geneva threatens these exports and at least 50,000 jobs in rural areas. The IFA has calculated the cost to the economy at €4 billion per annum, with the loss of 50,000 jobs in manufacturing and services and a further 50,000 farmers put out of business.
The European Union set out in the WTO talks to achieve a so-called "balanced deal"— a phrase we keep hearing — involving non-agricultural market access, NAMA, and services, as well as agriculture. I have continually challenged all interested parties, whether in the State or elsewhere and including the Government, Opposition and business interests, to demonstrate the tangible benefits to Ireland from the proposed deal. Nobody can demonstrate any potential gains to offset the certain losses arising for agriculture and the food industry. This is a crucial point. There is a general expectation and assumption that somebody is gaining from this deal. If agriculture is being sold out, one would assume that something must surely be gained in return. The reality, however, is that absolutely nothing is being gained. That is the message that must be sent from this meeting. This deal represents a sell-out with no benefits to the State.
The greatest threat to Irish agriculture from the WTO proposals is the suggested cut in import tariffs. For beef and dairy products which account for 65% of our agricultural output EU import tariffs would be cut by 70%. For other products, including lamb, pigmeat, poultry and cereals, tariffs would be cut by between 55% and 70%. The IFA's assessment is that a 70% cut in beef tariffs would severely depress cattle prices in Ireland to a completely unsustainable level of €2 per kg which equates to 70p per pound in old Irish pence. This is less than farmers were getting 30 or 35 years ago. The increased volume of imports after the WTO agreement will mean the European Union will become the dumping ground for South American ranchers. The likely price for Irish cattle could be as low as 64p per pound in old Irish pence or €1.80 per kilo. The prices would not remotely cover the cost of production and would result in 100,000 cattle farmers being redundant and 1 million suckler cows being slaughtered. Ireland has a total herd of 1.2 million suckler cows. While a few always will be kept, possibly for hobby purposes, etc., 1 million such cows which are on farms that depend on them to make an income would be slaughtered.
The point also should be made that beef prices are approximately €3.50 per kilo. Given rising oil and fertiliser costs, that barely constitutes a break-even position for farmers. Were the price to drop to €1.80 per kilo, it would not cover even half the costs on farms and it would be impossible for the industry to survive. Mr. Mandelson speaks of beef having sensitive product status and continually states that were beef to be treated as a sensitive product, a 70% tariff cut would not apply, that the tariff cut would only be 23%. However, he neglects to tell everyone that to qualify for sensitive product status, we would be obliged to allow the importation of between 270,000 tonnes and 400,000 tonnes of beef tariff-free. The 23% tariff cut would operate thereafter. This would mean that in addition to the approximately 220,000 tonnes already imported on a tariff-free basis, a further 300,000 tonnes to 400,000 tonnes could be imported also. It is possible that more than 600,000 tonnes would be imported on a tariff-free basis. All this meat is imported in the form of striploin, rather than as entire carcasses. It must be emphasised that all the imports are high value cuts.
The European Commission accepts that beef imports will rise by 700,000 tonnes from the approximately 500,000 tonnes imported last year. I emphasise the point regarding the importation of huge volumes of striploin. Although Ireland is already the fourth largest exporter of beef in the world, it produces a total of 31,000 tonnes of striploin each year. The new South American imports would be at least ten times Ireland's output of prime steak. Essentially, this would wipe out Irish beef exports on European markets. To put the issue in context, the striploin constitutes 6% of the weight of the animal but 30% of its value. If we are unable to get a price for our striploin, we cannot get a price for our animals and will be completely wiped out. For Ireland, beef and livestock are vital national interests. As I noted, Ireland is the fourth largest exporter of beef in the world and beef is three times more important to Ireland than wine is to France.
Butter is the most vulnerable of the main dairy products. Following a 70% tariff cut, the imported price would be approximately 16% below the current EU price. We believe this price fall, combined with lower skim milk powder prices arising from the 70% tariff cut, would reduce the milk price in Ireland to approximately 24c per litre which would have devastating effects on confidence and development of the Irish dairy sector.
The European Union already imports 283,000 tonnes of lamb annually, including 228,000 tonnes from New Zealand, at zero import tariff under previous trade agreements. These preferential imports, equivalent to 26% of total EU consumption, will be increased further in a new WTO deal, particularly with Australia which has millions of sheep coming into the market. In addition, the normal import tariff on lamb would be cut by between 55% and 70%. Oireachtas Members will be aware of the income crisis in the sheep sector in recent years, whereby numbers of ewes in Ireland have fallen from 4.5 million to approximately 2.7 million or 2.8 million in the past five or six years alone. As regards pigmeat and poultry meat, the import tariff, already is relatively low, would be cut by between 55% and 65%, depending on the particular product.
To aid economic growth and progress in developing countries, the unilateral agreement by the European Union known as Everything But Arms, EBA, provides for completely unrestricted imports of all products from the 50 poorest countries of the world. This is an enlightened and liberal strategy to lift the economies and peoples of the poorest countries, particularly in Africa. By destroying the European food market, Commissioner Mandelson is also destroying the opportunity for these poor countries afforded by the EBA agreement. People in the 50 poorest countries have tariff-free access currently, but they probably will be the deal's first losers because the EBA deal will become null and void if Mr. Mandelson gets his way.
No other wealthy country or trading bloc — the US, Canada, Japan, Australia, New Zealand or Korea — has made a tangible commitment to the 50 poorest countries in the world. The winners in Mr. Mandelson's scheme are not the poor countries of the world, but agricultural superpowers such as Brazil. Even in those countries, the poor and landless will never benefit, as wealth and agricultural property is concentrated in less than the top 5% of the population. On those farms, landless labourers' wage rates are less than $1 per day.
If Mr. Mandelson gets his way, Europe will be flooded with beef from South American ranches where landless labourers are paid only subsistence wages. Produced with lower costs, lower standards and on large ranch-scale units, dairy products, lamb, pork and chicken will be shipped to the EU from all over the world. The European model of agriculture based on the family farm structure will be destroyed. Corporate ranchers, multinational traders and shippers and international supermarket chains will reap considerable profits. Once they have control, consumers will pay the food prices they set. There is no evidence that jobs will be created in industry or services in Europe to offset the €17 billion losses in European agriculture. The figure of €17 billion comes from the Commission, not from the IFA. Due to Ireland's significant dependence on exporting food, we will suffer a disproportionate loss.
Mr. Mandelson is a failed negotiator. For all his concessions, the US and other countries have offered nothing. Both candidates for the Presidency of the United States are committed to protecting their farm and food industry as a vital national interest. They have clearly stated that food is a security issue for the US. In May, the US Congress passed a new farm Bill worth $307 billion over the next five years, a strong statement that US politicians, both Democrats and Republicans, are putting American interests first. This is in sharp contrast with the hostile attitude of the EU trade Commissioner, Mr. Peter Mandelson, who insists on selling out Irish and European agriculture in the WTO to the detriment of both Irish farmers and consumers.
The WTO negotiations and the Lisbon referendum are linked. The Lisbon treaty enshrines Articles 38-44 of the Treaty of Rome, which has been the legal basis for the entire European project since 1957. The Treaty of Rome established the Common Agricultural Policy as a cornerstone of European integration from the beginning. Probably more than any other sector of the electorate, farmers have a good understanding of Europe and always have been pro-Europe. Their difficulty is with the EU trade Commissioner, Mr. Mandelson, who is ready to sell out European agriculture without any effective sanction by the Government prior to last week when it stated it will oppose the present deal. The Taoiseach has said the current conditions in the Doha Round do not justify calling a WTO ministerial meeting in Geneva. The set of proposals on the table would require agriculture to bear a disproportionate burden while delivering little in other sectors and are, therefore, unacceptable to the Government. I welcome the Taoiseach's commitment to use the veto to stop Commissioner Mandelson's WTO cuts.
The way is now clear for farm families to vote "Yes" in the Lisbon treaty referendum. The IFA executive council has unanimously called for a "Yes" vote from farmers, their families and rural Ireland in the referendum. The IFA is giving a strong recommendation through our county executive structure and our 950 branches calling for a "Yes" vote, not just from farm families, but from the whole of the rural population. We hope for a strong turnout in the referendum on Thursday next.
I have written to all of the IFA's 86,000 members informing them of the WTO commitments given by the Taoiseach and the importance of voting "Yes" in the referendum. We have placed advertisements in the Sunday Independent, the Irish Farmers’ Journal, the Farming Independent, The Irish Times, the Irish Examiner and 22 local newspapers encouraging farmers to support the referendum. This week we are running a special advertisement in the marts urging farmers to come out and vote “Yes”. All IFA spokesmen at national and county level are taking every media opportunity to urge a strong farmer turnout and a “Yes” vote next Thursday. The farming community and rural Ireland can now be assured that the veto will be used to block this deal, which the Government has said is unacceptable.
I recognise the involvement of the Minister of State, Deputy John McGuinness, in regard to what is happening in the WTO. He took a strong, businesslike approach to this. He is familiar with the importance of the beef and dairy sectors. He played his part in meeting with various Ministers across Europe for which I compliment him.
