I would like to apologise for the fact that I am not able to circulate copies of my speech immediately because of the dispute with word processing personnel in the Department. I was not able to get a number of copies run off. As soon as some of my hard working secretarial staff in Agriculture House have some copies I will make them available to you.
Situation in Agriculture: Statements.
As the Opposition Senator who will be coming in immediately after the Minister I, at least, would like a copy. Others will have a chance to browse through it while I am replying. I feel an effort might have been made to bring in two or three copies and then get the rest over as quickly as possible. I have objected before; my views on this are well known. I am being persistent, not contrary.
As the Senator will appreciate, the distribution of any documentation is not within my control. In the circumstances, I think the Minister has indicated the difficulties he is confronted with.
When are we likely to get a copy, before or after the Minister sits down?
I hope within the next few minutes that I will, at least, have a copy for you. This matter is completely, totally and absolutely outside my control. It is an industrial dispute authorised by the unions involved.
With respect, it would be very simple to photocopy what you have in hand. My views are well known and the views of other Members of this House are well known on this matter. It is mere courtesy, notwithstanding the difficulties which I can understand of getting 50 or 60 copies.
I must intervene and say that the business of the House must not be interrupted. I ask that the Minister be allowed to continue.
It is a bad start.
I invite Senator Doyle to make contact with my secretary who is unable to type and photocopy at the same time unfortunately. She has been working extremely hard trying to get this script hot off the typewriter. She is now in the process of photocopying and making this speech available within a few minutes.
I am glad that this debate on agriculture gives me an opportunity to outline to this House the current situation in a sector of such strategic national economic importance. While the sector is currently beset by a number of difficulties, it has the potential to develop and diversify and overcome its current problems. Very clearly, overdependence on market support mechanisms and failure to be sufficiently responsive to market changes need to be addressed and with some urgency. A great challenge faces Irish agriculture and I am certain that if we enthusiastically adopt a market-led approach, with the needs of the modern European consumer primarily in mind, this sector will overcome its present difficulties and, drawing on its many strengths, flourish in the years ahead.
However, it would be foolish not to accept that there are clouds on the horizon at the present time. Markets are under increasing pressure for a number of reasons — the Gulf crisis, increasing supplies, declining demand and a more discerning consumer. At the same time, the ongoing GATT negotiations, a matter to which I will return shortly, have caused considerable anxiety recently.
Before doing so I would like to make a few comments on the farm income situation and to refer to developments in a number of sectors. Much attention has been focused on the decline in farm incomes this year, which it is reliably estimated will be something over 10 per cent. However, this decline cannot be considered in isolation. It is a fact that since 1986, farm incomes have increased by 51 per cent in nominal terms and by 22 per cent in real terms. This increase was considerable at a time of relatively low inflation which led to farm incomes during 1989 reaching their highest level in a decade.
I must also point out that farm incomes have always tended to be cyclical by nature. This is clearly shown by an examination of the trends in farm incomes since we joined the EC. In the period 1974 to 1978 incomes increased by about 160 per cent in nominal terms, but fell during the following two years. During the years 1981 to 1984 an upward trend in incomes was maintained, followed by a serious decline in 1985 and 1986, with as I have pointed out, this trend being reversed again between 1987 and 1989. Developments this year should, therefore, be viewed as the downside of this cycle which governs incomes in the agricultural sector.
By clearly recognising the problems facing agriculture and by taking clear decisive actions across the board, from the proposed extension of the disadvantaged areas scheme, to the effective use of market support arrangements such as the safety net mechanism for the beef sector, the Government have already alleviated the income problems faced by producers this year.
As the Minister for Food I would now like to speak about the importance of the food industry not only in the agricultural context but also in the context of the wider national economy.
The value of gross agricultural output is of the order of £5.5 billion, or about one third of our total manufacturing output. Employment in the food processing sector represents nearly 25 per cent of all those employed in manufacturing industry. The industry has great potential for further development and expansion and with the advent of the Single European Market there will be challenging opportunities for Irish exporters in an open market of 340 million customers.
It is, therefore, not surprising that the Government is devoting special attention under the Programme for National Recovery to the expansion of the food and drink industry where significant job opportunities and increased wealth can be achieved.
Since first taking office over three years ago, our policy has been clearly directed at restoring confidence and investment in our agriculture and food industries. Our food and drink exports have increased from £2.3 billion in 1986 to £3.5 billion in 1989, a growth increase of 52 per cent over the period. It is clear that our food industry has a new sense of drive and a confidence which augurs well for the future.
Government policy implemented through the various State agencies is clearly showing results. It is emphasising the importance of the market-led approach and is impressing on companies the critical need for them to have a clear strategy for developing their markets. As a result, the State agencies are now targeting their assistance towards those enterprising and ambitious companies who are committed to providing quality Irish products for our export markets and who have the marketing strategies necessary to sell in those markets.
Further evidence of the buoyancy in the agri-food sector is that during 1989 a record level of £25.4 million in FEOGA grants were approved for Irish industry in relation to eligible investment of £80 million. The projects involved will lead to higher value products and new jobs in the sector.
I would now like to look in more detail at various sectors of the agricultural economy, recognising the difficulties but, at the same time, indicating how these will be tackled.
The EC milk quota system was introduced under a cloud of negative publicity in 1984 and only after all other efforts to control Community production had failed. This regime is to remain in place until the end of March 1992 and the Commission is to present a report on its operation by March 1991. It has to be accepted that the introduction of the super-levy system coincided with and contributed to a vast improvement in milk prices, especially during the period 1987 and 1989.
The availability of cheap eastern European dairy produce on the world market and changing consumer demands are a major factor in setting milk prices at the present time. These developments only prove our traditional dependence on the commodity dairy products of butter and skim milk powder and makes us particularly vulnerable to market downturns. They should also serve, of course, to refocus our attention on the need for our dairy industry to rationalise its processing capacity into more efficient units and to reduce its dependence on commodity products.
Ireland's dairy industry up to now has been particularly dependent on the maintenance of adequate Community support arrangements. In recent times Irish butter has accounted for over 50 per cent of total Community purchases into intervention. We are also highly dependent on exports — some 75 per cent of our dairy output is exported with over 20 per cent going to third country markets and requiring substantial export refunds.
We are, therefore, concerned that adequate support arrangements can continue to apply in the post-GATT period. The industry will, of course, have to play its part and the recent developments in relation to rationalisation is a recognition of what has to be done. Any industry must have regard to the scale and ability of its competitors if it is to succeed. The Irish dairy industry is beginning to grasp this fact and this is to be welcomed.
There can be no disputing the fact that in this sector Community producers have had to make significant sacrifices in recent years in order to deal with surplus production. Severe restrictions were imposed in the beef regime in 1986 and again in 1989. The worst effects of these measures were offset by the operation of the safety net mechanism which was introduced at Ireland's insistence. As a result, intervention was introduced much more quickly than would otherwise have been the case thereby preventing the problems arising from the BSE scare and the Gulf crisis from becoming much worse. The existence of the safety net has meant that a collapse of the scale experienced in 1974 has been avoided.
Ireland is particularly vulnerable to such developments given that we have to export 85 per cent of our production with about half of this quantity going to third countries. This is one reason why it is not necessarily in our interests to shift too rapidly from price supports to premiums. The operation of Community price supports will be of paramount importance at least until we have achieved major penetration of the European market and reduced our dependence on volatile third country markets. CBF will have a crucial role in developing European markets in the years ahead.
In the cereals sector, the price cutting measures which have been in place since 1986 have not had the intended effect, with production continuing to exceed demand. Increasing imports of cereals substitutes are, of course, an important factor in the growing imbalance. This is why the rebalancing proposal in the GATT negotiations is so important. Existing Community policy impacts most severely on the small and medium-sized producers, which are the vast majority in Ireland and the procurement of compensationary measures for these producers will continue to be a top priority for the Government. A policy of supply management may, indeed, offer the best prospect of curtailing production and ensuring a reasonable return to producers. In the context of the review of the cereals stabilisers scheduled for next year, it is Ireland's policy to shift the emphasis from price reduction towards output limitation.
Within the EC the sugar regime is unique in that it is self-financing. Production quotas have remained the same since 1981. Discussions now taking place at EC level on the review of this regime are concentrating on Commission proposals providing for the maintenance of current quotas for a further two year period up to the end of June 1993. It has to be remembered, of course, that the outcome of the current GATT negotiations could affect these proposals.
Producers can be assured that in the current review Ireland will not agree to any measure which would lead to sugar beet growers opting out of sugar production. On the processing side, the Government decision in relation to the future of the Sugar Company clearly indicates a commitment to ensuring its ability to effectively compete in the marketplace post-1992 and thus to ensure the future of the sugar industry here.
The importance of the sheepmeat sector in Irish agriculture has grown over the last few years with sheep numbers raising from 4.3 million in 1987 to a current level of 8.7 million. This trend has been reflected at EC level resulting in an increase in the Community self-sufficiency level to 83 per cent at present. At the same time, the international obligations of the Community have obliged us to afford access to third country supplies which are currently at an annual agreed level of 275,000 tonnes.
The combination of these two factors can be blamed for the difficulties experienced by sheep farmers this year with price levels falling substantially. However, the advance payment of the ewe premium to all producers this year and, in addition, the headage payments to those in the disadvantaged areas have been particularly helpful in offsetting the worst effects of this year's fall in prices. Of course a further help next year will be the payment of an additional £3.50 for eligible ewes in the disadvantaged areas.
I would now like to briefly look at the threats and opportunities posed to Irish agriculture by developments in Eastern Europe this year. It is important that a realistic view is taken in relation to this matter. Eastern Europe will neither provide the EC with a ready market of its surplus production nor will its production swamp EC markets. At the same time, we must be vigilant and ensure that in the aftermath of the German unification short term problems which arose earlier in the year are quickly brought under control with effective frontiers being quickly established. On a positive note we must make our exporters aware of any opportunities arising from these markets and move quickly to exploit them.
During the course of this speech I have referred on a number of occasions to the disadvantaged areas. I would now like to deal with an important development in regard to the extension and reclassification of Ireland's disadvantaged areas. The proposal for this extension has been put forward to the EC Commission. We are asking that some 1,871,000 acres be classified as disadvantaged for the first time. In addition some 118,300 acres in coastal areas with particular problems in regard to erosion have also been proposed for disadvantaged area status. This overall proposal covers some two million acres and is three times the size of all previous extensions granted.
I must also point out that within the existing disadvantaged areas, some revisions have been proposed: an extra 1.3 million acres to move from less severely handicapped status to more severely handicapped status and 250,000 acres from mountain sheep grazing status to less severely handicapped status. If these proposals are accepted, many producers for the first time will be able to benefit from payments under the disadvantaged areas schemes while the rate of return to some producers within the existing disadvantaged areas will also be increased.
In 1989 the Exchequer expenditure on the disadvantaged areas scheme amounted to £60 million. It is envisaged that spending in these areas will rise to £100 million in 1992, with additional benefits for all existing applicants and 30,000 new applicants receiving aid for the first time.
It is in this context that criticisms concerning the perceived exclusion of certain areas must be viewed. I can assure this House that the Government are making every effort to expedite the requisite approval for the extension.
This brings me to the current round of GATT negotiations which will have a considerable influence on agriculture in the coming years. The round which began in Punta del Este in 1986 is due to be concluded in December of this year.
Contracting parties went into the negotiations which began with different views on the results they wanted to see emerging from them. The Community has approached the negotiations on the basis that agriculture is of its nature different from general industry. Agricultural production is unique in many respects. Climatic conditions can affect production. The length of the production cycle for some products can make future planning hazardous. In addition, concerns over food security have a major influence on Government's attitudes to agriculture. Without Government intervention to support agricultural prices, security of supply at reasonable prices could not be guaranteed.
As a result, the Community's position from the outset has been that it is prepared to reduce support to the extent necessary to establish balanced markets and a more market-oriented agricultural trading system. Commitments to achieve this result would have be be made on a global basis using an aggregate measurement of support mechanism which would cover all measures affecting the production decisions of farmers. The Community has also insisted that credit would be allowed for measures undertaken since the beginning of the round in 1986 and on the rebalancing of protection against imports of certain oilseeds and cereal substitutes. The Community has always made it clear that the basic principles of the Common Agricultural Policy are not up for negotiation.
In contrast to the reasonable approach of the Community to the negotiations the US and the Cairns Group, agriculture exporters including Australia, New Zealand, Canada, adopted the extreme position of advocating the elimination of virtually all agricultural support and protection over a ten year period. In particular, they proposed that specific commitments be undertaken by contracting parties to eliminate export subsidies over five years and that non-tariff barriers be converted into tariffs and be eliminated progressively over ten years. In effect, their aim was to dismantle the Common Agricultural Policy and to replace Community produce on third country markets with their own produce. Some other countries, including Japan, the Nordic countries and Austria while wishing to retain the right to support and protect their agriculture and their rural areas generally, could agree to a more market-oriented trading system.
The US, the Cairns Group, Canada, Japan, Norway and Sweden have submitted their proposals in Geneva for the concluding stages of the negotiations. The Community has not submitted its proposals yet. The position of the US is that it proposes a 75 per cent reduction of internal supports over the ten years from 1991 using as a base the average internal support levels applying in 1986-88. However, the support reductions would apply only to supports which the US considers to have trade distorting effects. Less than 50 per cent of their supports fall into this category and thus more than half of their internal supports would remain intact. The US also proposes a reduction of 90 per cent in export subsidies over ten years with the elimination of export refunds on processed products by the end of 1996-97. The proposals call for the conversion of all non-tariff border protection measures into tarrif equivalents which would be reduced by 75 per cent over ten years. This would be complemented by expanding existing access levels and providing minimum access levels to markets where products have no access at present.
The Cairns Group of countries, excluding Canada, have proposed an identical reduction in internal support, i.e. 75 per cent and a bigger reduction in export subsidies. Canada proposes reducing internal support by 50 per cent and eliminating export subsidies over ten years. Submissions from other countries propose reductions in internal supports of between 20 and 50 per cent.
The Commission proposals which have yet to be agreed at Council suggest a reduction of 30 per cent in support levels by comparison with 1986 for the main commodities over the five years up to 1996. The Commission is also proposing to accept subsidiary but related commitments on border measures and export subsidies in specified circumstances which would include securing increased protection against imports of cereal substitutes and oilseeds.
The Commission's proposals have been discussed at Council level on a number of occasions during October without agreement being secured. The European Council briefly considered the matter last weekend and requested Ministers to adopt an agreement so that the Community's agriculture offer could be submitted. Agriculture Ministers have again been asked to address the issue next Monday. Some member states such as the UK, Denmark and the Netherlands have no difficulty in accepting the Commission's proposals which those countries regard as the Community's opening bid in the final stages of the negotiations. However, a significant majority of member states want additional assurances that the basic mechanisms of the CAP, including Community preference, will be maintained and that vulnerable producers and regions will be compensated for losses arising from the GATT Round. Many member states, including Ireland, are also opposed to making specific commitments in relation to export subsidies. There is also considerable concern about the ability of the Commission's proposals on rebalancing to stem the tide of imports of cereal substitutes and oilseeds.
From an Irish viewpoint our main concern in regard to the Commission's proposals is that a reduction in support and protection of the level proposed would have adverse effects on the income of our producers and on the economy as a whole. We would be particularly affected because of the important role which agriculture plays in our economy in terms of employment and in terms of export earnings. There would, of course, be follow-on effects on rural society generally. Our approach to the Commission's proposals will be determined by the assurance we receive on the modalities involved and on the measures that will be implemented to adapt the CAP and to protect farm incomes especially those of the most vulnerable producers. We would also wish to get commitments on structural measures to maintain and develop our rural areas.
In relation to any support reduction arising from the negotiations, it must be borne in mind that the continuing growth in the Community's overall agricultural output together with the return of surpluses in some of the more important product sectors will necessitate the adoption of further constraints in any event. The Uruguay Round will impose commitments on our competitors to reduce supports also. This can be of considerable benefit in matching food supplies to market demand on a global basis and thus providing stable marketing conditions for our producers.
Some progress has been made in the Council discussions in meeting concerns particularly in relation to the compensatory arrangements to offset the main adverse effects of market support reductions. I expect that some additional assurances will be provided which will complement a draft Council declaration which had gone some way towards meeting our demands and those of like thinking member states. As the negotiations progress the Minister will continue to follow overall Government policy in relation to the GATT negotiations which is to defend to the utmost the interest of Irish farmers and the agriculture industry in the broadest sense.
I have given a detailed outline of developments in the more important product areas for Ireland. In particular, I have dealt at some length with the ongoing GATT negotiations and set out the present situation in relation to the Commission's proposed offer on agriculture. The agriculture sector has experienced many changes in recent years with most of the market regimes of importance to Ireland having been subjected to review. Indeed, review of the Community agriculture policies is an ongoing affair and perhaps this is indicative of the Community's willingness to face up to reality and to the requirements of changing circumstances. We have had major reviews in most market sectors and the sugar regime is just the latest to be tackled. The outcome of the GATT negotiations will give further impetus to review and change. Our priority on GATT is to ensure that the Community's negotiating position on agriculture conforms fully to the requirements of the Common Agricultural Policy. As an exporter of considerable volumes of agricultural products, we wish to ensure Community preference on the markets of the 12 member states and continued access to third country markets with the aid of an appropriate level of export subsidy. We want to ensure a viable future for farmers in Ireland and throughout the Community and the maintenance of a sound socio-structure in our rural areas. We want to cater to the needs of our consumers, assuring them of adequate supplies of reasonably priced quality food. I believe we can achieve this and that the GATT negotiations can be used to arrive at a more vibrant, market-orientated agriculture and food industry in Ireland in the years ahead.
I would like to thank the Minister for the copy of his speech which I have just received.
In discussing a topic like the one we have before us here this morning, there is a risk that we, the representatives of the farming community in our different areas and roles, might be accused of putting on the béal bocht, as it were, on behalf of our constituents or on behalf of rural Ireland. That accusation may have been reasonable going back over the years and because the béal bocht was common enough when perhaps it was not justified it is often hard to get an audience and to get the Government and Brussels to listen to the facts and understand the real problems of the farming community in Ireland when times are genuinely extremely difficult.
At different times we have all talked about the preservation of the Irish family farm. Indeed, when every other argument fails in Irish politics we can thump our breasts and talk about the preservation of this model Irish family farm that we laud. However, very little has ever been done about it and I do not think any Government — looking back as long as I can remember in active politics and, indeed, a little bit before that — has abandoned the family farm like the present Government. The facts are that the 5 per cent, 6 per cent or 7 per cent bigger commercial farmers will survive whatever the next three, four, five or six very difficult years will bring. However, the family farm is not looked at as a commercial farm, as an economic unit, and it is to the Social Fund and it is to social legislation that the vast majority of the Irish farmers are going to have to turn to be sure they have a future in this country.
It is very difficult for me to follow the Minister's speech. As he will understand, when facts and figures are being given it is of major assistance to have a copy of them in front of one. While I note the points he makes on the different issues, I do not think there is any reference to the Irish family farm in the Minister's speech. Do I have to remind him that 90 per cent of Irish farms are what we call family farms of questionable economic viability particularly in 1990? It is amazing how quickly taxation problems were wiped off farmers' agendas. A few years back, when they had an income to consider taxing, there were major problems in relation to taxation, to the compilation of income for taxation and various different methods of taxation. That was the discussion and the debate on the agenda at farmers' meetings throughout the country. Is it not ominous that virtually no farmers have a need to discuss taxation problems because they do not have a taxable income any more? Tragically, we will still be told the percentage of tax take from the PAYE sector versus the farming sector. How is it we are not told how the decline in farm incomes has caused the situation to arise where there is no taxable income for the vast majority of farmers in 1990?
The item at the top of all farming agendas, and indeed political agendas or the agendas of politicians who have an interest in agriculture which is such a fundamental industry to our country, should be the conclusion of the GATT talks in the best interests of Ireland and Irish farmers, should be the reform of the CAP to ensure there is a future for Irish farmers and their produce on the market shelves of Europe, of third countries and the rest of the world. All the issues we should be discussing have been wiped off the agenda because of the income crisis in virtually every sector of Irish farming today. There are very few enterprises that will stand.
The Minister mentioned the beet quotas. We hope those with reasonable sugar beet quotas will have a good beet campaign which is just underway now. If the weather holds and the situation continues as it is, they look like getting a reasonable profit per acre for their beet. Thankfully, we can say that those with reasonable quotas seem to have a reasonable harvest ahead of them.
Silage was of very good quality this year, as was the hay and the winter fodder generally. That may cushion some who in other circumstances would literally be facing the gate this winter. Malting barley and feed barley had a reasonable season for those farmers who had sufficient acreage, who had the storage and drying facilities and who could work on sufficiently large economies of scale. Spring cereals were extremely disappointing. The Minister referred to the quota situation and to tillage generally. He mentioned in passing, if I recall, the need for some control mechanisms on production in tillage to ensure that those farmers who are tillage specialists will have a future and that they will have a market for their produce in the years to come. It is perhaps an area in which we cannot claim a major natural advance unlike the grass-based enterprises in our country, but it is a very important area to counties such as Wexford and, indeed, right along the east coast and in Meath, Kildare and those areas where weather traditionally has allowed farmers to develop tillage enterprises. However, the vast majority of our tillage farmers, those we would call small acreage tillage farmers, are not in a position to have economies of scale and I would like the Minister to tell this House what future there is for these tillage farmers in our country.
With the variable levies situation at present and the restrictions and controls on production, even in years when the world market prices had it an advantage that we produce more tillage in Europe such as the drought in the US over a couple of years etc., Irish farmers, and indeed European farmers, were tied to unrealistic levels of production. Perhaps it is understandable when there is a glut of certain products on world markets that we should look to some type of production controls as a means of controlling quantity. Whatever type of production control is put in place must be sufficiently responsive to natural forces such as droughts and catastrophes of that kind and to world market prices generally to enable us to take whatever advantage those years will allow our tillage farmers and not put them into a strait-jacket when they could, be producing more. That whole system has been most unsatisfactory. If I recall correctly, the Minister made some reference to the fact that the control mechanisms put in place did not achieve what they were supposed to achieve.
Could we get a commitment from this Minister and from the Minister, Deputy O'Kennedy, that there will be some priority to resolving the dilemma for our tillage farmers on the agenda in Europe, and that it will be put on the agenda fairly soon? If farmers are over-borrowed and are not in a position to stock land and build major farm buildings, livestock buildings and intensive units of any kind, it is an area they could get into if the economics were resolved. The economics must be such that the average farm in Ireland could justify tilling. At the moment they cannot. It is only the large tillage farmer who often has as much conacre as land he owns himself, who can till, on a major scale with his own machinery, storage and drying facilities. I would ask the Minister if there is a future for the average tillage farmer in Ireland? I cannot see it; Fine Gael cannot see it. The response from the Government to this particular sector has been abysmal. What production control mechanisms does the Minister envisage? Is it regional quotas for those already in tillage or has he something else in mind? What sort of urgency does the Minister attach to resolving the dilemma of this enterprise in Irish farming?
The Minister mentioned the beef sector. Above all sectors the dry stock farmer has taken the brunt of the difficulties of this year, and indeed of several years. The Minister quotes figures for incomes in 1989 and other years but, quite frankly, when one takes inflation into account, the disposable income of Irish farmers in those years did not increase, and I stand to be challenged on that. I am not going to go into that argument now because it would be a waste of time.
We are looking at a reduction this year of between 10 per cent, according to the Minister, in farm incomes, 21 per cent according to Teagasc in farm incomes and anything up to 30 per cent depending on specialist enterprises in relation to farm incomes. Whichever figure one settles on — and the Government will say 10 per cent, the Opposition will say 30 per cent; it is possibly somewhere around 21 or 22 per cent or 23 per cent — it has been a catastrophic decline in incomes in a major sector of our country. I have said, and I stand over the statement, that the dry stock farmer has taken the brunt of that. There was no fat in dry stock farming to fall back on. Thankfully, our dairy farmers had a few good years when they could put their affairs in order and perhaps they can withstand a few difficult years which could be facing them now. They have had a one-third decline in their income but they had a long way to fall, unlike the dry stock farmer.
What does one say to the calf producer in the west or the man who is trying to produce the weanling or the small store when he sees his income decline to the point where he is virtually out of the gate? This is the farmer who will disappear from our land, the traditional trade of the family farm in Ireland, who brings the cattle up along the line to the farmers trying to fatten them. Some are graziers, heavily dependent in recent years on APS or a support mechanism of some kind, particularly in the back end of the year. It gave them a few pounds then only to distort the trade in the spring and for several months afterwards when markets were filled from stores rather than directly from the factories and directly from the farm gates. No matter what way we have turned to try to help the producer of the calf, the small store, the forward store or the beef beast, we have failed, the Government of the day have failed, this Government have abysmally failed and Europe has offered no consolation at all.
The sectors that we are in a position to stand up and shout loudest for are the sectors in Irish farming that are in grass-based production. The whole philosophy of joining the European Community, as I understand it, the philosophy of the Treaty of Rome going back to the late sixties and early seventies when this debate was raging, was of concentrating production in areas of natural advantage. We would let the West Germans get on with steel production, we would let the French get on with their specialities and we would be allowed to thrive and develop industries based on the natural advantage of this country. Can the Minister name an industry that is more firmly rooted in natural advantage for Ireland than grass-based dairy production and beef production? Quite frankly, I cannot. Yet, this Government have totally failed the beef sector, as has the Common Agricultural Policy in recent times. The attitude is, you trot out the safety net, and anytime the shouting gets to such a crescendo that the farm leaders are banging down your gates you will trot to Europe and get a safety net and lob a bit more into intervention and then that goes on again.
Is that the way to market a product in which we should be world leaders and in which we have the potential to be world leaders? We cry for intervention as soon as problems develop at home instead of developing the markets. Indeed this Government's response to developing the beef markets was to dock the annual estimate of CBF by £400,000 or £500,000. That is the only concrete response we have seen by the Minister to CBF. He reduced their budget by half and then wonders why a job is not being done in finding other markets rather than depending on EC supports and interventions of one kind or another.
This is indefensible, and I would like to hear the Minister try to defend it. I would like to know what his proposals are for CBF, for Córas Tráchtála and for the whole export arm of Government. We should ensure that we have an aggressive, vigorous export policy and marketing policy for beef and indeed other fresh meat products and all our dairy products.
The cycle in the production of beef has been a major headache for many years now. There has been no even supply to the market throughout the year. One expects a bit more off grass from the summer graziers but there should be a system in place whereby the winter fattener is rewarded for his extra costs, whereby we are ensured a regular supply of top quality product that this country is capable of producing for 12 months of the year, whereby we can meet our contract commitments to any markets we have managed to establish and whereby we are not overly dependent on some volatile Third World market which has seen us all in severe trouble in recent months.
I do not know what thinking has gone on or what effort there has been to develop such a system in beef production. The removal of the use of hormones, both natural and artificial, while fully understandable in the consumer demand climate of Europe, has further added to the headache of the producers of beef here. It takes a greater length of time to achieve the same weight post hormones as during the hormone era and indeed that extra input costs a lot more money. It also means that many more animals are not grading as they otherwise were and so there is a loss in terms of the quality at that end and in terms of payment when you reach a lower grade with your animals than heretofore.
Apart from the cycles, other factors have intervened. The distortion of the APS trade over the years has added to the difficulties and we have seen no response worthy of an Irish Minister for Agriculture and Food to this most important sector. That sector has been most affected by the catastrophe of this year and so far nothing has been done. There has been no response from the Minister or from the Government and absolutely no hope held out for the future of these farmers, most of whom are small farmers on the west and south-west coast where they traditionally produce the store calf, the small store, which is fattened and finished off in the winter fattening units, the intense units, generally along the east and midlands. That whole, historical and traditional method of producing beef in Ireland has been broken because of the lack of a market return. If that is acceptable, will the Minister of State say so? If it is not acceptable will he tell us what his plans are to ensure the survival of this sector in Irish farming?
I mentioned the dairy sector. There has been a major crisis in the decline in farm income. Milk reached the 110p a gallon in some areas and it had a reasonable way to fall but the rate of the fall and the speed in which the price has come down has rocked the industry. Calf prices also have tumbled. There is no doubt they were at a false level for some time. With the beef sector, this is at the foundation of Irish agriculture. The future needs to be spelled out clearly in terms of what may be expected and the policy of the Government in dealing with the crisis that has occurred in this area.
One area I have taken an interest in over the years which has been prone to cycles in terms of profitability is pig production. Very little land is necessary relatively speaking the overheads are containable and if we were producing consistently and marketing properly a quality product, we should be leading the world in pig production today. We are an island nation and we have been able because of that to control disease in this country. One of the greatest tragedies has been the lack of a proper policy in this area. Traditionally it has been the occupation of the second son of the farming household. The eldest son go the farm and the second son was given his few acres and got on with what was considered the smaller enterprise at the time, pig production. It could be profit able. It could be one of the most profit able industries in our country, not pron to the vagaries of our weather, not pron to as many natural disasters that can befall us because of our temperat weather and not needing a lot of capital to establish. Yet, we have not been able to get our marketing right.
There are other specialist areas I have a particular interest in where we have failed to get our act together. The spot horse industry is dear to the Minister heart and it is particularly dear to my heart. We had a horse breeding advisor committee established over a year ago by the Minister. We wait with baited breath the deliberations of that body. I heard on the grapevine that something may be coming from them in the next few weeks. Perhaps at last we might get the present nonsense in relation to the registration of stallions in order, if the Minister listens to the recommendations of the committee he set up which has not always been the case.
With regard to the nonsense in relation to registration of what we used to refer to as half-breds but are now called sport horses, is there any hope we will sort out the Irish register? Before the vast array of rules, regulations and directives of the Single Market fall down around us in early 1993, is there any hope we will be able to sort out our act? The horse advisory committee have had a year of deliberations so far but we have heard very little from them.
The Minister for Agriculture and Food had a good initiative some 18 months ago in relation to the Irish draught foal and the premium there. That was lauded, but we rapidly need to follow that up with support for the half-bred industry. I insist on calling it half-bred even though I should more correctly refer to it as sport horse industry. I dislike that description but I will get used to it some day. We should now have initiatives in place to support the sport horse industry, a one time flagship industry in our country. I am very proud of the fact that the first time the Irish flag was flown abroad in the early 1930s was over the head of an Irish show-jumping team. For many years we have been very proud of our horses, our horsemen and women, of our Army Equitation School and of a flagship industry that thrived up to recently despite the neglect of successive Governments.
There is a marvellous second farm enterprise here that is in danger of being lost forever if this generation of farmers stick to tractors and do not understand the handling of horses. Unless we can continue the interest in rural Ireland in half-bred mares, in non-thoroughbred mares, unless the next generation of farmers can be reared to appreciate the beauty of this animal and understand the potential success it could have, not only for their own farm enterprise but for the country as a whole, it will be lost irretrievably because once the pool of brood mares goes below the 5,000 mark — it is at the 5,000 now with less than 2,500 half-bred foals being born a year — you are at a dangerous level for maintaining the herd.
It is an area I could talk about for a long time, I believe the Minister appreciates my views and I know he supports this industry. I am disappointed that we have heard so little in the last 12 months from the horse advisory committee. I am disappointed the Minister has been distracted, notwithstanding the difficult problems he has to deal with, and has not been able to give more time and attention to this industry, which is in danger of declining and is in danger of extinction. I urge the Minister not to forget the sport horse industry, it is very important to our country.
In all of this there is a major problem running through the system. Different farmers in different sectors are in financial difficulty, the majority through no fault of their own. Others because they had programmed, planned and projected to develop their enterprises to a certain stage and a certain profitability, and indeed borrowed and invested to help that programme, found themselves cut off in mid-stream either through production controls or market collapse for their product or whatever. The result has been that we have many farmers, not all who would traditionally have been classified as small farmers, in need of help to exist. The number of farmers qualifying for eligibility for medical cards has increased dramatically.
County Wexford was often referred to as the model county. When one considers disadvantaged counties or poor farming counties, traditionally Wexford has not been to the top of the list. Unfortunately, even in County Wexford, we have major income difficulties, a major need for social welfare support for our families, and increasing clamour for medical cards and all that goes with supporting a family and maintaining a bare existence.
In Wexford, as indeed in every other county, we have a major difficulty in that we do not have a unified or single means test for social welfare. I am only making a passing reference to this as it is not specifically an agricultural function to develop policies in terms of means testing or qualifying for social welfare but the Minister must be aware of the anomalies and the dilemmas in this area pertaining to farmers. They are treated totally differently when they apply for social welfare than any other sector of our economy. They are put through the hoop and those who are virtually hungry are denied social welfare even in the short term; even if they have a harvest crisis and no income for that particular year, their previous year and the year before that will be looked at. If they had a reasonable year they will not be allowed any social welfare even 18 months later when they have no money to put food on the table.
There is some discrepancy in this area. We need a unified means test system. The matter needs to be resolved quickly because there is tragedy enough for our farming community when their incomes collapse and the bank managers come hounding them. It is totally undignified for people who have worked hard all their lives to be put through such a hoop when it comes to looking for what should be their right. The right and entitlement of every Irish family if they need it is reasonable social welfare assistance to allow them exist and nothing more. We must not condone abuse of any kind but because we restrict the system so tightly to prevent abuse it must not mean that we squeeze out farmers who are entitled to social welfare, in the short term hopefully, so that they can farm their way out of the difficulties they have got into. I urge the Minister to look for a unified system of means testing there so that it can be applied impartially right through our population and applied equally to the farming community.
We are all buried in surveys and buried in paper when it comes to problems, no less in the agricultural sector. Indeed if the Minister fires enough statistics at enough of us he will confuse us all sufficiently not to be able to analyse the problem. It is a system which seems to work reasonably well. It is quite an effort to plough through all those statistics and look at the reality. One of the surveys that was not buried and that did not lie gathering dust on any shelf was that done by Teagasc and the IFA in County Wexford last year. I pick my own county without apologising because it is a county that was not traditionally associated with difficulties in farm incomes generally. May I just remind the Minister of the contents. There were 200 randomly sampled farms in County Wexford last year. The picture that emerged of the many low output farms, which will never have the means to work there way out of difficulty, was one of the most frightening aspects of all that has been written on the crisis in farming in recent times.
The average 30 to 50 acre farm had £7,600 indebtedness and that is a very moderate sized farm. This indebtedness rose to £12,000 on the 50 to 75 acre farm in Wexford. Again for anyone who is not familiar with farming, this is not a very substantial holding unless there is a good milk quota attached to it when it would be a reasonable holding. Some 22 per cent of the larger farms in Wexford reported difficulties meeting repayments, varying to 60 per cent in the 30 to 50 acre lot. The average income for a farm also varied widely from £1,655 in the 15 to 30 acre group. What sector could live on £1,655 per annum? The income went up to £12,900 in the 50 to 75 acre group. The income on dairying farms was double that of dry stock farmers. That would be no surprise to any of us who have an interest in rural Ireland.
In relation to farmers' dole, only 5 per cent surveyed in Wexford receive this benefit. Non-farming income accounted for £4 out of every £10 coming into the home. The farmer and/or his wife or his grown children are being forced off the land. That is the reality of what we are talking about now. This survey by Teagasc in County Wexford was referred to by one commentator as a myth exploding survey. It is just that. If that is an analysis of the problems of the farmers in County Wexford, what must they be like in the midlands, west of the Shannon and indeed in other counties where over the years they have traditionally not been in dairying to any large extent? Dry stock and tillage were the main enterprises in Wexford over the years. As a county it got into dairying late. There are a few large quota holders but not many. If we can measure the problems in other counties on the problems in Wexford, it is indeed a very dismal picture. That Teagasc survey of County Wexford is a myth exploding survey in relation to life on the Irish farm today.
The Minister mentioned disadvantaged areas. I am sure I am no different from other Senators in this Chamber. There has been an avalanche of outcries in recent weeks, since the famous document we have all managed to get copies of, the submission to Brussels was circulated throughout the farming community. At times I wish we had never managed to find a copy of it. Daily and up to 11 o'clock at night the telephone rings and the door bell knocks. I have piles of cardboard folders full of resubmissions and cases for appeal to the Minister of cases that were left out in my county — I know every county is the same on this — in relation to the submission that finally wound its way to Brussels. It took two and a half years but it got there. We were told it would be done within 12 months but that does not matter. Will the Minister please speed up what has gone and outline to this House what type of appeals system he will put in place for those areas that were not included?
Can the Minister deny as was reported in one of the daily papers recently, that the sixth criterion for inclusion in a disadvantaged area was political patronage? If he cannot deny that, or if he will not deny that, we have major problems. I suspect he will make an attempt to deny it but if he does he will have to tell me why in County Wexford, for example, the Templeudigan area was left out? One half parish was excluded and the other half got in. The larger farms and the large dairy quotas in the neighbouring half parish were included yet the small 40 to 50 acre farmers, dry stock farmers, in Templeudigan were left out. There are four or five areas in the county. There is an area around Aske in Gorey, the Ballindaggin area, the Camross, Adams-town area. I could bore the Minister for the next two hours listing the problems in County Wexford in regard to this submission.
I ask the Minister to spell out here what type of appeals system will be put in place, what criteria will be necessary to qualify to appeal or is he going to let the whole country appeal? Maybe that is a good idea. Was that not what I suggested two and a half years ago? Would it not have saved a lot of problems, two and a half years hard work and the political row that will reverbate? The shenanigans in Dáil Éireann last night will be nothing to what will happen when this is put to bed in relation to reclassification and extension under the less favoured areas directive, better known as the disadvantaged areas. It will be nothing to what happened in the last few days around this House.
Farmers are so frustrated by the decline in their incomes, by the lack of a future in virtually every enterprise, the lack of reform of the CAP and because of the pressure of GATT in terms of the outcome of the round of talks, that the final straw was the insult in relation to some of the areas that were left out, and, may I say, a lack of understanding in relation to some of the areas that got in. More power to areas that got in. We can only assume they met the criteria. I can tell the Minister if some areas met the criteria and got in, there is some explaining to be done why other neighbouring half parishes were left out.
There was a huge discrepancy in how the survey was done. Different surveyors took different matters into account. Off-farm fodder and the formula for computing it and thereby reducing stock numbers was not used in many cases. It was not used in the Slieve Coillte region. It was not used in the Templeudigan region in Wexford. It was used in other areas so they could bring down their stock numbers by computing 100 bales of straw as so many acres, so much barley as so many acres, so many round bales of hay were worth so much and square bales of hay were worth so many more acres. Thereby, they diluted their stock numbers and, quite rightly, met the criteria. Not all surveyors operated through the same system. We have a most unjust, inequitable system about to be put in place in terms of the extension and reclassification at the moment.
I must remind the Minister of Fine Gael policy at the time this review was announced. We wanted all of the country that had not been classified at the time to be brought in as less severely handicapped. — I was the spokesperson on agriculture at the time — and areas already classified we wanted regraded as more severely handicapped. That could have been done very quickly, there would not have been a two and a half year delay. Our farmers would have been benefiting from the extra headage and subsidy payments and grants of one kind or another two years ago. Indeed, with the doubling of the Structural Funds the farming community would not have lost out on two of the four years.
Perhaps more important of all, this tragic row whereby farmer is pitted against farmer, neighbour against neighbour, half parish against half parish would be avoided. We have priests on the altar in Wexford condemning what has happened at the moment. I am afraid it harks back to what I thought were bygone days when these type of rows reverberated throughout our small country. I do not know how the Minister will solve the problem bar designating the whole country as less severely handicapped. No matter how he redraws the border between classified and non-classified areas there will be a major row. This is being compounded by the tragic decline in farm incomes whereby farmers cannot sit and see their neighbour across the road being handed an advantage of £3,500 a year just because they are shadowed in on a map that went to Brussels. There is virtually no difference from one side of the road to the other side of the road in similar enterprises; yet, some are in and some are out. How can the Minister justify it? It is inequitable and we cannot stand over it. When will we get an explanation for those areas that were left out? Will we be told the exact criteria they failed on? Could the Minister please tell us what appeal system he will put in place?
The Government should be hounded on this issue. It is a Fianna Fáil Minister who has been over this entire two-and-a-half year review that is soon to reach a conclusion. Yet, every Senator and every Deputy of all political persuasions are being hounded by frustrated and angry farmers throughout the country. We have to give the answers as much as the Government even though they are to blame for the shambles that is before us on this review of the less favoured area directive. Is the sixth criterion political patronage or is it not? Without other answers to explain to the farmers we can only assume it is.
Apart from the difficulties at home, which are of our own making as I have just been mentioning, there have been international problems for some time. With regard to the whole Eastern European scene, even though we all welcomed, certainly in our hearts, the unity of Germany, when we apply our heads to the implications of that for our country we are inclined to get a little bit more selfish. In relation to the tragic BSE scare in these parts, I firmly support the Minister in his contention that it is of absolutely no consequence on this island at all, and the couple of dozen isolated cases we have had represent the facts although there may be one or two more cases. In any notifiable disease problem you get about 95 per cent notification and there are always one or two that escape the net. We have no problem here. We have no endemic BSE in this country. We have all got to support the Minister on that. If, by implication, we further damage an industry none of us can justify it.
If one takes the Eastern European situation, the BSE and the whole Middle East problem, the Iraqi situation generally and the whole Goodman problem, which is a layer of difficulty through different agricultural enterprises in our country, one can understand in part some of the difficulties that are before us and before the farming community. However, I do not understand the lack of resolve of the Minister for Agriculture and Food to do anything specifically about it. The negotiating table in Brussels is the place where the future of Irish agriculture will either be broken by the Minister or indeed will be made.
I see no evidence that the Minister is taking as seriously as he should the dilemma facing all Irish farmers at the moment. I know he had to sit up over several nights and had some very arduous sessions in terms of the GATT talks. I have no confidence that the Irish position will be protected. The Dutch and Danes have a similar position to ourselves in this area but we are among the most peripheral of agricultural economies in Europe. Not having confidence in the Minister to bring home the bacon literally as far as Irish farmers are concerned, we are all extremely worried. Will the Minister of State spell out to us exactly what is Government policy, given the tragic decline in farm incomes in Ireland this year? Given the uncertainty that hangs over the entire Common Agricultural policy, because of pressures from GATT generally, what will be the outcome? The GATT talks conclude December of this year and we are on the horns of a dilemma. If we concede to their pressures at the moment there will be major problems for income support in Ireland generally. If we do not concede and we are into a trade war situation, I think we lose hand over fist. It might even be a worse scenario. Where are we going and what is the position of the Minister, Deputy O'Kennedy, on this whole area? We deserve to be told as such a major industry is at stake in relation to the outcome of these talks.
I even find myself with a dilemma in terms of what is in the best interest of our country because I have no doubt that in the long term the liberalisation of Irish agriculture could be of benefit to Ireland. I am talking about 20 or 25 years down the road. In the short term, if we were to accept the proposals of GATT, we would literally write the death certificate in terms of farming enterprises for 80 per cent of Irish farmers. What do we do? Do we accept the philosophy of liberalisation of agricultural trade and world markets? Do we face up to the situation and tell Irish farmers honestly that the Minister, Deputy O'Kennedy, is prepared to sell them out for the 20 per cent that will be left in 20 years time? Do we have a gradual system in place whereby we will be able to cushion the transition from the Common Agricultural Policy support mechanisms at the moment for farming in Ireland, indeed Europe generally, to a liberalised agricultural trade, say 20 or 25 years down the road? How could we put in place a cushioning system to ensure the vast majority of our farmers can survive the liberalisation process? I have heard no discussions in this order at all. I do not know what are the options.
Why is it that Europe has to be pushed about by the Cairns Group of countries, by America and by others, in terms of our agricultural policy? Why is it we must be dictated to by the Americans who give 2 million farmers the equivalent subsidy and price support that 10 million farmers get in Europe? Two million American farmers get the same as 10 million European farmers and yet they have the audacity to lecture us on subsidisation and price support in the different agricultural enterprises. One has only to look at the Farm Bill that was published in the US last May or June. That will be in place in four years, if I recall correctly. It was riddled with support and subsidy of every kind for every sector, including the dairy sector, and yet this is the very country that is putting the gun to Europe's head, that is effectively stating to most Irish farmers, "There is no future for you, we must pull the rug in terms of subsidies and income supports; that is it." It is the survival of the fittest the Americans are looking for without any regard to peripheral economies in Europe such as our own.
I would like to comment on another area that is not on the agricultural agenda at the moment, which concerns me greatly. The Single Market is around the corner. We have talked about it a lot but not done much about it. At the moment in Europe the various veterinary committees and other health committees of one kind and another are drawing up and trying to implement phytosanitary regulations that will be imposed on all members of the European Community. These regulations will come into place along with the dismantling of barriers at customs posts and ports of entry throughout Europe. We will be the only island nation — that has been said many a time but it is factually true — without any land contact with our neighbours in the Community in a couple of years time.
We have a particular animal health and plant status in this country at the moment. Proposals are on the table in terms of regulations, which I suppose will become directives, that will insist on free trade and free movement in the vast majority of cases where animals and plants are concerned into and out of Ireland and we will not be able to insist that our clean health status as an island nation at the moment is protected in any special way. I do not know the Minister's thinking in this area. Maybe he has spoken on it but I have not heard of it. Along with the other issues, this should be on the agenda. Are we at risk from foot and mouth disease, are we at risk from rabies? I know there is a system of inoculating foxes in Europe at the moment. They are air-lifting vaccinated pieces of meat and dropping them into forests all round Europe hoping to vaccinate the fox population. I look slightly askance at that.
What are we going to do, how are we going to protect the health status of our plants and animals in this country? There is not a word from the Minister about it. What about Newcastle's disease in poultry? We know the scare we had in Monaghan when there was one outbreak. What controls will we have on this? What about Corona positive virus pigs? I suggested a year ago that we allow them to be brought into the country to increase the genetic merit of our pig breeding stock at the moment. My policy on pigs was accepted widely, with this one exception — the Department of Agriculture said no, they could not do it because it would be very dangerous. Corona virus is like a common cold; it is the equivalent of a common cold in a pig. Corona virus is not even listed among the diseases that would have to be looked at with a view to regulating them post-1992. We have got to accept Corona positive virus pigs from 1 January 1993. It is not even being debated. There are some of the diseases that should be debated, but this is not happening. The official Department stance at the moment is "No, we cannot do that." That is what they said 20 years ago, and that is why they are saying it now.
This is an area where we need open and vigorous debate. There is perhaps a particular role for Ireland, as an island nation, in relation to this whole area post-1992. It is one I would like to see brought into this House, vigorously debated and let us see what role we can play. The protection of our health status is one of the areas we may in years to come be able to turn to major advantage for our farmers. That, plus a clean environment and protection of our environment generally, may see most of our farmers through the crisis at the moment. That is, if the Minister will not put in place policies to support the family farm today to ensure they have a future for the next few years until they are able to get out of their particular dilemma.
Perhaps I have gone on too long but I would just like to say that we still have difficulties. There are still two tiers of farmers in this country: the farmers who have viable milk quotas which will stand notwithstanding the difficulties and the decline in income, and then virtually every other enterprise. Perhaps we could put the sugar beet men this autumn along with the larger dairy farmer. I hope they have a good campaign; it is looking good for them. We have major difficulties with a stream of farmers who are earning a negative income, down as far as minus 30 per cent this year depending on whose figures you accept. We need policies now from the Government. We need to assure these farmers with concrete measures that they are indeed the backbone of our country. Words are no longer sufficient. They have had empty rhetoric for too long. They have not been looked after by Brussels. These farmers have been let down by our entry into the European Community. I do not want to see the Single Market being the final death-knell to them as well.
First, I would like to congratulate the Minister on giving us a very good review of the agricultural scene at present and going through the various areas of agriculture. Even though the picture may not seem so rosy, it is not really as bad as what Senator Doyle would paint it to be. I hope in the years ahead that we will see a vast improvement in this area.
Agriculture today, as we all know, is going through a very difficult time. We have seen great changes taking place in agricultural markets in Europe and those changes have not always been for the betterment of our Irish farmers. In recent years we have seen the imposition of quotas in cereals, milk, beef, beet and other products making it more difficult for farmers to plan ahead. We also have declining demands in products such as beef. We have the issue of BSE, which was unheard of some years ago. The consumers worry about this particular disease has caused a major hiccup in the market but, thank goodness, as far as our beef is concerned we are in a good position. Of course, we must always be vigilant. We must be alert to make sure that the good name of our beef is not tarnished. Indeed, I would like to congratulate the Minister, Deputy O'Kennedy, on his efforts, particularly to secure the Iranian market. I believe that has been secured thanks to his efforts and the efforts of the Government to convince the Iranian authorities that our beef is free of BSE.
The Gulf crisis, of course, has also affected our market for beef, so it is necessary for our Government to look for new markets to replace those we have lost in the Middle East. The intervention system has been a godsend to some Irish farmers this season because without it farmers would be much worse off. I want to thank the Minister for his efforts in getting the maximum amount of Irish beef into intervention this season. Without this, farmers' incomes would be much worse, and we all know the income of beef farmers has fallen drastically because those of us involved in the agricultural scene know that the price of cattle this year is back about £100 per head on what it was this time last year. It is pretty difficult for farmers to sustain this kind of drop.
We still have the GATT negotiations going on and the outcome of those negotiations is awaited with a degree of worry by our farmers. If the United States gets its way we will see the elimination of support and subsidies which we rely on so much to exist. At the same time as the United States are proposing the elimination of support and protection in Geneva, in Washington the United States Farm Bill is proposing to increase support for United States agriculture and especially its support for exports. This kind of contradictory stance makes it difficult for the Community negotiators to find a solid basis from which to negotiate with the United States.
I wonder, a Leas-Chathaoirligh, are the United States serious about the elimination of all supports. Will their Congress agree to follow such a line especially when one considers the strength of the farm lobby in that country? The United States, in terms of number of farms and size of farms, bears no comparison with European agriculture. Many of the huge farms in the United States are run by companies. They do not have the tradition of the family farm that is prevalent in Europe, and particularly in Ireland. Our negotiators cannot concede to the United States pressure because if they do we will witness an exodus from agriculture never seen before and this, as we all know, would create serious and enormous social problems for farming families. The farming families are our main concern in this country because it is not just the farmer himself but his whole family that is involved.
This year has seen a steep drop in farm incomes, a drop which I should say would be far greater but for the sharp increase in direct subsidies, some of which is, of course, of a once-off variety. The reason for the drop in income is largely outside the control of the Government, but I must say that our Minister has succeeded by tough negotiations to get Community support which has helped to ease the situation. I would like to outline some of those measures which have been put into effect and negotiated by our Minister.
In the beef sector we have seen a reduction in the delay period in payment for beef taken into intervention from 120 days to 45 days; in-take of 24,000 metric tonnes of beef in Ireland for the two week period commencing on 1 October, representing 72,000 bullocks, under the special safety net procedure negotiated at last year's price fixing; in-take of 30,000 metric tonnes of beef for the two week period commencing 15 October, representing 90,000 bullocks.
In the sheepmeat area we have seen early payment of a second tranche of the 1990 ewe premium — October rather than December — representing £33 million for producers, bringing the total for 1990 to an excess of £140 million.
In the milk area we have seen an increase in the level of casein aid by 20 per cent, thus restoring our competitive position on export markets; an increase in the level of aid for the incorporation of skimmed milk powder into calf feed; intake of 93,000 tonnes approximately of skimmed milk powder into intervention in Ireland up to 31 August 1990; intake of 68,000 tonnes approximately of butter into intervention in Ireland to date. We have seen the introduction of a 60-day test period in the period up to Christmas to help the orderly disposal of cattle while having due regard to disease control. We have also seen the payment of suckler premium of £52.43 on ten suckler cows on farms with quotas of less than 12,800 gallons.
In the disadvantaged areas, which have been discussed here at length today, we have seen a major extension of the scheme for this sector. Almost 1.9 million acres are being proposed for designation as disadvantaged for the first time, a 20 per cent increase in the existing areas, under Article 3.4 of Directive 75/268 because this entire area complies with all five criteria for designation as required, that is; a stocking rate less than one adult bovine livestock unit per hectare, ploughed land percentage under 7.8 per cent, family farm income less than 80 per cent of national average family farm income, population not exceeding 27 people per square kilometre, percentage of working population engaged in agriculture at least 30 per cent. Such an area will become less severely handicapped. We have seen all mountain sheep grazing areas, 255,000 acres, being proposed for less severely handicapped area status. A total of 1.3 million acres are being proposed for reclassification for less severely handicapped area status to more severely handicapped area status because they comply with the criteria laid down. About 118,000 acres in coastal areas are being proposed for designation as disadvantaged under Article 3.5 of Directive 75/268 — specific handicaps comprising in this case coastal erosion.
That, to my mind, is a major advance by our Minister and by our Government and it shows they have not been sitting back as Senator Doyle would try to convince us. In relation to the severely handicapped area she seems to blame our Minister and our Government for all the delay in submitting and dealing with this application. I would like to refresh Senator Doyle's memory and ask her to go back to 1987 in the weeks and months prior to that election when her Government, her Minister and her Minister of State made a rushed, botched-up application to Brussels to try to convince the electorate they were doing something about this problem. I remember at that time Deputy Connaughton, who was then Minister of State, in my own constituency sending a circular to every voter on the register in East Galway telling them he had lodged the application and that if they voted for him they would be in the disadvantaged area and would qualify for all types of headage grants. That is the type of propaganda that was going on in 1987.
Since our Government came into power they have looked at the application submitted by the previous Government, which was returned because it was inadequate. All the details were not given. It was a rushed application in advance of the election. Even though it has taken a lot of man-hours to investigate, the Government have done a good job and I believe many thousands of farmers will benefit because of their work over the past two years in getting this application right and getting those areas included. Our Minister has succeeded by tough negotiations and I am happy to say many thousands of farmers will benefit because of his efforts.
I will not deal with every aspect of agriculture because there are others who wish to make a contribution on this very important debate for all of us who are interested in agriculture. As regards the milk situation, we know that producer prices have fallen. There has been a decline in butter fat consumption over the last number of years, for various reasons. Other products are being promoted for health reasons and so on and because of that the sale of butter fat and the sale of butter has fallen. Our co-ops have a job to do here to try to sell butter. They have to make a better effort at promoting it, because they have been promoting some of those products over the years and it is time that they got on their feet and promoted and sold butter. The sale of butter has declined in recent years because people are afraid to use it.
Our future policy should aim to safeguard the basic principle of the existing quota system and ensure that other major producing countries adhere to similar restraints. Any surplus of quotas that become available should be given to smaller producers. I appeal to the Minister in this regard. If there are any extra subsidies or extra quotas available over the next couple of years he should make sure that it is the smaller producers who get them. When I talk of smaller producers, I mean anybody below 20,000 gallons or 25,000 gallons.
It is important that the support mechanism at present in place be maintained, particularly since we export 75 per cent of our dairy products. Export refunds ensure a viable return for our exports to third countries. The value of the export funds currently represent about 64 per cent and 41 per cent of the return on butter and skimmed milk powder respectively, so it is important for our producers. Any reduction in the value of export funds would have very serious consequences for commodity prices and producer returns in the Community as a whole.
The situation in Eastern Europe is also having an adverse effect on the dairy industry generally because of the fact that cheaper dairy products are available on the market. There is a great urgency at present for our dairy industry to rationalise its processing capacity into more effective units and to reduce its dependence on commodity products. The take-up this year by Irish butter of over 50 per cent of total Community purchases into intervention highlights our dependence on the intervention mechanism and shows we are completely out of step with our fellow Community members. We are depending, more or less, on intervention and that should not be so. A fundamental restructuring is required in the dairy industry in order to eliminate the cost penalties which result from excess capacity and to provide the optimum conditions for diversification of our product portfolio. This has been talked about for a long time but action is needed right now. In other countries there are much larger processors and they are able to do the work and sell the product much cheaper so we have a good deal to do in that area. The long term success of the dairy industry will depend on how the challenges can be overcome. I believe that our dairy industry can meet that challenge and compete successfully with our competitors in Europe.
With regard to sheep, we have seen a substantial increase in recent years in the numbers of ewes and lambs. Unfortunately, we have had to take a severe drop in price in the last year or so. The increase in the number of ewes has been brought about largely by the amount of subsidies that have been available over the past couple of years. It was made profitable for people who never before got involved in sheep production to do so and they have done so in no uncertain manner. Even though we are still only 83 per cent self-sufficient in the market, we find that the prices have dropped. As far as I am concerned, giving subsidies and grants has only created further problems for the industry. I think there is a great need there at present to go out and market Irish lamb. I believe that is not being done adequately at present even on the home market. A lot more could be done to sell Irish sheepmeat at prices that the housewife could afford. That is not happening at present. I am afraid somebody is having a rip-off because the declining price in lamb has not been reflected in the price the housewife pays at the butcher's shop. That should not be and it is something that should be looked at very soon. I have said we are still only 83 per cent self-sufficient in the market. Of course, international obligations oblige us to allow Third World countries access to our market. This in recent years has been confined to approximately 275,000 tonnes because of the voluntary restraint agreement between the different countries.
I have covered some of the more important areas of the agricultural debate. I do not wish to prolong my contribution any further except to say that I would not be as pessimistic as some contributors might be here today, because when you think back to 1973 and 1974 those were two terrible years as far as Irish agriculture was concerned. First, the markets improved very fast. The situation changed and after a few years farmers forgot very quickly the bad years they had in 1973 and 1974. I am satisfied the same thing will happen now. With a little effort on the part of the Government, and indeed not alone our Government but the Governments of the other EC member states, if they go out and try to capitalise on the new situation that is emerging in Eastern Europe at present there must be opportunities there for us to sell some of our products to those people, perhaps in exchange for some of their products. There must be opportunities there. I am confident our Minister will look into those areas and spearhead a determined effort to secure the best markets he possibly can for our dairy products, our beef and our sheepmeat. Those are the main matters we are concerned with at present because they are contributing enormously to our national economy.
I wish the Minister every success. It is a very difficult time to be Minister for Agriculture and Food. I believe Deputy O'Kennedy is fighting a hard battle to secure the best deal he possibly can for Irish farmers and I wish him every success in his efforts.
There are a number of points which I will deal with which I consider to be of great urgency at this time with regard to the farming situation. First, we must realise very fully that farmers in the main — there are exceptions, of course, to this — are going through an extremely difficult patch at present. We have heard in the Minister's speech that the percentage decline in income is 10 per cent this year and it was so much increased last year and the year before and so on. Frankly, I believe that for many farmers they have had a significant drop in income in 1990 and also that at best they held their own in 1989.
I would classify farmers at this stage on the basis of whether they are in milk or whether they are not in milk, because farmers who are in milk with any kind of a substantial milk quota can make a reasonable living. I accept their income position is not in jeopardy at this time. But when we group all farmers together, get a set of statistics and come along and say that incomes are up or down by so much, I believe we have a distorted picture. Once we start on that premise we realise that within the farming sector we have as great a variation as we have between farmers and other sections of the community. For example, beef farmers were referred to here today, as well as cereal farmers and other types of farming. There is no question or doubt about it that cereal farmers will be taking a significant drop in their income in 1990. Beef farmers will be taking a significant drop in their income in 1990. Prices of cattle were quoted as being £100 or £150 less than this time last year. Those same farmers paid dearly for the raw material they are now selling. I would say therefore that we should not in any way generalise about farming. I think it is most important starting out that we put farmers into particular categories. First, we start by talking about milk production and non-milk production. We have varying phases from there on. We have, as was mentioned, certain lines of tillage, such as beet, which as it so happens this year should yield a good return but, in the main, those farmers who do not produce milk and do not have a reasonable quota are in very serious trouble.
While I am talking about dairy farmers, I want to point out the decline in farm income this year for even the dairy farmers, where we have had a reduction of at least 20p per gallon, which is more than 20 per cent, or 25p per gallon and 30p in some cases, and coupled with this are expected very poor calf prices in the months ahead. When people have quotas as low as 7,000 or 10,000 gallons of milk per year, one can get the message easily. Those people will find it difficult, if not impossible, to stay in business. Regrettably, I forecast that in five or ten years if the world proposals under the GATT are taken on board — even in part, not alone in total — we will have reduced our full-time farmer population to a very small level. I can see a situation here within about ten years, or maybe less, where we might be reduced to a figure of perhaps 30,000 farmers, that those 30,000 farmers will be full-time dairy farmers and the rest of our land will be farmed by part-time farmers who I hope will find gainful employment to supplement their income from farming that if it comes from a livestock or tillage operation would be totally inadequate.
The Minister made reference to the Americans and their target of a 75 per cent reduction. Frankly, what the Americans and the Cairns countries are talking about simply and solely is the total and absolute removal of all price supports from the EC in any shape or form. This would inevitably mean we would have world prices operating for all our products. Effectively, if this applied in the next ten years, this would mean a halving of the price of the Irish gallon of milk, the Irish pound of beef and so on. Sheep-meats and all other products would be affected in the same way, and some in an even more drastic fashion. In no way can we entertain anything of that order.
The Commissioner for Agriculture in his opening bid was talking about a 30 per cent reduction in price supports of one form or another, but he was going far too far. If one starts out at that level it is very unlikely one would want to finish at the same point. We have already gone too far. Our Commissioner in the EC has gone too far in trying to placate the Americans in the GATT negotiations.
I recognise very fully the importance of GATT for us as a country and as part of the EC. Frankly, agriculture is small in comparison to the whole GATT negotiations and all the various products or materials that are dealt with through the GATT. For that reason we cannot put our heads in the sand and say we want no change at all. We must claim, and in so far as we can demand, special treatment as being a very severely disadvantaged island here. We are far removed from the marketplace and have a very underdeveloped economy. There is no way in which we can compete with our colleagues in Europe such as Holland, Denmark, Germany or France.
A point mentioned earlier was the reunification of Germany. This, of course, brings problems for us in its wake. It means that Germany, which has been the great payer of funds into the EC has now to attend to its domestic scene — the whole of Germany, East and West. Less money will, obviously, be available for general disbursement within the EC.
There is also the position that Eastern European countries such as Czeckoslovakia, Poland or Hungary may in the short term be a good outlet for EC products and may take up a considerable amount of our food production but in a very short time these countries, given the soil they have, their climate and the type of people there, will not alone become self-sufficient but will be net exporters of food which will place us in greater jeopardy still. Unfortunately, we are in a stage of siege as far as the agricultural scene is concerned and it requires the best efforts of this Government supported by the EC to deal with it. One has to be a realist.
Our Government cannot resolve this very difficult problem on their own. We are a part of a large community at this time and we must not forget that. There was a time when decisions dealing with this country were all taken here in Dublin, whether they were concerned with agriculture or industry. Now, particularly in the agricultural field, most of our decisions are not taken by our Minister or the Department of Agriculture in Dublin but are taken in Brussels. We must acknowledge this point and be realistic about it. The Government has a very positive function in ensuring that what emanates from Brussels is in our favour and to our advantage. Rather than condemning the Government for not doing things themselves, I would rather urge the Government to leave no stone unturned in ensuring that their muscle in Europe is used on a continuing basis in a vigorous fashion to make certain that our position in agriculture is not eroded.
At the moment there are at least 40,000 farmers who are either going to be forced off the land in the very near future or forced to exist on very meagre earnings. Figures can be questioned — whether it is 40,000 or 45,000 — but we are speaking about large numbers and very high percentages. The Minister, whom we are fortunate to have with us today is a practical farmer. He knows precisely the difficulties I am talking about. There is no doubt one does not have to go out doing any research or looking for the facts. They are staring at us, straight in the face, all the time.
Reverting back to the Government and their function in an EC context we must explore what Europe can give us at this time. We must for economic reasons, consider seriously this direct income aid programme. Some 70 per cent of this direct income paid programme would be funded by Brussels. At the moment disadvantaged areas are, of course, an extremely important matter. This year 65 per cent of the disadvantaged areas moneys will be funded by Brussels as against 50 per cent last year. That is a very important point.
On the subject of disadvantaged areas, I am of the view that was expressed earlier that rather than having certain pieces of land classified as disadvantaged we should start from the point where the island of Ireland is classified as a disadvantaged area and within that formula we would then have certain obvious exclusions. It might be more workable than the present way of putting in one particular townland and leaving out the other. As the Minister, the Leas-Chathaoirleach and all other people in this House will know, there are areas that should not be in the disadvantaged areas scheme and there are areas not in it that should be included. There are glaring examples. Any of us here can pinpoint such examples in our own parts of the country. I am not blaming people for the exclusion or inclusion of areas. Even on a townland basis one can be extremely wrong in regard to classification. By having the island of Ireland declared disadvantaged and then having a very clear cut policy of exclusion it would be far easier to identify the areas that obviously and definitely could not be classified as disadvantaged. Of course, if we could have the whole island included as disadvantaged that would be the best of all options but that is something that would be very difficult to achieve.
We are facing a very grim situation in the area of employment if our farming goes into a further state of decline. Many jobs are on the fringe of farming and they will go. Much of the spending power that comes from the farm at present will disappear. The livelihood of many people will be very seriously affected and this is something that is quite disturbing.
I referred to GATT, it is no harm to again remind ourselves that GATT has now probably a greater influence on EC policy decisions than the EC has itself. It is the big giant out there, coming in and practically dictating to the EC what line it has to follow. This is a very serious situation. As we know, the CAP is included in a reforming process that is fairly advanced. We accept that process. We have been a party to it, but we accept nothing — and I emphasise nothing — of the sort that is now being mooted and promoted by the Cairns Group, America and others that are giants in the industry. We are talking about countries whose average size holdings are 450 to 500 acres, as against average size holdings in this country of 40 or 50 acres. Therefore, we are not comparing like with like. It all has to do, not with agriculture but with all the very valuable markets in the EC with its 325 million people. The Americans, Australians, New Zealanders and Canadians are very determined to be in that market.
I could continue, but in the interests of facilitating other speakers, and I know there are quite a number, I will be brief and just finalise a few points. At the commencement of my speech I divided farmers into dairy farmers and non-dairy farmers. I would like again, for the purpose of emphasis, to repeat that. There is no comparison between the person in dairying, with a reasonable size quota of perhaps 30,000 or 40,000 gallons and the person in beef or tillage farming who does not have quotas. We must not be misled by figures about farm income being up or down. We must look at each sector practically on an individual basis. Then we will get the true picture. I acknowledge that the figures, which the Minister gave in his address are factual and true taking the totality of farming into account, but I respectfully submit to the Minister here with us that it is quite erroneous to do that because it gives a wrong impression.
We must resist the very severe threats of GATT. The implementation of the GATT proposals as originally thought out, and which may have been diluted a little now, would lead to nothing short of disaster in a short time. We must also look to 1992, a very important time when we will have the Single European Market. There is perhaps a lot of talk about it but not a great deal of action taking place to ensure that we are fully prepared for this Single Market and ready to compete with our other colleagues in Europe. The Single European Market is extremely important and we have got to be prepared for it.
As far as the food industry is concerned, we must make sure that we increase further our research into market requirements. Frankly, our market research has been abysmal in the past. We have tended to produce goods and materials that nobody wanted. We succeeded on many occasions in selling them but when we come back in later years it is vital that we have proper research programmes. These programmes should advise the Government of the day and the various Departments concerned about what the consumer in Europe, America or elsewhere wants. We must produce goods to meet those requirements and that cannot be over-emphasised. I believe we have done some work in this area in recent times but a great deal more must be done in order to find out what the consumer is looking for.
Rather belatedly at the end of my contribution I welcome the Minister to this House. He is a man who was very active in this House for a number of years and contributed enormously to it while he was here. We are very fortunate that he is here for part of our debate today. I ask him to use his influence to make sure that Irish farming is seen in its true light. It is going through a very difficult period and if it is not helped it will mean the disappearance of the livelihood of thousands of farmers and result in thousands more having to survive on subsistence levels. In other words, we have a crisis situation in agriculture on our hands. One could go on and on and talk about it for ever, but what we need is action. I recognise the constraints on the Government in Dublin, but I do not accept that the Government could not do more as a member of the European Community in ensuring that we, as an island, greatly disadvantaged and under-developed, should not get special treatment. We must not apologise to anybody for asking for these special conditions, because politically we are a nation vital to the EC. Our location is of paramount importance. Therefore, we must not go with cap in hand but quite bodly look for what is necessary for us at this time.
I welcome the Minister to the House this afternoon. I am sure he is relieved to be here today rather than in other places where he might have been.
At the outset may I say the Progressive Democrats fully accept that there is a major crisis in Irish farming in relation to incomes and that it is one of the worst the farming community has faced for quite some years. Reference has been made already this morning to the cyclical nature of farm incomes. I agree with that, but I think the trough is a very deep one at the moment and that the mountain confronting farm families in getting back to the top of the cycle is an immense one. Many will fail to climb that mountain.
We have had a deal of discussion this morning as to whether the drop in income is 10 per cent, 20 per cent or 30 per cent. The Government's figure is 10 per cent and Teagasc's figure is 20 per cent but whether it is 10, 20 or 30 per cent is quite irrelevant. Ten per cent of a very poor income is still poverty. There are quite a few people in rural Ireland who at this moment are finding it quite hard to provide for their families and are confronted with the situation where they are likely to have to sell land. Indeed, very many farmers are living off their capital simply to survive and any industry which continues to do that will obviously run down in time. One only has to talk to bank managers or to people in the ACC to realise that that is what is happening. People are living off their capital. Statistics are irrelevant. Anybody who produces a bullock or heifer for sale or produces a gallon of milk, a tonne of grain or any agricultural commodity knows what has happened in the past 12 months and particularly since the beginning of the year.
We have had quite a degree of analysis this morning of some of the reasons for the income crisis. The question is not whether we should be analysing it. The question is: what are we going to do about it? I think that even people outside farming, and even some of the people on the Independent benches who are continually hostile to farming, must realise there is a major crisis in rural Ireland. If there is a crisis in rural Ireland and in farming, without question it will affect the welfare of towns and villages around the country. There is evidence that is happening already. One has only to speak to traders to know that the purchasing power of the farming community has declined quite dramatically over the past 12 months.
The question is not whether there is an income crisis but what can be done about it. In my view there are things that can be done about it, at European Community level but also domestically by the Government and, it has to be said also by agencies outside Government, such as the banks and the meat factories who have responsibilities to the industry which supports them.
Obviously, there are long term measures in relation to marketing which are very important, but the crisis must be dealt with in the short term. That must be the priority at the moment. The measures which may be taken have to be taken against a background of the management of the total economy within which farming must operate. In that respect we can look to a record of good overall management. Since our foundation, the Progressive Democrats economic and taxation policies have been taken on board quite extensively, both before we came into Government and since we have been in Government. Were it not for the fact that we have managed our economy relatively well — and it appears from the events of the past few days that the business community subscribes to that — our inflation rate would be much higher than it is. It has come down to one of the lowest levels in Europe.
One of the appalling things which happened to us during the 1970s was that we were getting price increases which were related to European rates of inflation and we had domestic inflation which was many times more than the price increases we were getting. That is not the case this time. That is not the reason we have an income crisis. Thankfully, it has been ameliorated to the extent that we now have an inflation rate at which the prices that are coming from the European Community can be reflected more fully in the incomes of farmers. Of course, the prices themselves have declined, but that is a separate matter.
One of the other things that needs to be said is that intervention has been a very valuable asset in protecting farmers from an even more catastrophic decline in their incomes. It must be said also that it is not the most effective way of securing markets. It has led to us becoming commodity traders rather than innovators of new products, and rather than a country that will add value to its excellent basic raw material. In that sense the intervention system has failed us. It has allowed people trading in the commodities — the people killing the cattle or the people processing the milk — to have a guaranteed outlet for their products. Unfortunately, a great deal of the price which they can secure from a guaranteed market through intervention does not find its way back into the farmers' pockets. Last week, I heard figures from the OECD which indicated that only about 40p in every £ which the European taxpayer subscribes towards the support of the Common Agricultural Policy finds its way back into the farmers' pockets. There is obviously a huge leakage through middlemen, through administration and through other areas.
It must be quite obvious at this stage that there must be more effective ways found of channelling the aid to where it is needed. That is one of the reasons the headage payments should be increased in line with overall increases in the Structural Funds. Their payments should be brought forward. That is something that could be done quite quickly and it would help to alleviate the problem. Those with low incomes in the most disadvantaged regions of the country should get most assistance because they are the people who are suffering most.
There has been much discussion here this morning about the extension and the management of the disadvantaged areas. I agree it has taken too long to sort out this matter. On the basis of the information which has been leaked in a most unsatisfactory way, farmers are very angry about the way the proposed boundaries have been drawn up. Of course, mistakes can be made but I think the Minister must set up a properly constituted appeals system. I would like an indication to that effect so that farmers who feel they were unfairly excluded can have their cases presented again, and we can nail the lie that these boundaries were in some way created through political connivance or to create political advantage. If that were the case, I doubt if the disadvantaged areas in Cavan-Monaghan would have been drawn in the way they were. Nevertheless, farmers are very displeased. They cannot understand the position when, if they are on bad land and have a poor income they see a dairy farmer whom they imagine to be prosperous — and I am sure is more prosperous than they are — being included.
I agree boundaries must be drawn somewhere, but if mistakes have been made — and they have been made — they need to be rectified. Farmers on bad land with low incomes who have been excluded from the disadvantaged areas cannot understand the reason for their exclusion. The detail needs to be sorted out. I want to know what progress has been made by the Minister and by the Department of Agriculture in sorting out the many queries which have been raised by the Commission in relation to disadvantaged areas and when we are going to have the scheme or the final situation in regard to disadvantaged areas available to us.
Sitting suspended at 1 p.m. and resumed at 2 p.m.
Before Senator Dardis begins there are many speakers offering. It can only be on a voluntary basis but may I appeal to Senators to keep their speeches to approximately 15 minutes, if that is agreeable to the House.
I will try to be as brief as possible. We had one Senator this morning who continued for a very long time and I want to get some points on the record. I note the Minister is late but I am glad that he is not the late Minister, if you take my point. I shall continue.
We were discussing the question of the disadvantaged areas before we adjourned and I want the officials from the Department to convey to the Minister that we want an appeal system. We want to know when it will be introduced for border-line cases so that the justification for decisions in particular areas can be understood and be subject to scrutiny. I have already mentioned the extreme disquiet there is among farming circles about the way the boundaries have been drawn in relation to the disadvantaged areas so we do need an appeal system. As well as that, the Council of Ministers at EC level need to get the new reclassification sorted out as quickly as possibly. I thank the Minister for arriving at this juncture. Senator Norris was concerned earlier this morning about the clock. He thought it was going fast. It is obviously going a lot faster since Senator Norris spoke about it and I thank the Minister for his attendance.
One of the things which was promised when the EC Heads of Government met around about 1988 was that there would be an EC direct incomes aid for small farmers but very little progress has been made in that direction. As we discussed earlier, some farmers do not have much chance of providing for their families, to say nothing of surviving at farming without direct income assistance. That must be looked at very seriously both at European level; also, where necessary, the social welfare offices must take liberal stance in relation to this matter.
Apart from what needs to be done at Brussels and what the Community can do, I submit that the Government can also take independent action which would be of use in solving the farm income crisis. One of the things that is quite obvious is that in view of falling incomes the burden of debt repayment has become an extremely weighty burden for a significant number of farmers. The way in which it can best be solved would be to make finance cheaply available and to do that the obvious way would be through the availability of Eurocurrency loans with the exchange rate risk underwritten by the State. That could help greatly and the State's exposure would not be significant in view of the European Exchange Rate Mechanism which now operates and the fact that the currencies move within a narrow band. Eurocurrency loans would be a significant help to many farmers who are in debt and need to get their interest rate burden alleviated. In addition to that, farmers who have been very badly hit by bovine TB can also be helped by the Government independently of anything that might or might not happen in Brussels.
The other matter which I find greatly disturbing is the whole aspect of advice and research and what that can do to help farmers out of their difficulties. It can help people to trade out of their difficulties and it is a matter of extreme regret that in the savings which had to be made in the interests of the economy and of improving our economic welfare, our agricultural advisory and research service suffered much more than practically any other area in the State. We are now suffering the effects of that. Farmers definitely can be helped to work out their difficulties by Teagasc. Intensive advice based on good research back-up can turn many very difficult situations around and I would appeal to the Minister and to the Department of Agriculture to provide the funding which is needed by Teagasc to give the necessary back-up to the industry and that must be done on a cost effective basis.
Agricultural research is fundamental to the welfare of the industry but it has been sadly neglected. It is not valid to say one can go the countries in Europe or elsewhere and pick up bits and pieces and bring them home. They have to be tested under Irish conditions and applied to Irish farmers. Teagasc, and ACOT before it, has a very good tradition of looking after the interests of all farmers, big and small. That tradition needs to be maintained, encouraged and funded by the Government.
In the longer term I have discussed when the Community might do and what the Government might do. It should also be said quite decisively that the processing industry, the industries which live off farming and supported by farmers, must also contribute to solving this problem of farm incomes. In particular, I am thinking first of the banks and, secondly, of the meat factories. I have cases in my own constituency where farmers who have performed admirably, who are excellent in every aspect of technical production, who have met their bank debts year in and year out, are not now been given money to carry cattle over the winter. The banks have a responsibility to the industry which maintains them. In my view some of the decisions which are being taken by the lending institutions, the banks, the ACC, etc, cannot be defended either on economic grounds, on social grounds or on grounds of the welfare of the total industry. They need to address their responsibilities to the industry.
The same must also be said about our meat factories. My understanding at the moment is that by selling steers into intervention the factories can make about £80 a head. If there are farmers who are losing that amount of money on cattle they bought earlier in the year it seems to me quite legitimate that they should expect that some of those, from their point of view, exorbitant profits should be ploughed back into the industry which is again keeping those factories in existence.
In the longer term we have to pay much greater attention — it has been mentioned earlier this morning — to the way we market our food and to exploiting what is, after all, the excellent quality raw material that is coming off our farms. I cannot understand why a country of our size, with products of the quality we have selling into a market of 320 million people, cannot penetrate that market to a greater degree. I have already mentioned what intervention has done to us, that while it has been extremely important in terms of supporting farm incomes it has turned us into commodity traders. We are price takers, we are not price makers. The only way we can solve that is to begin to market our produce properly and in that respect both CBF and Bord Bainne need the support of the Government, of the Department of Agriculture and Food and of the industry. We have to try to add value to the produce which is coming off our land.
In relation to a matter which arose in recent weeks when the Court of Auditors asked questions of the Department of Agriculture and Food, in the first place it is taking far too long to answer those questions. There is also a certain degree of feeling within the industry that those questions were politically motivated in the context of the GATT talks. That may be the case but even if it is the best way for us to defend our industry is to investigate those allegations openly, to adjudicate on what we think has happened and to publish the results because the marketplace will not be deceived by anything else. We owe it to our industry to be upright, to be able to stand over our produce on any market in any part of the world.
One of the things I think was probably the most significant point in the Minister's address to us this morning was when he said that Ireland's policy in relation to cereals was to shift the emphasis from price reduction towards output limitation. That would be our objective when the stabiliser mechanisms are reviewed next year. That is something I have been arguing for for the last three or four years; we cannot continue with the system of EC support which operates in cereals. I am glad to see that cereals, incidentally, have received quite a degree of discussion in this morning's debate and tillage farming in general because, as a tillage farmer, it appears to me that a lot of the time it is the Cinderella of the agricultural industry and it is ignored. It is quite certain that if the present European cereals policy continues, we will wind up with a country of corporate farms producing our tillage crops, corporate farms with family farms excluded. We will go down the road which America has already gone down. We should not go down that road, and we need not go down that road. The pace with which that will happen is very much related to the outcome of the GATT talks but, irrespective of the outcome of the GATT talks, if the present EC cereals policy continues that will be the outcome.
The effect of the existing policy over the past five years has been to drive 17,000 people out of cereal growing and to cut the income of those who are still there by about two-thirds. At the start of the 1990 season there were 30,000 farmers growing grain, less than one-third of the number who were growing grain in 1975. It is certain that with a further fall in income this year there will be fewer people producing grain in 1991. The problem is that the policy which has resulted in that reduction in the number of people growing cereals has had no impact in terms of reducing the problem of cereal surplus and of curtailing output. That is why I very much welcome the Minister's commitment that we will seek to have that policy shifted from price reduction towards output limitation with, I hope, a degree of income support involved.
Cereal growers are one of the very few sectors in farming who are less well off now than when we joined the Community. I realise that the income situation for all farmers is extremely difficult at the moment but the figures published by Teagasc show that between 1963 and 1989 the income from cereals was less than inflation if we took the margin in 1963 and adjusted it for inflation. Beef, sheep and dairying are above it — they are not good, but they are above it. Cereal growers are really at the bottom of the barrel as far as income is concerned. The premise that underlies the EC cereals policy is that if you cut the price you reduce the output. That has not happened, it has been shown that it has not happened. The reason for it is quite simple. If there is a very efficient farmer growing cereals and his neighbour is a very inefficient farmer growing cereals he will go out of production; he has not been producing much off his land; the very efficient producer will buy his land and his response to the signal he is getting from Brussels is to produce even more tonnes off that land. That is contributing to the problem of surplus while at the same time ensuring that we have fewer farmers and fewer acres. That is the effect of the policy, and that policy has to be adjusted.
Within that context, the whole question of cereal substitutes must be addressed. It is quite understandable that farmers whose incomes are very low are outraged by 18 million to 20 million tonnes of cereals substitutes coming into the Community every year. The livestock farmers in Ireland need also to realise that were those substitutes curtailed it would be to their advantage. What is happening at the moment is that the people near the port of Rotterdam and the large ports in Europe have a competitive advantage because they can buy very cheap cereal substitutes and they are putting our grass-based livestock production at a disadvantage. From that point of view I plead that the present policy should be readjusted. There are plenty of options available to us in relation to how we can curtail supply though regional area quota and so on. There are plenty of measures that have been spelled out over the years and any one of them would certainly improve the situation we have at the moment. For instance, this year the price of grain, of feed wheat, fell by £8 a tonne. In addition to that there was a co-responsibility levy. If you are a farmer producing 500 tonnes of grain — and that is not a tremendously big farmer, it is a large one but it is not a very big one — the effect of that is to cut your income by £5,500, to take it off the top. That is the effect of that fall for an individual. That is more telling than statistics of 20 per cent or 30 per cent or 10 per cent. It is a reduction of £5,500 in income.
Another thing I think needs to be said in relation to GATT is that it is obviously the most significant thing that has happened within Irish agriculture since we joined the Common Market, possibly since the economic war. I am glad to say that my party first raised the matter of GATT in February of last year. I spoke about it at our party conference in Galway and I am glad that this House debated a motion which was put down by my party in relation to GATT in July. At that time there were many people in the country who could not even spell GATT. At least we have progressed from that point. It is of profound significance not just for farming but for the entire economy. I hope the efforts that are being made in Brussels to hold the line and to defend the interests of Irish farmers and Community farmers will be successful because they are in the interests of the consumer, not just the farmer. That is an important point which must be underlined.
There are people in Europe who can remember a time when the population was starving. During the Emergency there were restrictions here — I was not alive at the time so I do not have a personal recollection of these matters, but I am told that conditions in Ireland were not nearly as severe as elsewhere. The Common Agricultural Policy developed out of that background where people were hungry. We must remember that the balance between surplus and deficit is a very narrow balance and there is a need for a strategic food reserve within the Community. My understanding is that there is about 60 days supply of grain in the world. All we need is for the global warming effect to become more severe, for some nuclear accident as we had in Russia, for some matter like that, and we go quite quickly from surplus to deficit. Everybody needs to remember the strategic importance of having a food supply behind us.
In relation to GATT, I think there must be extreme disquiet about the Commission's role. It is obvious that there is an element within the Commission who want to make substantial concessions to the Americans and, let there be no doubt about it, the Americans are not doing this for any altruistic reason. Their proposals do not develop out of altruism. Their proposals develop out of selfish self-interest. There are farms in America that are 13 times bigger than they are in the Community; there are two million farmers in America; and ten million farmers within the Community. Of course, in that context there must be a social dimension to the Community policy because, if half those farmers are driven off their land, as they would be in the event of the American proposals going through unchallenged, I shudder to think what the effect would be on the whole European economy in terms of supporting those people and trying to provide them with jobs off the land.
That is where the agenda is and that is why we must continue to press for no concessions under the GATT Round. I realise the extreme importance of reaching a GATT agreement before the deadline at the end of the year and I realise that there are matters other than agriculture but, from a domestic Irish point of view, agriculture is central to the debate. The type of thing that is going on in the Commission at present is not acceptable. We have different elements playing a political game within the Commission when it is their responsibility, under oath, to defend the institutions of Europe, the people of Europe and the farmers of Europe. These are my remarks in relation to GATT.
In the event of there being concessions — and that is some way down the road — it is inevitable that some compensation will be required. In view of the fact that we were successful in achieving a doubling of the Structural Funds under the 1992 agenda to compensate us for our peripherality, we can argue something of a similar case in relation to GATT. I look forward to measures to compensate us to the degree that is possible for any concessions which may be made under GATT. I say to the Government quite bluntly that this matter is so serious that I, for one, would be prepared to get up and walk away from that GATT table if the consequence of it is to drive half the farmers off Irish farms.
There is no doubt that there is a major problem in relation to farm incomes. I have no doubt either that farmers' incomes would have been a very important issue if the general election, which we all thought would happen yesterday, had taken place. I have no doubt at all that in rural constituencies it would have played a very important role in determining where votes did and did not go.
The Minister's speech is remarkable for a number of reasons. It is long on analysis, there is a wide range of statistics in it but it is very short in terms of proposals and solutions. The Minister adverted to the fact that it had to be compiled in the context of an industrial dispute taking place. Nevertheless, he seemed to have collected a remarkable range of typewriters during the assembly of the speech. I counted four typefaces, spacing policy and paragraph lengths changed as the speech went on, and I wonder why, when the Minister got to the beef sector, for example, he decided, before moving on to cereals, that he would change his typewriter. He typed on through sheep meat and developments in Eastern Europe and then changed typewriter again. He moved on to extension of disadvantaged areas and that involved a new typewriter. However, he had not exhausted all his typewriters. GATT meant the wheeling out of the last of his range of typewriters. He went for a new top spacing policy at this stage. He assembled and compiled it all together on the one page. I wondered if a dreadful paper crisis had hit the whole process at this stage. That is neither here nor there with regard to farmers' incomes.
It depends on who you listen to when you try to assess the extent of the decline in farmers' incomes. The Minister quotes a figure of approximately 10 per cent decline this year; the farmers' associations are quoting somewhere between 17 per cent and 25 per cent reduction in farmers' incomes; there is an overall drop of £300 million in farm incomes this year according to the IFA. It is obviously the small farmers who are worst hit by this income crisis in farming and many small farmers are now simply struggling to exist. The average income in farming last year was of the order of £6,900 and, simply from the definition of the average, that means that half the farmers earned incomes which were less than £7,000 a year. Forty five per cent of all households which had a farmer as head of the household were classified by the Economic and Social Research Institute as living in poverty. Farmers are being driven from the land at present into rural environments where there are no jobs for them, compounding the problems of unemployment in these areas. Many farmers are also being forced to emigrate. Emigration is now creating a major crisis in rural Ireland. Rural values and rural communities are being threatened. Organisations, such as the Gaelic Athletic Association, are finding themselves being stretched to continue in existence in some rural communities. Many of the new poor come from farming backgrounds from small farms.
I sometimes wonder at the concept of disadvantaged areas. It would seem to me to be far more appropriate that you would have a concept which involved disadvantaged farmers rather than disadvantaged areas. In disadvantaged areas you can have a minority who are doing very nicely. I accept that the majority of people in these disadvantaged areas are disadvantaged, but you have those exceptions. It would be far more just and equitable if you had the notion of disadvantaged people rather than disadvantaged areas.
I suggest that there are three short term solutions which can be used. First, I suggest that direct income aids should be introduced. As I understand it, the European Community has approved this and the decision should now be taken to introduce direct income aids. They are an absolute necessity for certain elements of farmers who make up that 45 per cent who are trapped in poverty. I would like the Minister to clarify the position in relation to the introduction of direct income aids. As far as I could gather from his speech, he has not stated what the position is in that regard. Second, there should be an increase in headage payments for farmers. I understand it is possible to double the headage payment which is at present being given to farmers. I also understand that there was a commitment to pay the maximum levels of headage payments in the national plan, and that commitment has not been honoured. I would welcome the Minister's response on this issue. Third, there is the question of the extension of the disadvantaged areas. Senator Dardis spoke at length on this and I acknowledge that he knows much more about this matter than I do. What is stopping this whole process going ahead? Where is the blockage? What is the problem in Brussels? I believe this matter has been in the melting pot for quite some time. Again I would welcome a statement from the Minister on what the likely outcome of this will be and when this whole business will be up and going.
There are, of course, many structural and marketing problems in relation to farming. EC policies have favoured commercial farmers. Small farmers have been discriminated against because they did not receive that special type of consideration which is absolutely necessary to maintain them at a reasonable level of income on their farms. The time has now come for the development of agriculture as part of a rural way of life rather than as a system which supports corporate farmers or factory farmers.
The question of marketing, research and development in agriculture and food has been alluded to already. It seems to be one of these everlasting issues in agriculture, taking on something of the same dimensions that the restoration of the Irish language has taken on. We talk about it, we would love to see it happen, we are all in favour of it, but progress has been very poor. Investment in the development of branded products has been minimal in comparison to what is needed. I will give one example of that. I understand that the CBF marketing budget is of the order of £2 million to £3 million. CBF were given an extra £0.3 million — if the figure is correct — this year to improve their marketing. The beef industry is worth something in excess of £1 billion and an extra £0.3 million is a crumb, a pathetic response to the need for more marketing of beef, which everybody now accepts. It is not relevant in terms of what is needed. It is scratching the surface, it is pure cosmetics of the most transparent type. To make bad worse, first, CBF were given £1 million, it was then reduced to £0.5 million by the Government and now it is £0.3 million. It is like one of those big corporations going broke. What do people decide to do? They decide to cut down on paper clips or something like that. It is absolutely ridiculous. It is a shocking commentary on the degree to which we are not being serious about marketing and developing products.
I agree with what Senator Dardis said in relation to technological support for agriculture as provided by ACOT. Anybody who wants to know about this can see it in terms of the signs on the wall. Anyone who walks down Sandymount Avenue these days will see a "For Sale" sign outside the Agricultural Institute's headquarters. A bit of it is being sold off and that is happening in a context where agriculture is going through a great crisis. Part of the solution to that crisis inevitably has to come from providing technological and financial support for those people in the industry. What are we doing? We have cut the ACOT budget into ribbons. It has taken an appalling savage series of cutbacks and I gather there are more in the pipeline. On top of all that, we had the appalling sight of the Chairman of ACOT coming out and launching an attack on the people who worked in that organisation, people who provided a very valuable service with a great deal of commitment over many years.
There is no use at all in people pretending that somehow we can import research findings into this country from other places. It does not work like that. To be able to interpret those findings and to be able to apply them in Ireland, you need to have developed a certain technological capacity. I believe that we are falling below the basic levels that are required to be able to maintain and develop that level of technological capacity.
Over the years there has been an abysmal failure on the part of farmers, and indeed on the part of people who might know better, to get through generally to people in this country that there is more to farming that what goes on at cattle marts. There is a long term and what is not done in the short term which will sooner or later come back to haunt them. That is part of what is happening now.
We are not taking seriously many of the fundamental changes which are impacting on Irish farming given the way we have carried on in terms of producing commodities, beef, dairy products. The Minister this morning spoke in terms of something like half of dairy output going into butter. The one thing that is obvious is that the consumption of butter is falling and it does not look as if it can be turned around. The reason is that people have become very conscious of the effect the food they consume will have on their health. In Ireland people have simply said that this is wrong, it is not true. The reality is that our capacity to influence the thinking processes which give rise to the kind of opinions which are flowing into this country from Europe is minimal. What is being said and what is being felt in Europe in relation to the impact of diet is something we can do very little about. We should try to make the best of those situations rather than sticking our heads in the sand and saying it is not true. That has gone on for years. We had research reports commissioned and afterwards newspapers reported cleans bills of health for butter. The figures show what the public think of that sort of thing. It will go on like that.
There is a clear association now established between the type of food which people eat and certain types of diseases, I am sure Senator Conroy in his other capacity is well aware of those facts. We must take them on board and make the most of them. In many ways we have a great capacity to exploit that because of the healthy image of the food that is produced in this country and because of the healthy image of the environment from which it comes.
That takes me on to the question of organic farming. I gather that organic farming is one of the few growth areas, if not the only growth area, in agriculture. This year by way of responding to that opportunity in the market — the Minister can correct me if I am wrong — we have invested £60,000 in it this year.
In the organic area?
Yes.
£450,000.
£450,000, something less than half a million pounds on an industry which produces £3.5 million worth of product. Here is probably one of the big expanding areas and we put half a million pounds into it. It is the price of a crumb in terms of the overall agricultural picture. We are not going in in the way we should to exploit those opportunities. We will find ourselves being passed out by our competitors.
What is this £450,000 being spent on? Are we developing new products? Are we laying down new standards? Perhaps we are but, if so, these new products are not exactly making a big impact on that segment of the population I seem to be circulating in. I do not find very many organic products coming on the market produced in Ireland, guaranteed, controlled, certified as having been produced organically. Have we laid down the standards of what organic production will be and have we organised the capacity to implement, monitor and control those standards? I certainly do not think that can be done for £450,000. It is an example of how we are not serious about exploiting these opportunities. There is a growing market for organic and health foods across the world, particularly in Europe but we are not moving in to exploit that market. Rather, we are continuing to flog a declining sector of the market in pushing things like butter. There is not a future in that.
There is also the question of BSE scare and the various responses which have arisen to that scare in the United Kingdom and in Europe. I am not particularly happy with how that problem is being handled in this country. I believe we must acknowledge openly that the Department of Agriculture and Food simply will have to go for a slaughter policy in relation to those herds where BSE is occurring. If we do not do that fairly soon we will find ourselves in a crazy situation. As I understand the position, the herds and the offspring of the herds where the BSE has occurred, are being bought up. The most recent statistics indicate there were something like 24 cases. It is getting larger. If more cases occur — and it would be unrealistic not to expect more cases to occur — then the problem will escalate out of control very soon. I wonder if we have the capacity to check all the animals that have been in contact with animals that have contracted BSE? Do we have the capacity to trace the animals, to trace where they were on different farms before they were diagnosed as suffering from that disorder? I have serious concerns about that.
There is the question of environmental problems in relation to agriculture. This is of growing concern. The grants available are not particularly attractive Investment to prevent and eliminate pollution will pay dividends in the long term. Always in Irish agriculture we go for the short term options. There are many explanations for that, including the political reality that there is nothing beyond the life of the Dáil, which yesterday looked like being another five minutes, but which cannot at any stage be more than four years. That is the nature of our politics. We seem to have a disturbing inability to think and plan for the long term. One of the areas where we are falling badly behind our European partners is our preoccupation with short term stuff at the expense of the long term.
I welcome some of the changes which are happening in the food industry, particularly in the dairy sector but I am disturbed they are not happening at a much greater rate. There is need for concentration in the dairy industry, indeed in the food industry generally. Unless that happens Irish firms simply will not be able to compete at the level of competition that is necessary to survive in Europe. It is very important that the concentration that is taking place at present be enhanced and encouraged. I imagine there is probably room in real terms for two or three big dairy co-operatives in this country. There must be a sinking of differences and people looking to the long term rather than being worried about their little patch and their little bit of control in a fragmented industry. There is no future in that for anybody.
Of course, the beef industry is all over the place. I will not mention the Goodman collapse and all that that represents, but what is missing are some serious players in the beef industry who could compete meaningfully at international level. As I see it, we are not at the races there. It is vital that we take the steps needed to allow for the development of those industries. Some of those steps were set out fairly clearly in the NESC report produced last year.
In relation to farming generally, and rural communities especially, I hope we will think in terms of rural development programmes rather than piecemeal supports and so on for farming. The long term strategy has to be in the direction of developing rural communities rather than solving problems on a minute to minute basis.
Like other Members I welcome the opportunity to make a contribution regarding the current situation in agriculture. I welcome Minister Kirk to the Seanad. From his involvement since he was promoted, he has shown himself to be concerned for and helpful to the farming community. I am very happy and feel at ease with him. He understands the problems of the farming community and has demonstrated that consistently.
Listening to other speakers today one would wonder what can be achieved. There has been quite a lot of waffle in the debate. It is not my job to reply to comments but I note that Senator Upton, who said he would not comment about Larry Goodman, did so at length before the recess. He said then he was delighted to see the downfall of Larry Goodman.
I certainly did not say I was delighted to see his downfall.
He even went on to say that Humpty Dumpty sat on the wall, Humpty Dumpty got a great fall and would never be put together again. That was the rhyme put on the Seanad record.
There was no talk about me being delighted.
That Senator today — and this shows how one can turn around — criticised the Government for not spending more money on finding markets. Larry Goodman made a major contribution to finding markets for a product we need to sell. I am delighted to record that Larry Goodman's business will be with us to serve the Irish producer for many years. The farming community are delighted, regardless of the jealous or other comments made about him.
If agriculture is not profitable here at the moment we cannot blame the Minister for Agriculture and Food. Every month a bulletin is issued by the Minister. In January the bulletin listed the additional grants for agricultural students from Bord na gCon and for organic farming which, as the Minister rightly corrected Senator Upton, was £450,000. In April a price package was issued.
A modest public house would have a turnover of that amount and a serious one would have a turnover of £4 million or £5 million.
Acting Chairman
Senator McGowan, without interruption.
I believe that if the Lord was in charge of agriculture here he could not satisfy some people, including the Senator who is interrupting me. The extension to the disadvantaged areas was announced in May and a ewe premium scheme was announced on 4 May. Many more schemes were introduced but I will not list them because there is no lack of understanding among the farming community about the consistency of the Government, and the Minister for Agriculture and Food, in particular. The Minister is a good Minister. He has negotiated in a serious way and most people understand that. He has been one of the best negotiators in Europe on behalf of this country. There is no lack of commitment by him. We have an excellent team in charge. Ministers O'Kennedy, Kirk and Walsh are three of the most able people we have. It is fair to recognise that they are doing a consistent and a good job. I compliment them.
I recognise that all of the money provided for agriculture does not reach the farmers. That is the main problem. Farmers have a serious cash problem because it is difficult to sell cattle and sheep. All the money provided under the different headings would not compensate them if certain products cannot be sold. A farmer with a large milk quota should not qualify for a headage payment for sheep or cattle. There has to be rationalisation and recognition that the supports cannot be all directed at those who are strong financially at the expense of the small farm unit. If a very large farmer, who has a milk quota of 100,000 gallons plus, is at the same time entitled to a sheep headage payment and a cattle headage payment, that is channelling resources to those who are reasonably well off. There has got to be rationalisation. I have no doubt that the Government will eventually do that and that it will be recognised at EC level.
Milk producers are doing fairly well. Coming from as near the Border as I do, one does not have to be told that because a litre of milk is about 25 per cent cheaper, and maybe a little more, just across the Border. We have to recognise that milk producers here are doing reasonably well. Other sectors are not doing as well. The producers of beef have been especially hard hit of late and also the producers of sheep meat. They would not survive if it were not for the generous headage scheme which the Government have fought for and succeeded in maintaining for the last number of years. It looks as if it will be available for a further period.
Our main difficulty is with the amount of grain allowed into the EC. It is nearly impossible in the present negotiating climate to prevent the EC from importing a very large tonnage of substitute feeds. It has reached the stage when it is not profitable to grow barley here if a farmer who produces an average of two tonnes per acre receive about £115 per tonne. One does not have to use much imagination to realise that, if in the west and in Donegal, one gets an average of two tonnes of barley to the acre realising an income of £230, after paying for fertilisers, and harvesting, not to mention the risks involved, one ends up with a deficit. I am not informing the House of anything that is difficult to understand. It may be that on very large farms where production is very high and where they are reaching four tonnes per acre, barley production is economic but on a limited acreage of land it is not economic to produce barley. Therefore, we have to recognise that the whole of the tillage area has to be looked at very hard, largely because there is a major section of small farmers in Ireland who are still depending on tillage. If one takes from Galway in the west of Ireland to my own county one would find it very difficult to establish that there is any wealth in that area from farming, largely because there are no big milk quotas. That is the area requiring the greatest attention from the Government.
I am satisfied beyond doubt that the Department of Agriculture and Food, the Minister, and those involved are doing a reasonable job. I would also think it right and fair to recognise that Commissioner MacSharry — and we are fortunate to have an Irishman as Commissioner in charge of agriculture at EC level — is doing trojan work. It may not be recognised by everybody in Ireland, but when you turn on UTV and BBC and find out that public representatives in Britain recognise the value of having Mr. MacSharry as Commissioner during tough times it is a good day for Ireland. It has been said by British elected representatives that the knowledge of agriculture which Commissioner MacSharry has brought to his position has been good for Europe. I think it has also been good for Ireland. We recognise how fortunate we are to have a Commissioner in Europe with the background knowledge of the small farmers in the west of Ireland.
We could spend several days discussing the plight of the farmers. At the moment it is costing the Exchequer approximately £40 million to try to eradicate bovine TB, but the largest part of that money is going into administration, to vets or whatever; it is not going directly into the farmers' pockets. Farmers who have to have their herds slaughtered are not overpaid, they are not even paid enough. That has been part of the problem and part of the reason we are still finding it difficult to make progress in the eradication of the disease. There is no incentive to report and to cooperate, because in the end the farmer loses heavily on cattle that have to be slaughtered. This is a serious problem, despite the fact that the Exchequer and the taxpayer are paying £40 million a year to try to eradicate this disease.
We are living in changing times. We have seen the formation of co-ops and the value of co-ops to farmers. Today that is a changing scene. Some of our co-ops have now become multinationals. They freely admit they are more interested in investing in America than in investing in Irish agriculture. This is not something they keep from the public. They are saying it is no longer profitable or wise for them to invest here, that they are now interested in investing in America. They even say that their principal business is no longer liquid milk. Some of the co-ops that were specifically set up to deal in milk have now reached the stage of success where they are no longer interested. I think the Government are entitled to look at the development of co-ops which have now become multinationals and to ask what contribution are they making to agriculture. What assistance are they giving to the industry, to the farmers and to their members, whom they were initially established to help and to support? There is a question mark there. I strongly believe that the co-ops, who got thousands to establish themselves, should still be encouraged and directed to help the farming industry and those involved in it. Recently, a well-known chairman of a co-op in the south of Ireland, who is also a member of the CBS, had no difficulty in saying that he would now find it more profitable to invest in America, which was a shock to me.
My contribution is confined to 15 minutes and, rather than go on reminiscing over areas that have been partly covered already, I bring two matters to the attention of the Minister. First, I ask the Minister to do what he can to have committees of agriculture re-established. I know it is already accepted that agriculture is the poorer because a decision was made to abolish committees of agriculture. At this crucial period for agriculture it is wrong that committees of agriculture are not involved. Therefore, I ask, as a matter of urgency, that committees of agriculture be re-established as soon as possible to give a local input, to allow for a local contribution and the involvement of the farming community at ground level.
Some might say that the IFA are already doing that. However, with no disrespect to the IFA, and no intention to attack them, I believe the IFA have not achieved very much. I say that as a paid-up member, with my membership card of the IFA. I have to say, with regret, the IFA have achieved nothing. Sometime ago they had a full page advertisement of what they had achieved in regard to the disadvantaged areas. That was totally false in so far as we are still arguing about the definition of what area is in and what is not included. You get nothing for standing in the corridors in Europe waiting on a whisper or a rumour and coming back with innuendos. The farming community are reasonably intelligent and they are not going to be happy with that situation. Recently, I attended a dinner in Ballybofey in County Donegal and I was disappointed to hear farmers, coming in once a year for the annual dinner, listening to old jokes about the parish priest. That is not the kind of co-operation and spirit of survival that we need. We need a lot of help, a lot of knowledge and a lot of involvement by farmers who believe in the land, who believe in their future and in living and staying in rural Ireland. They have got to be encouraged, they have got to be supported. I strongly ask the Minister to campaign and to do his best to see that committees of agriculture are re-established as soon as possible. In that way I believe we would be making a major contribution.
I would make one final remark, it is that we ask the Department and Minister for Agriculture and Food to put in place a section in the Department that will examine the feasibility of alternative crops if we have reached the stage where barley is not profitable, that we cannot compete with the farmer who has 300 acres in one field, whether it is in America, France or wherever. The small man in Ireland with a ten acre field cannot use the same kind of plant and machinery and it has been proved beyond doubt that he cannot compete. Therefore, we have to be alert and we have to examine areas where there are profitable alternative possibilities to sustain the small farmer. I am not going to hold up the House by giving a list of those possibilities, even though I have some knowledge of areas that could be investigated. Suffice it to say to the Minister that most of the farming community in Ireland who are getting it hard at the moment would welcome serious examination of the possibility of the production of alternative crops in place of those now found to be unprofitable.
I am happy that this discussion is taking place. Agriculture and those involved in it are having some difficulties in earning sufficient and having a sufficient cash flow. Blame cannot be attributed to the Minister for Agriculture and Food, or the Minister of State, Deputies Kirk and Walsh or Commissioner Ray MacSharry. All of them are doing a reasonably good job and I would compliment them at every opportunity I get.
There is a voluntary 15 minutes time limit. I cannot impose that, but I just want to remind Members that it is their co-operation that will allow the maximum time for everybody.
I certainly intend to keep within the 15 minutes allocation to ensure that other speakers will get in. First, before I get to the address proper I would like to make a comment on what Senator McGowan said as regards the inactivity and perhaps the irrelevance of the IFA. I would suggest that membership of the IFA surely is testimony to the importance that farmers place on being members of a farming organisation. If the Senator had travelled to Limerick last Saturday he would have seen 1,000 farmers marching under the IFA banner and those farmers in other parts of the country will continue to march in the weeks to come looking for what they would consider action as regards the crisis in farming.
Like other speakers, I welcome the opportunity today to highlight the continued crisis prevailing in agriculture and the issues confronting us include what is being enumerated by speakers today — the fall in farm incomes, low farm incomes, reclassification on disadvantaged areas and, of course, GATT. It is not the first time we have touched on GATT and the effects of GATT on farming in Ireland. That debate took place in the last session of the Seanad.
The situation as regards GATT, as we know, is yet unresolved. Irish farmers saw that saga beginning with the Ray MacSharry statement in July of this year in Dromoland Castle. Taking all of this into account, and I refer back to GATT, we cannot but say that 1990 will be remembered as a black year for Irish farmers, and people who do not acknowledge that really are not living in the real world. It is not just a black year for Irish farmers but for consumers also, because we are all in this vicious circle together. We are an agriculturally based community with the fall off affecting small towns and villages in Ireland, affecting both city and county, because there is absolutely no urban — rural divide or no urban versus rural situation with regard to the farming crisis.
The figure of a 21 per cent drop in farm incomes in one year is a fact. It has been proven and it is frightening. I am a farmer's daughter and I have a long interest in farming, but there is a feeling of hopelessness and helplessness among farmers in Limerick and Tipperary because they believe their Government and the EC have let them down and ignored them. They feel powerless in the face of the EC, in the face of GATT, in the face of changes taking place in farming and in the face of European pressure which has been seen over the last few weeks, particularly from Franz Andriessen.
As regards the GATT negotiations, I think GATT is now a household word; it is the greatest challenge facing us and I supppose the greatest challenge that Irish farmers will ever face since the economic war of the thirties. The next seven weeks or so will be surely the turning point for the future of Irish farmers.
The general consensus from all concerned in farming — and I would have to include the three farming organisations — is that Commissioner Ray MacSharry, despite all sorts of tributes coming from the other side of the House, went too far in offering to cut the CAP by 30 per cent. That is not the way negotiations are carried out. It is not the way business is conducted at auctions or marts. If you are buying or negotiating for a new car you certainly do not give your bottom line price to the person selling you the car. If you do you are left with something in the middle, and not to your satisfaction.
The Americans were very quick to seize the opportunity, with a push from Franz Andriessen — all ominous signs before we even go into negotiations with the Americans — with their propaganda machine to drive a rift between Commissioners within the EC. That is certainly not to European farmers' advantage and it is most certainly not of advantage to Irish farmers. This time it is not a question of farmers crying wolf, as has often been mentioned in the past because milk prices, cattle prices, grain prices, stock prices and sheep prices were shown this year and we cannot deny them: milk prices were down 20p per gallon, beef prices 12p per pound, lamb prices £10 per head on this time last year, and grain co-responsibility levy £6.63, and pig prices were down £15 to £20 per head. Nobody can dispute these figures; they are correct and they can be read in The Farmers Journal, they are there for anybody to see in newspapers as reflecting the situation for Irish farmers.
Whatever way we look at Irish agriculture, whatever way the Minister for Agriculture and Food or Commissioner MacSharry or the Taoiseach tries to dress up the situation, the fact cannot be altered: the situation is dire. All the various efforts since July were enumerated last week in The Irish Times, line by line, month by month, date by date, venue by venue, whether we are talking about Dromoland or Luxembourg, about Rome or venues in the future, the talks have not come to a satisfactory conclusion. The divisions have been highlighted. I suppose we have to contend now with that problem of going into battle in disarray, which of course is never a good omen for a satisfactory conclusion. You find Denmark, Britain and The Netherlands on one side and Ireland, Germany and France on the other. It is very hard to find a compromise, where Britain, The Netherlands and Denmark support the thrust of the MacSharry package while the other three are pushing hard for special compensatory measures, including direct income payments for the worst affected producers. I can understand why it is hard to find a solution.
The Minister in his speech this morning hopes: "As the negotiations progress that the Irish Government will defend to the utmost the interests of Irish farmers and the agricultural industry in its broadest sense." That is an aspiration and I wish him luck in his aspiration. The last paragraph of his address contains a list of aspirations which I believe will be very difficult to achieve in the light of the outcome of the many protracted talks already having taken place in the venues I mentioned.
The Irish Government know the cost of these talks. I do not expect, and neither do the Irish Government, that £40,000 farmers are going to throw down their agricultural implements and walk away from the land in order to increase or swell the profits of the industrialists in Europe or the multi-nationalists who are pushing the traders of the United States. It is interesting to reflect that when Jacques Delors visited this country not so very long ago he gave us a vision of an Ireland where we could retain the social fabric of rural Ireland. I am nearly sure he said that as he stood close to the banks of the Mulcaire River in my own area where he was brought to see the problems caused by flooding. It was there he had this great vision for Ireland that we could retain the social fabric. I do not think it is a vision; I think it is a mirage; and within that mirage I hope we are not going to see ghost towns and ghost villages. It appears to me at present a dire picture is being placed before those farmers and those small villages which are dependent utterly for their survival on a thriving farming population.
I will not spend much time on the extension classification of the disadvantaged areas, because Senators Upton, Dardis and Doyle have been referring to this all morning. I worry about the submission to Brussels. It is not adopted as yet but I wonder whether the full demands from Ireland will be adopted. It seems as if that submission will not be fully agreed to, so are we right in thinking that 50 per cent will be increased to 65 per cent? I would like to see it on paper because so much has been written about the extension and reclassification of the disadvantaged areas. We got lists this morning of acreages and areas. We heard reference to coastal areas and what not; but at present all I know is that when that magic piece of paper comes back from Brussels and is made known — of course, it has been leaked here, there and everywhere — I think there will be further mayhem and uproar among Irish farmers who have been promised inclusion and who perhaps will eventually find that they are excluded. They do not know whether they are in or out as they listen to rumour and counter-rumour which have been circulating for the past year. The increase the Minister refers to certainly will not include all the farmers who have been promised.
Some months back I read a statement in the Limerick Leader submitted by a Fianna Fáil TD. If you were to believe what I read then — I certainly did not believe it, accordingly to the leaks that have come out now — the whole of east Limerick was going to be included. Every single farmer in the area, every townland that I know from my childhood, were all in. Now they certainly are not all in, despite the fact that we are not running for an election. If we were, I dread to think what would happen those farmers who were promised so much. It is there in black and white in the Limerick Leader of some months back. Those farmers are going to be disappointed.
Senator Upton referred to the idea of disadvantaged farmers rather than disadvantaged areas, but I would like to comment briefly on what I would consider disadvantaged farms rather than disadvantaged areas in all regions as distinct from just areas. These have been defined; it is a definition from the IFA and we must believe them: they are the authority in the farming organisation with economists working full-time on facts and figures. They have defined disadvantaged farms as those where the income level is less than two-thirds of average industrial earnings. It could be £7,500 or even less. There were two figures bandied about as being the average, £7,500 or £6,900, because there is very little between them anyway. This is seen as the minimal income level necessary to support a farm family without eroding the capital base and the future viability of the farm.
One would wish to be constructive in offering a solution. Again Senator Upton referred to the absence of solutions in the many-paged document that we received this morning — there were very few solutions except price aspirations. In relation to solutions, I will refer to some of the proposals necessary that are generally agreed on to make these areas viable. I agree that they will cost money, but it is the future of our agricultural community. First, it is essential to have proper and free farm advisory services available. I will not go on about the cutbacks in Teagasc, as enough has been written over the past while in relation to those cutbacks. You must have free farm advisory service for the farmers who most need it and who are not financially in a position to be able to pay. They must also be eligible for livestock headage payments and acreage payments. Again, the Department of Social Welfare must be more sensitive in their assessment of benefit entitlement and a permanent direct income aid scheme must be introduced which would be of far greater benefit to those farmers than exists already under the smallholders assistance scheme.
Again, when milk quotas are allocated, the EC milk restructuring scheme, which is now limited to disadvantaged areas, should be extended to all disadvantaged farmers. Training and re-training measures must be made available. I shudder to think what the attitude of young people is to a career on the land at present. I do not know if there are very many of them left. Most of them have emigrated, particularly in the mid-west area anyway. There is no way that they want to stay on the land or that they are even there to stay on the land. But if some of them did wish to stay, they would certainly need training, and for older farmers there must be re-training measures. Land consolidation restructuring improvements must take place and, where appropriate, retirement schemes must be introduced.
It boils down to the fact that if we were really interested in the future of our country and farming, the whole of this small island, as has been stated over and over again, should have been sent as an area for reclassification. We are tiny by comparison with other members of the EC and even tinier still when you think in terms of the dire prospects that are facing us as regards an enlarged Eastern European farming entity.
As regards rural development projects and their role in supplementing farm incomes, deer farming has been mentioned. In my own area of Slieve Phelim, quite a bit is going on in deer farming; but my experience is that the people that are involved in it are those that are already fairly viable. It is not something that is taken up by the very poor farmers because, first, they do not have the financial ability to take it up, develop it or to service it afterwards. What is really needed there — and I know Shannon Development are involved — is very strong and very successful management skills for any farmer to take up these projects, whether it is the alternative of deer farming or whether it is agri-tourism. Certainly, I cannot see that that is going to be the panacea for all the farmers' ills. My experience is that the better off farmers who have initiative, who have the money — and money is the bottom line — are the farmers who are going into the alternative enterprises.
Reference has been made to the effect on agriculture of German unification. I did spend a week there this year and what I found was that, while we are talking, the Germans have already acted. Undoubtedly there will be massive aid redirected towards Eastern European countries. German efficiency has already come into play. The statistic that I find very interesting there is that, despite the loud cries from Germany to solve their farming situation, they still have only 2 per cent of their population involved in farming. When you think in terms of our involvement of 14.4 per cent, there is absolutely no comparison.
It is obviously of crucial importance for us to stake our claim, and to stake it very strongly, for essential funds. We cannot make potential subsidies from our Government that Germans, for instance, can still make and elicit from their national Government. They have the goodwill to do it. When we in the delegation that went to Germany asked them how they felt about German unification, the cost and the fact that income tax might have to be raised in order to pay the price, their reply was: "We are doing it. We are going positively forward". They were not just going to agonise and whinge and moan or whatever. They were going straight ahead. That is how they are going to tackle their agricultural problem. They will have it solved while we are still agonising. All in all, the crisis for agriculture is with us. We have to believe it. The facts are there.
Look at the criteria of prices — facts and figures again — the total farm income projections, 14 per cent in money terms and 17 per cent in real terms. While total non-agricultural remuneration is expected to increase by 6.5 per cent in money terms, the National Farm Survey shows that in 1989 the average level of income earned from farming last year was approximately £7,000 per farm. That is £133 per week. That is 60 per cent. On the figures already mentioned today our farmers earned less than £5,000, which is £96 per week. We are talking about 60 per cent of Irish farmers.
These statistics are shocking. The average industrial earnings in 1989 was £216 per week. There is a big difference between trying to live on £96 and £216 per week, so the figures speak for themselves. Looking forward to 1991 — and when I say "looking forward" I mean looking forward in a time sense, not looking forward with any great confidence — I ask will prices for cattle or sheep fall? Perhaps they will. What I would be worried about as regards the GATT talks and the American push is that we may not be just talking about 40,000 farmers forced from the land; if the Americans get their way you are talking in terms of 70,000 people, so no matter what way the dice falls, between 40,000 and 70,000 or, hopefully, below 40,000. Nobody can but say that the crisis facing us is absolutely extraordinary. I would almost liken it to the famine of the 1840s. In this case we are not just dealing with ourselves and Britain, we are dealing with a world situation. We are dealing with Europe and we are dealing with the United States.
Would it be possible for me to share my time with Senator Denis Foley?
Is it five minutes each?
No, ten minutes, please.
Agreed.
I would like to take this opportunity of welcoming the Minister here today. I would also like to congratulate the Minister on the tremendous work he is doing in the face of difficult and trying times in agriculture. I refer to the present critical position of Irish farming. The reduction in the price of milk, which is about 20p per gallon, is the equivalent of £200 per cow. That would be the annual repayment on £1,000 borrowed over ten years. This means that with the drop in milk prices a 40-cow herd has no repayment capacity. Also the dry stock farmer is in severe difficulty and would be unable to pay interest on money borrowed and make a profit. Cattle prices are in a depressed state. The floor has fallen out of the sheep trade completely. The GATT negotiations at the moment are not very favourable towards farming and in particular towards Irish farming.
What are the solutions? Consideration should be given to the inclusion of more of my constituency, Monaghan-Cavan, in the severely handicapped areas. Headage payments are essential for the continuing viability of all farmers in my constituency and I ask the Minister to review the entire situation in Monaghan and Cavan.
Diversification should be considered with an alternative enterprise being considered, namely, the rearing of reindeer as an alternative enterprise. Some research and aid should be given to any farmers so interested. The rearing of angora goats and other such enterprises should be considered. Where farmland is of doubtful quality consideration should be given to the planting of such land. Further consideration should be given to stocking this land with wild game which attract tourism. Teagasc specialists should be employed solely in doing a survey on the best type of alternative agricultural enterprise to keep farmers on the land. Headage payments are very necessary for these farmers. Monaghan farmers are always willing to take a chance and with the right guidance and advice they would take on the challenge of such alternative enterprises.
I wish to refer to one further problem on the Irish farm, and that is the safety factor. Unnecessary injury and death in some cases could be avoided if the necessary care and advice were available. I propose the appointment of a safety officer in each county. He could visit farms, identify danger signals and give the right advice so as to avoid unnecessary suffering to the unfortunate farmers and their families where accidents occur.
I thank the Minister for coming here today to give us the opportunity of making the statements on agriculture. Last year and the previous couple of years were very favourable for farmers, but this year there has been a severe downturn. I know the Minister for Agriculture and Food and his two Ministers of State are doing all in their power to stabilise the farming situation at the moment. I wish them well and continued success.
At the outset I want to thank Senator O'Brien for sharing his time with me. I am glad to have the opportunity to contribute to this very important debate. I wish to congratulate the Minister for Agriculture and Food on the tremendous work he is doing during a very difficult and trying time in agriculture. We all accept that at present there are major difficulties in the agricultural sector.
The Minister, by some of his interventions and the concessions he has secured in the recent months, has helped to resolve to some extent major problems that exist in agriculture. He has a difficult role to play in the GATT negotiations. All sides of the House should give him the support he needs to ensure that farmers are protected. The Minister has been the subject of much criticism in recent months. Nobody has worked harder and deserves the support of the Members of this House. I would also like to congratulate his Ministers of State, Deputy Walsh and Deputy Kirk.
There is no doubt that a very serious crisis obtains in Irish agriculture at present with no sector unaffected. The incomes in the cattle industry have dropped severely in recent months and are set to decline further. In the dairy sector there has been a decline of some 30 per cent this year. When that decline is added to the reduction of the price of calves which is in the region of £100 each, or 40 per cent of their present value, it serves to emphasise the difficulties obtaining to that sector. In the sheepmeat trade prices are down almost 25 per cent and the future looks rather bleak here. There are many people who have made a living from sheep farming over many years and who, because of the liberal attitude adopted and the numbers of sheep bought by people who had never been involved in the sheep trade, now find that their income has been reduced to a mere pittance. I know that the 60 per cent advance of the 1990 ewe premium worth approximately £13.75 per ewe will cushion somewhat the decline in incomes. Nonetheless, we must acknowledge that the trade is going through a very difficult period. Bearing in mind all these problems, there is need for specific national measures to combat the serious position. Full use should be made of the headage payments for disadvantaged areas by increasing those rates of payment. These payments are financed by the EC to an extent of 65 per cent. Our Government should introduce immediately the EC direct income scheme, where there will be a 70 per cent recoupment from the Community.
Other speakers have mentioned the need for essential working capital to be advanced at low interest rates, which is something I would advocate the Government should consider, taking into account the current lending rates here. The availability of Eurocurrency loans with the exchange risk loan undertaken by the Government would be a major help. In relation to extra payments for beef farmers it is essential that the proposed premiums for all cattle slaughtered and exported live between January 1991 and 31 March 1991 be put in place and passed on in full to producers. This would help to underpin prices for store cattle this autumn and is badly needed. There are many low income farmers experiencing real poverty at present. These are the farmers who should receive our attention today. An adequate income supplement should be available for them. It has already been mentioned. I will go along with this on the basis that we take into consideration the family income supplement which is in operation at this time.
Something similar should be introduced for agricultural holdings. I accept the fact that the people concerned are entitled to unemployment benefit but this is based on a means test. This is also a very slow process. With a little imagination, I believe that some other system might be put in place and I ask that this be investigated. The Minister has been in touch with some of the lending institutions to impress on them the need for a sympathetic approach to farmers who are in difficult circumstances. I support that move.
In the area of agri-tourism, there is tremendous potential for jobs and income. I hope the pilot scheme which is in place will be introduced on a national basis as quickly as possible. We are at present entering into negotiations for another national understanding. It is an appropriate time for this Government, the farming organisations and the trade union movement to come together. The trade union movement have a very important part to play. There is a big input from farming and tremendous job opportunities within the agricultural industry. It is time to work out a long term policy for agriculture. I recommend strongly that this proposal be followed up. We must look at the new marketplaces in Europe and try to satisfy these markets by co-operating together. This can be done.
Incomes were good in 1988 and 1989 but over the last number of years there has been a general exodus from the land. In 1965 there were only six countries in the EC with 25 million farmers. Today there are 12 countries. East Germany has been included recently in the EC but there are only 10.9 million people involved in agriculture. These figures speak for themselves. We should all be seriously concerned about this. It was the policy of consecutive Governments and of the EC that, where possible, we would maintain family farms. That is not happening. Today many people are leaving the land. We are in a crisis.
Like other speakers, I would like to refer to the disadvantaged areas scheme and the reclassification of extensions which have become common knowledge of late. I apportion no blame to the Minister or the Government; they gave clear directives and set out criteria as to how the survey was to be carried out. Unfortunately, that survey has been carried out and I am disappointed at the result. It makes me wonder about the validity of the disadvantaged areas scheme.
I would like to make reference to recent press reports. I am disappointed that north Kerry has not been included as a most severely handicapped area. This is a major disappointment to the farmers of the area. Perhaps at a later date we should have a debate on disadvantaged farmers, rather than disadvantaged areas. Here I would agree with the previous speaker, Senator Jackman. Many anomalies were uncovered as a result of the survey. I hope the Minister will introduce an appeals system as quickly as possible. I suggest that there be a 5 per cent allocation; mention has been made of 3 per cent, but because of the difficulties the survey has shown up, I believe there should be a 5 per cent allocation. This should be done as a matter of urgency.
I do not wish to delay the House but I would say in conclusion that in the longer term we shall have to pay much greater attention to the marketing of our food, to expiry dates and the quality of basic raw materials from our farms. Selling into intervention will no longer give farmers an adequate return. The whole industry will have to turn its attention to adding value, exploiting our clean environment and penetrating specifically high value markets worldwide. This will be our best long term guarantee of prosperity. To prevent the present crisis from worsening, the Government must continue to defend the Common Agricultural Policy from US attempts to dismantle it within the GATT negotiations.
I want to point out Senators, that Senators Raftery, McDonald, Ó Cuív and Kiely wish to speak and the Minister will reply. The debate was to conclude at 4 p.m. I must ask for your co-operation. Senator Norris has indicated to me that if it ran a little over 4 p.m. he would be very happy to faciliate us. I thank him for that.
It is a sad reflection on all of us that almost 70 years after this State was founded we still do not have, and are not likely to have, a plan for our main industry, agriculture. It is now like a beached whale — we are not likely to be able to get it off the beach too easily. It has been said here today by several speakers that farmers' incomes are falling. Even the dogs in the streets know that. Milk prices are back about 20 per cent to 25 per cent, but at least that is from a good base. Cattle prices are back nearly 20 per cent from a disastrously low base. Cereal prices are back — in fact, cereal prices are about 20 per cent less now than they were six or seven years ago. In real terms, of course, that is a hell of a lot more. Sheep prices have dropped by about 30 per cent. Wool prices have dropped by about 50 per cent and pig prices have dropped also. The list goes on and on. In fact, I do not think farming was facing a worse time in any period since the economic war in this country.
Some of this is due to world events. There is no doubt about that, but some of it is also due to the actions and inactions of our Government. Of all the countries in the European Community last year, support for farming was cut significantly more in Ireland than in any other. Most countries, and particularly the strong ones, increased support for farming. In Ireland we cut by 40 per cent. These are EC figures; they are not mine. One can see the result of that in several ways. We cut money for marketing, but above all we cut money for research and education. When times get tough, competition gets tough. That is the time farmers need most support. What are we doing? We are cutting the support right from under them. We have already heard Senator Upton speak today about the selling off of the Agricultural Institute, or Teagasc, as it is now called. There is a selling off at the universities also. That seems to be the only solution we have to the problem — sell off the very props and support which the farmers enjoyed and which they need now more than ever, particularly the smaller farmers who are not in a position to employ consultants.
Mention has been made here today of marketing, to the mistakes made in our approach to the dairying and beef sectors and to lack of strategy. It is a sad reflection on our dairying sector that while the farmers produce the product we have today more or less the same product mixes we had when we joined the Community. Almost the same amount of milk is going into butter. Meantime, everybody knows that the consumption of butter has dropped dramatically. In fact, in Ireland it has dropped from over 40,000 tonnes to about 14,000 or 15,000 tonnes. There were two mistakes made here: first, continuing to produce butter which not many people wanted and, secondly, and most extraordinary of all, almost all the money used in advertising by the farmers' own co-operatives was used to promote butter spreads. In other words, it was used to promote the consumption of vegetable fats produced in the United States. That is not just shooting yourself in the foot; it is blowing your two feet off. Of course, it was easy to dump the butter into intervention. Senator Upton mentioned that the drop in the consumption of butter was due to health concerns. It is only a small factor in it. The other factors are price and, above all, spreadability. It should not have been too difficult for technologists and nutritionists to come up with a solution to that problem, to have a spreadable butter. That certainly is a big factor. People are in a hurry nowadays when preparing sandwiches, convenience meals and so on. How can we expect people to consume butter when even the farmers in their own households are no longer consuming it? They are consuming butter spreads and margarine. With regard to other products, we have, unfortunately, only one successful one apart from the butter spreads which we can point to in our period in the European Community, and that is Baileys Cream Liqueur into which only a relatively small quantity of butter fat is going.
Mention has also been made of marketing. We do not engage in any marketing in this country. All we do is sell. There is a distinct difference within marketing and selling. Marketing is monitoring continuously what the consumer requires. Selling is just giving him something that you happen to have at a particular time. That is what we are good at. Mention was also made of GATT. Here we have a particular problem. I returned this morning from the United States. I was on cattle feed lots in Texas yesterday. I spoke, the day before, to the Texas Cattle Feeders' Association. They have 5,100 people who, this year, will produce for slaughter over six million cattle, or more than four times the total cattle output of this nation. That is the kind of competition we will be facing if there is the free trade the Americans want in relation to GATT. Mention was also made of organic farming, as if this was something new. I was in organic farming, as every other person was during the war years. I do not want to see all farmers going back to that. It gave us nothing but drudgery and hardship, poor quality food and not enough food. If there is a small segment out there who can afford to pay the extra cost of producing organically produced food, and if they want it, by all means supply it, but for God's sake stop preaching that this is the solution to all our problems. I want to give a few minutes of my time to Senator McDonald.
I appreciate the facility and I thank my colleague for sharing his time with me.
I would like to lend my voice to the call that has been made to come to the aid of the farming community and Irish agricultural industry in general. Different speakers have put the problem in a variety of ways. Since the mid-seventies, since the first disadvantaged areas scheme was announced I have been very interested in the scheme as a vehicle for aiding Irish family farm incomes. I very much regret that even the present system and the proposals that some of my Government colleagues are announcing around the country are all very vague. I wrote to the Minister for Agriculture and Food for a list of townlands in the midlands which we were told by our Fianna Fáil colleagues were now in for inclusion. It is rather alarming to find that in order to meet the criteria it would appear that selected, more progressive farmers are being dropped in order to balance the figures for other better favoured townlands. This is a new twist in the whole development, about which I would be alarmed.
I again appeal to the Government to have the entire country classified. Everyone is familiar with the amount of grant aid which will emanate from the European Community. If it is possible to have the entire region west of the Shannon classified, I see no reason why the rest of the country could not meet such criteria. If it is possible that with that process you would be grant-aiding, through headage payments, farmers who would be quite viable, the taxation system should have a significant clawback element. It is very clear that we in the farming community need a new approach or method of compensating a significant number of farmers. I hope the Government will treat the matter with the greatest urgency to see if we can give hope again to the entire industry.
I appreciate, a Chathaoirligh, the facility you have given me, but I regret we have not had a fuller debate on this occasion.
I regret very much that we will not have more time to debate this very important issue. However, one of the problems that occurs in debating agriculture is that we tend to debate farming and not farmers. At the end of the day any policy must do two things: produce wealth for the country, but also provide a livelihood for the people directly trying to derive a livelihood from it. As I have only two minutes, I would like to direct particular attention to one aspect, that is the position of small farmers in the present crisis.
The small farmers of the west of Ireland, the area in which I live, are facing particular problems. I recognise that the doubling of the payment of the ewe premium this year has been of great help. I suggest also that the cattle headage and grant schemes, of which there are five, should be rationalised, and that form filling etc. should be simplified so that fewer farmers miss out on these schemes than do so at present due to the incorrect filling out of forms. The Minister might look at the possibility of one form being sent yearly to each farmer for all cattle schemes so that he could include all his cattle on it and that payment could be sorted out by the officials according to the declaration he made. This would be somewhat in line with what happens already with sheep.
Finally, one of the big problems we have with headage schemes, the ewe premium and sheep headage premium, is that what is given with one hand is taken away with the other hand under the social welfare code as we know it. It is very important that we look again at the concept of farmers being on social welfare. As far as I am concerned, a farmer needing social welfare to supplement his income is not unemployed. He is in a situation where the income he gets from farming does not give him a family wage. I would like to see the present unemployment assistance for small farmers being replaced with an income supplement system somewhat akin to the income supplement system that exists for people on PAYE incomes.
Mar a deirim, is dóigh liom go raibh sé an-tábhachtach an díospóireacht seo a bheith againn inniu, agus tá súil agam go mbeidh tairbhe as do fheirmeoirí na hÉireann.
I am disappointed I have only two minutes when previous speakers spoke for an hour. They hogged the debate, which was most unfair. I appreciate the suggestion of Senator Norris that he would not mind if the debate went on past 4 p.m. I will be as brief as possible.
First, I would like to congratulate the Minister for Agriculture and Food on the great work he is doing in these difficult times to ensure that farm incomes are maintained as well as possible. The present situation in agriculture is not an easy one. Markets are under great pressure for a variety of reasons. Farm incomes have definitely decreased. There are many low income farmers experiencing real poverty at present. The subject of unemployment assistance should be taken into consideration. We know they are entitled to unemployment assistance through assessments and means tests, but that is a very slow process. With a little imagination some other system might be put into place where something similar to the family income supplement scheme would be made available to farmers. I ask that this be investigated.
The Minister has been in touch with certain lending institutions to impress on them the need for a sympathetic approach to farmers' difficulties. I support that. The financial institutions are barbarous in their approach to the present difficulties of farmers. I know from experience, and from farmers who have told me, that they are very severe in these institutions. It is all very well to listen to the radio and hear that the Bank of Ireland have a savings scheme that will help farmers, but as soon as the farmers are in trouble they crucify them. It is most unfair of financial institutions to harass farmers who have difficulty making repayments due to circumstances beyond their control. The crisis in farming is not of the Government's making. It has been brought about by trends outside our control.
I would like to refer to the disadvantaged areas. There is unrest in my county about the areas that are included in the disadvantaged areas scheme. I cannot see how some areas with good land are included and areas with bad land are excluded. The disadvantaged areas should be areas with bad land. I heard Senator Dardis say today that he would like to see an appeals system being introduced. He made out that it could be political influence that got these areas included. I know that if it was political influence in County Limerick, it was definitely Fine Gael influence. The people who got into the scheme were Fine Gael supporters. I know agricultural officers who, when they are looking at cattle for the beef subsidy, are canvassing at the same time. They are canvassing for Fine Gael candidates. That is outrageous. I will conclude by saying that I hope these anomalies will be rectified.
A Chathaoirligh, I would appreciate if you could extend some tolerance to me with regard to time for reply. It has been a comprehensive debate and a number of significant points have been raised to which I would like an opportunity to reply.
The House agrees to give you ten minutes. Senator Norris has very kindly assisted.
I am very pleased to have this opportunity to debate the present situation in Irish agriculture and I would like to thank Senators for their contributions to the debate today. The importance of the agriculture and food industry in our social and economic life is, of itself, such as to justify a major claim to a retention but the present state of the GATT negotiations in relation to agricultural trade makes today's exchange a particularly timely one. Personally, I am greatly encouraged to note that as he prepares for the latest round of negotiations on the Community's GATT position, the Minister, Deputy O'Kennedy, will go to Brussels knowing that his determination to defend the fundamental principles of the Common Agriculture Policy enjoys the overwhelming support of this House.
Earlier today my colleague, the Minister of State, Deputy Walsh, acknowledged the Community's willingness to participate in an overall effort to achieve a more balanced and market oriented international trading system for agricultural produce. In this regard support producing measures, which the EC have taken unilaterally since the commencement of the Uruguay Round in 1986, have been outlined and, as Senators are aware, next Monday's meeting of the Community Agriculture Ministers will again attempt to agree on a package of such additional measures which will constitute the EC formal negotiating stance. Having regard to the structure and diversity of European agriculture, as well as the pre-eminent role of farming in our society, I believe the Community's attitude towards the GATT negotations is both responsible and fair. By contrast, the position adopted by the US and the CAIRNS Group of so-called free traders is, in my view, entirely unreasonable and partisan.
I should like to deal with a number of points which were raised during the debate, and one which, I understand, has been raised by virtually every speaker, and that is the designation and reclassification of the disadvantaged areas. The Irish proposals for the extension and reclassification of our disadvantaged areas were submitted to the EC Commission on 8 June 1990 and the Commission was asked to deal with them as quickly as possible. A visit by Commission officials to Ireland on 29 August 1990 for the purpose of discussing the submission was arranged but cancelled at the behest of the Commission on 21 August 1990.
On 5 September 1990 the Commission forwarded a request instead for specific survey data which were supplied at a bilateral meeting with the Commission in Brussels on 25 September. Information was then requested in a new format and this was supplied at a further bilateral meeting on 11 October 1990 in Brussels. We are pressing the Commission services for swift completion of consideration of our submission. The services have limited staff resources and are also under pressure of work arising from submissions from three other member states. They have promised, nevertheless, to complete consideration of the technical aspects of our case in the near future to clear the way for a proposal to be put to the Council of Ministers. As regards dealing with specific areas, I cannot disclose details of areas included in the submission nor can I announce any new boundary extensions until EC approval of new and re-classified areas is obtained.
As regards the methodology and accuracy of the survey the areas for which requests were received were surveyed in a fair and equitable fashion on the basis of a 50 per cent random sample of farms. The accuracy of the results double checked to the extent that entries made by Departmental surveyors on the survey form were verified by the farmer when he or she countersigned the form on the completion of the survey of each farm. This was the most extensive nationwide survey undertaken and was completed in the shortest time period since 1975. Every effort was made to ensure that 50 per cent of the farms surveyed in all areas were representative of the areas concerned.
Areas approved for inclusion in our disadvantaged area will be published in advertisements in the local papers in the counties concerned after approval of those areas has been given and published by the Commission. In this way farmers whose areas have not been included will be made aware that these areas did not meet the five criteria for designation of an area as disadvantaged— less than 7.8 per cent of the area is ploughed; stocking rate is less than one adult bovine livestock unit per forage hectare; the family farm income per male farm worker does not exceed 80 per cent of the national average; there are not more than 27 people per square kilometre, and at least 30 per cent of the working population are engaged in agriculture.
I am satisfied that all areas were surveyed equitably and fairly. It is, of course, possible that, purely by mischance in some small number of cases they were not. Because of this possibility, and in line with the commitment given in the Programme for Government, we have provided for an appeals system in the submission to the Commission. Until this is approved, however, it will not be possible to set up an effective appeals system or decide its terms of reference on procedure. I will continue to press for EC approval and will set up an appeals procedure as soon as possible after approval is obtained.
Senator Doyle, I understand, this morning in response to a reference in the speech made by the Minister of State, Deputy Walsh, asked for more information about the idea of supply management referred to by him. Our view is that in the cereal sector emphasis should be put on output limitation instead of price cutting. Limitation of output would be through a regime of compulsory set aside, that is, countries in the Community which are large cereal producers should have their output cut back. We would expect that peripheral areas would be treated more favourably. As regards acreage limitation, we would expect more favourable cereal support prices and an abolition or weakening of the levy system. There will be, of course, a Commission proposal involved and we will have to await the 1991-92 price proposals. I must say in passing that I am glad Senator Dardis signalled his support for the proposal.
Another matter which was raised during the discussion was the audit by the European Court of Auditors. The audit in question was part of a series of audits by the court of export refunds transactions in several member states. The audit on Irish operations was undertaken between January and June 1990 and related to transactions involving firms in the milk sector. The audit team made six one week visits to Ireland in that period — two in January, one in February, one in March, one in April and the last in June. Visits were made to the Department, to the Revenue Commissioners, to offices of recipients of export refunds and to a number of producing plants. Carbery, though named in the media, was not visited by the representatives from the court.
Detailed preliminary observations were forwarded by the court to the Comptroller and Auditor General who, in turn, forwarded them to the Department. This is the normal procedure. Two letters were received. The first, in early June, which contained observations in relation to five visits between January and April. The second was received in early July and contained a supplementary report following the visit in June. The letters indicated various issues which the court asked to be further investigated. Before a full and final reply, based on the results of the investigation requested, could be issued the court forwarded for observation a draft special report relating only to the Irish firms and containing most of the observations contained in their two original letters.
The court refers to a range of issues which it considered merited investigation to establish whether their observations were well founded. It may well be that following the further investigation now in hand many of the issues may have proved to be neither extensive nor irregular. Pending the completion of the investigation and a study of its findings, it would be mischievous, unprofessional and imprudent to elaborate on or refer specifically to the court's preliminary observations.
The investigation was put in hand without delay by the Department of Agriculture and Food and by the Office of the Revenue Commissioners. Most of the issues raised fall within the responsibility of the Revenue Commissioners who have primary responsibility for verifying their exporter's declarations are correct. The Department are also involved in relation to certain compositional and quality aspects. The Department, as intervention agents are responsible for the payment of refunds and for reporting to Community bodies on the related activities. The investigation is nearing completion and the findings will shortly be available. There has been no undue delay.
The comprehensive nature of the investigations, involving extensive detail and wide ranging scrutiny of commercial and other documents supporting export declarations at a number of plants and premises, required considerable time to complete. The Department furnished in early August the response to the court on two classification issues and at that time indicated that while investigation of the other various issues was progressing, the nature of the investigation was such that it would take some considerable time to bring it to conclusion. The court was assured every effort was being made to ensure there was no undue delay.
The observations of the court are of a preliminary nature and, in accordance with the procedures of the Department and the court, are not divulged to any party until fully investigated by official authorities. Indeed, the court in its communications with the Comptroller and Auditor General have asked that these preliminary findings be treated as confidential and are not divulged to anybody. The authorities here have strictly adhered to this requirement. The EC Commission has been kept informed of the court's activities.
Senator Upton made reference, in his contribution, to organic farming. As I indicated to him, there was a provision of £450,000 for the support of the organic concept. A new organic unit has been established in the Department and staff are actively pursuing the development of the organic aspect of the agricultural industry. It goes without saying that demand far exceeds supply at present. I can assure the Senator that we are actively applying our minds to that with a view to making what progress we can.
Other Senators referred to the development of the horse industry. The promotion of the non-thoroughbred horse was also raised. Senators will be aware that since the demise of Bord na gCapall, and the direct assumption of their former responsibilities by the Department of Agriculture and Food, emphasis has been placed on breeding and production rather than on promotion and marketing. That is not to say, however, that these latter aspects are being neglected. In fact, they are under active consideration currently by the horse advisory committee whose recommendations in this regard are expected shortly. Pending receipt of the committee's report I would tend to accept, however, that the Irish sport horse must be at the centre of any future promotion and marketing drive. Indeed, when in December last, Minister O'Kennedy announced the new national programme for the non-thoroughbred industry, the further development of the equestrian and leisure side of the industry was identified as a specific objective. The programme proposed the following measures in pursuance of this aim: an incentive grant scheme for Irish draughts; increased headage payments; grants for pony-trekking and horse-riding under the rural tourism scheme; the administration of the Irish Horse Register, including approval of stallions by my Department — the horse advisory committee recently reported on this register — and the establishment of marketing centres with national and EC aid.
A number of other matters were raised in the course of the debate but time is very much against me today. Perhaps we will have an opportunity to go into them in more detail on another occasion. I will conclude by thanking Senators for the very worthwhile debate which has taken place on the industry.
I would like to thank the Members of the House for their co-operation, and particularly Senator Norris who has facilitated this important debate. Will the Leader of the House say when it is proposed to sit again?
I would also like to thank Senators for contributing to what was a very important and worthwhile debate and, in particular, the Minister of State, Deputy Walsh, who opened the debate, and Minister of State, Deputy Kirk, who concluded it. The House will meet again at 4 p.m. on Wednesday, 14 November 1990.