Seanad Éireann díospóireacht -
Thursday, 3 Jun 1993

Vol. 136 No. 10

CAP Reform: Statements (Resumed).

Mr. O'Kennedy

I wish to welcome the Minister. My last engagement as Minister for Agriculture was in Germany in October 1991 where I had discussions with buyers from prominent German supermarkets. The supermarkets, especially those in Berlin, pay a higher price for Irish beef than any other buyers not just in Europe but throughout the world. Berlin probably has the highest level of income in Europe. One of the buyers from Berlin informed me that he could not conclude contracts for Irish beef because he could not compete with intervention prices. This is an appalling indictment of a system on which Ireland and other European countries have been too reliant.

We have many advantages in Ireland such as the tradition, culture, suitable climate and grass and the reputation which should help us reach those markets and command premium prices. Reform of the intervention system is long overdue although it may cause short term problems. When I was Minister for Agriculture for four and a half years I argued constantly with my EC colleague that the beef industry was of such importance to Ireland that not only could we not accept sudden and dramatic changes to intervention arrangements but we needed special arrangements which recognised this importance. We succeeded in obtaining these special arrangements. However, I always pointed out to producers that while I was happy to obtain such arrangements to maintain price stability they should never see this as a justification for not concentrating on the market.

Some of the habits and practices which have developed in Ireland, and elsewhere, relating to the overuse of hormones and, even more insidiously, clenbuterol, commonly known as angel dust, were directly associated with qualification for intervention at a price level above a certain norm. There is no point overlooking the fact that farmers were sometimes encouraged by buyers from factories to use substances to up-grade their cattle in order to qualify for higher intervention prices. This certainly did not improve the quality of meat sold on the home market. This was one of the adverse consequences of a system which served us well in many ways.

Although intervention is a fail-safe mechanism, and probably has been more availed of by me than any other Minister in recent times, I do not wish to have it on the record that I saw intervention as being the way forward for us. I am happy that the reform of the Common Agricultural Policy, which we are now discussing, involves less dependence on intervention. I regret that the European Council of Agriculture Ministers in its recent decision, probably for the first time, did not recognise the special position of Ireland. It is proposed that the qualifying weights should be reduced. This may pose problems for us. However, it is the long term to which we should be looking. Other countries which are unable to compete with us in the markets also rely on intervention. The intervention system does not exist solely for Ireland's benefit. Now is the time to take a positive, vigorous view that short term loss can be turned to long term advantage.

My second point is in regard to the set aside scheme which is not directly linked to Common Agricultural Policy reform but is related to it. I vigorously opposed this scheme when it was introduced and said that as a concept it would not be acceptable in Ireland. When the scheme was introduced it was not compulsory on individual producers but it was compulsory on member states to have a scheme which could be availed of by producers.

This scheme, which involves taking land used for growing cereals out of production, is contradictory in a world which is short of food. In many parts of the world cereals are used for dietary purposes in ways which beef cannot. All the indications now suggest—these were not as clear three or four years ago when the scheme was introduced—that the effects of global warming and the depletion of the ozone layer will result in major cereal growing areas of the world being unable to achieve anywhere near their existing levels of production. Instead of encouraging the continued growth of cereals which can be used to alleviate famine throughout the world, we are introducing a policy which involves saying to producers that not all land can be used and providing incentives for them to take land out of use. It is not surprising that there is a problem in Ireland in regard to qualification for the scheme. I will not regret it for one minute when the words "set aside" no longer exist in the vocabulary of farming, particularly in view of the need for food in regions of the world where people are starving.

Policing an intervention system makes great demands on any Department and Ministers have many other positive things to do. They are not policemen, chief superintendents or police commissioners; neither was I during my period as Minister for Agriculture. Some 99 per cent of my time as Minister for Agriculture was devoted to the role of a Minister and involved the development of agriculture and the agri-food industry in all its forms. The maximum amount of time spent on the policing role was 1 per cent.

Before I left the Department of Agriculture I asked that consideration be given to the establishment of a separate intervention unit. It is not part of the ministerial role to be linked to an intervention unit. As in other countries, there is a strong case for this unit as long as intervention exists. I made this point before the beef tribunal. If we have an intervention unit it will not be possible to accuse Ministers of involvement in certain matters. As a Minister who was subjected to unfair criticism, I would like to think that none of my successors would be subjected to the same criticism.

Mr. Sherlock

There is no doubt that the reforms announced under the Common Agricultural Policy will have serious consequences for Irish agriculture. On the other hand, the consequences of not acknowledging the need for fundamental reform of the Common Agricultural Policy will be more serious, not only for agriculture, but also for the Irish economy and the European Community. A farming policy which produces goods without a market, increases consumers' weekly food bills by £15, consumes 60 per cent of the entire EC budget and allows 80 per cent of all price supports to go to the top 20 per cent income bracket, has no future.

There were no more enthusiastic advocates of Irish membership of the EC than the farming organisations who promised that the country would benefit from the access of Irish agriculture to Common Agricultural Policy funds. Two decades later, despite the substantial transfer of funds, the contribution of the agricultural sector to GNP remains unchanged. The number of people who make a living from farming has declined by 40 per cent. The changing structure of farm costs reflects a change in the use of resources in Ireland. The proportion of these costs represented by wages dropped from 11 per cent to 7 per cent between 1970 and 1990, while capital costs — depreciation and interest on debt — rose from 7 per cent to 28 per cent.

The replacement of labour by capital on Irish farms in recent decades was the result of economic and monetary policies which included massive State borrowing, export subsidies, an abundant money supply, inflation and high taxes on labour. Any agricultural policy at national or EC level should be assessed on how it meets certain objectives. It should provide an adequate and varied supply of quality food as cheaply as possible; enable the land to provide the maximum number of families with sufficient incomes, and increase its overall contribution to the economy in terms of income generated and employment created.

The proposals for direct income support, rather than subsidies on production, are welcome and should be of value to the small farmers who need them most. We must ensure that the level of EC support for Irish agriculture is at least maintained at existing levels, so that the economy will be cushioned against the immediate effect of the proposals. The producer, and not the product, should be subsidised. This would result in more people staying on the land.

The MacSharry proposals are only part of what must be an ongoing process of reassessment of agricultural policy at both EC and national level. In many respects, the problems of agriculture are similar to those of the peripheral regions and they must be approached in a similar way. Direct payments to small farmers can only be a temporary arrangement. There is also no long term value in protecting low paying inefficient industries.

The existing Structural Funds must be retained, although they need to be substantially increased. Any decrease in Common Agricultural Policy spending in the long term must be compensated for by an increase in Structural Funds. There must be a move away from intensive production in favour of organic methods of production. The demand for organic food products will continue to grow. This move could benefit Irish agriculture and other less developed regions of the EC.

As part of an interventionist industrial policy of higher paid, value-added, high technology industries, there must be a move from the cramped centres to the less developed regions. There must be a specific programme of direct investment in the development of industries based on natural resources which are indigenous to the peripheral and aricultural regions. The EC must assist in the reorientation of Irish agricultural production so that it fits in with industry. Support must be provided for diversification into the production of non-surplus food and other products. We need a radical approach in this regard if we want to keep families on the land in rural Ireland. There is no alternative employment available to people who leave the land. The situation would be different if we had a good industrial base.

The priority for national agricultural policy must be to use the country's agricultural resources as productively as possible. There is a need for a comprehensive plan to work towards this objective. This plan should identify small farmers with development potential and provide them with the means to reach that potential. Small farmers who do not wish to expand, but who wish to remain in agriculture, should be encouraged to diversify into new areas such as forestry and agri-tourism. Farmers who do not see a future in farming should be allowed to retire in dignity or move to new careers. In the agri-tourism business it is usually the wealthy, and not those in need, who benefit because they are able to meet the requirements. A greater emphasis should be placed on improving people's standard of living. There is a strong case for diverting some of the Common Agricultural Policy funding, which is currently given to large farmers, to the EC Structural Funds with the aim of creating new job opportunities in rural Ireland.

Recently, set aside land, adjacent to streams and rivers, was burnt by landowners. Grass will not grow there for a number of years. It is appalling to see this happening. There should be a policy where small farmers who need land can rent set aside land. This would improve their standard of living. No effort has been made by the bureaucrats to rectify this situation which they created. The Mansholt plan, which we fought against in the 1970s, is being implemented by stealth. It was a development plan to rid this country of small holders but it came in by stealth. That is what is being done with the set aside scheme.

Mr. O'Brien

I welcome the Minister of State, Deputy Hyland, to this debate and I welcome this opportunity to discuss the Common Agricultural Policy and agriculture in general with a view to the future of this vital sector of our economy.

Agriculture is the single largest industry in our economy in terms of numbers employed, value of gross output, its contribution to the net export earnings and supplies of raw materials for the highly significant food industry. In addition to its economic contribution a strong agricultural sector is vital to the social fabric of rural Ireland and the way of life it gives people. The outcome of the Common Agricultural Policy reform negotiations early last year, while not containing all we in this sector wished for, puts the agricultural industry on the correct long term strategy and ends the uncertainty which hung over the industry for a number of years, as rumour and speculation destroyed confidence in the future. This House should today record its thanks and praise to the Irish negotiating team who represented us and successfully negotiated on our behalf.

The strategy of the Common Agricultural Policy is correct and Irish farmers will respond to the change as they have done in the past. I ask the Government to give them the assistance they require to respond to these changing times. While in May of last year we were presented with the broad framework of the new support arrangement, we now have the detailed and complicated rules of the various schemes. I compliment the Minister and his staff on the campaign of assistance offered to farmers by his Department and Teagasc in filling out the area aid application forms in recent weeks. I hope this level of assistance can be offered to farmers in the future. The recently launched Teagasc Common Agricultural Policy reform advisory service is ideally placed to give the assistance required and can be of great benefit in the future in the area of compensation payments.

Every effort must be made to safeguard the income of the smaller producer. I welcome the increase in the limits for small scale milk producers from 12,619 gallons to 25,638 gallons, to quality for the suckler cow premium. The abolition of the ten cow limit under this scheme is of great benefit to my own area of Cavan-Monaghan where the average income from dairying is £3,500 per annum. The special beef premium and the slaughter premium running from January to April will bring the slaughter season into line with demands and will be of great benefit to the industry. The early retirement scheme will allow farmers to retire, following a lifetime of hard work, with dignity and security for the future and allow younger, more progressive farmers to farm the lands.

I ask the Minister to give consideration to the disappointing uptake of forestry grants in recent times in County Mon-aghan. Perhaps the Department could examine why this has been the case so as to allow greater use of the forestry element of the Common Agricultural Policy reform programme. The new regime will bring change to which we must all respond. The approach is correct with the introduction of the produce-led market. This will suit Irish farmers who have a tradition of producing quality produce from a clean, green environment. We look forward to the successful implementation of these farm proposals for our farming community and all our people.

I thank the Minister of State for being here today and wish him well.

Dr. Henry

I am glad to be able to speak on this debate. Even we in Dublin 4 have heard of agri-business, and many of us have relatives in the business. This is an important debate for all sections of the community as we all depend on the agricultural base of this country in some manner. I would encourage research and development in the field of agri-business and this is why I was dismayed with the suggestion in the Culliton report that we could not be in the forefront of research and development in certain areas, that we would only be in the second string. We cannot possibly be in the second string in the area of agri-business. We must be at the forefront, and we must say to people involved in research and development that although the resources are limited, and research in other areas would be better funded, they must come up with the goods nonetheless.

It worries me that we have not talked about the consumer in this debate. Without producing products which we can sell — which we have all been aiming at — progress will be impossible. I strongly recommend that we take notice of a major report done by Nutrisan, a body in Trinity College Dublin which produces independent reports on what the consumer wants to eat, from a national and European perspective. Every Member of the House should try to read this report as it is important to see where we should concentrate our best efforts.

Since joining the EC, much effort has been put into agriculture. I am sure Members of the House are pleased with improvements regarding pigs. For example, I cannot be the only one who remembers, as a child, getting bacon with four inches of white fat, a thin ribbon of pink meat through it and, on top, skin with bristles if I was lucky. Unless that was marketed now as some sort of exotic charcuterie from west Cork one would not be able to sell it. We now have slim, trim, brim-full-of energy pigs which Mr. Vincent O'Brien might cast an eye upon, and which sell extremely well on the market. Great efforts have also been made with regard to lambs.

I spoke about headage payments in the House recently. A worrying thing about the headage payments scheme is that it targets quantity rather than quality. Quality has to be our aim and the aim of the Department of Agriculture. On what basis can we sell if not on quality and our green environment? I was delighted to see that the Minister for Agriculture, Food and Forestry has been stressing this. I was also glad to see that when he was in the North of Ireland he talked with Lord Arran about this and the idea of having a sales campaign for agri-business and food produce based on our green environment.

I heard an interesting lecture by Mrs. Myrtle Allen from Ballymaloe House, County Cork. She is a member of an organisation called Eurotoch whose members include some of the best chefs in the European Community. She said that to their dismay they now find that shelf life is the top priority regarding food. With due respect, shelf life may be of interest to Senator Quinn but to those of us who are interested in nice good food, flavour, tastiness, vitamin content and nutrition are more important. This is an area in which we can progress by saying that we have the freshest and tastiest food rather than food with the longest shelf life. As a consumer I am suspicious of items with long shelf lives because it means that something peculiar has been done to keep them that way.

The situation regarding cattle and the 380 kilogramme top weight for intervention is a topical issue. I realise that this will be a dreadful imposition on some cattle breeders because many of them have been encouraged to bring in continental breeds such as Charolais, Simmental and others over the last 20 years. As far as I know these are the most efficient convertors from food to meat and naturally if one is in the business for commercial reasons these are the animals one would choose. I also understand that this is the type of meat that is sought on the Continent. Consequently there has been much pressure on farmers to supply what consumers require.

Are we wise to start a case in the European Court of Justice about the limit? I am aware that this will apply right across the Community but our main source of likely support is from French farmers because they will mostly be affected in the same way. I do not know how strong our position is. I am not a lawyer and therefore I have no idea how the European Court of Justice will find on this issue. However, I understand that only 15 or 16 per cent of our carcase beef is over the limit. Are we wise to take such a stand at this time? The situation will become very serious when the limit reduces to 340 kilogrammes next July. At that stage some of the other dual purpose breeds, such as Holsteins, Friesians, Herefords and any of the crossbreeds, which are so important to the dairy industry, will also be affected. Would the Minister not be wiser to negotiate perhaps a limit of 360 kilogrammes for next year rather than holding out for a 380 kilogramme limit this year? If this was done we might get more support in the Community. Sometimes it can be best to lose one small battle to win a war. In this instance perhaps we could win the war with more Community support by settling for a limit of 360 kilogrammes rather than 340 kilogrammes.

I hope the Minister will encourage research and development in the agri-business area. For example, how much effort is being made regarding vacuum packing of meat? Vacuum packing is a far more satisfactory way of dealing with meat than freezing. As a result of cellular breakdown during freezing there is water loss and the quality of meat is not as good. Vacuum packed meat has a shelf life of approximately 90 days, which is very good. I do not know if much is being done in this area. I am sure there are other Senators who are more involved in agriculture who would know. We must constantly try to extend our frontiers. We cannot wait for other people to give us their ideas and research and development. We have to be ahead of the rest. We cannot sell into intervention forever. Our produce has to be the best quality and sold at the best prices for our farmers. I look forward to the Minister's comments on this.

Mr. Kelleher

I welcome the Minister to the House. On a number of occasions I have heard people refer to Common Agricultural Policy as "curtail agricultural production" or "curtail agriculture prices". It is important to note that the reform of Common Agricultural Policy is the most fundamental change facing agriculture and rural Ireland in the forseeable future.

CAP has succeeded on a number of fronts. It has benefited consumers in that food prices have stabilised and farmers have benefited because a market has been available for their unlimited produce. Common Agricultural Policy has succeeded so well that it has reached its limit and will have to be adjusted to alleviate the problems of oversupply. Common Agricultural Policy has been must successful for Irish commercial farmers. Unfortunately, as Senator Sherlock mentioned, marginal areas have not benefited. A commercial sector is important because it subsidises less well off areas. It makes agriculture and the agri-business food sector more viable but unfortunately too much money has gone to too few.

I am from an area which is quite affluent in agricultural terms, especially the dairy sector. This is evident when one travels to other parts of the country and sees poverty and deprivation. This must be immediately addressed and rebalanced if rural Ireland is to be sustained. Commercial farmers are the backbone of Irish agriculture and this is an area we must discuss at a later date because if their development is retarded the entire agricultural sector will suffer. Progressive commercial farmers borrowed and spent money, purchased much capital equipment and benefited consumers by supplying quality produce on a regular basis. The viability of commercial farmers must not be undermined.

It was correctly pointed out that larger commercial farmers can adapt more readily to forestry because they have more finance available. People are not inclined to invest in forestry because it is a long term investment. More will have to be done to encourage people, especially in marginal areas, to invest in forestry. I urge the Minister to make it attractive and interesting for a farmer to use his land for forestry. It is very difficult for a farmer to look 25 years ahead and contemplate what a tree will be worth and if there will be a market for it. Steps have been made to encourage investment in forestry but it must be more forceful.

Agri-tourism was also mentioned and this is an area which will have to be exploited. Tourism is the answer to rural Ireland's migration and deprivation problems. If agri-tourism is to be put at the top of the agenda it will have to be done in conjunction with the reform of Common Agricultural Policy. Larger, commercial farms benefit from Common Agricultural Policy but such farms are in areas where tourists do not normally go. Ireland's scenic areas are mountainous and remote and tourism must be brought to them. It is difficult to find accommodation, amenities and facilities associated with tourism in the areas that are most scenic. That is a sad reality. More funds and grants will have to be made available to encourage people in marginal areas to participate in agri-tourism.

I have some complaints with regard to the Common Agricultural Policy and they probably have much to do with national policy, in conjunction with European policy. The policy of one day becomes the problem of the next. Senator Henry pointed out earlier that the Government encouraged the introduction of large beef breeds — Charolais, Blonde d'Aquitaine etc. — a couple of years ago and the EC are now talking about only accepting carcases under 380 kilograms for intervention. We now have large cattle who will not qualify for the premium amount in intervention. I welcome the Minister's stance on it because it has grave implications for the beef sector, which has already been badly hit. This must be rectified immediately.

When we talk about intervening in the market, which is no longer capitalist driven or market oriented, we create a problem by solving a problem. I have already referred to the beef and carcase weights. There is now a problem with set-aside. This is psychologically damaging for any country and especially for any food producer and must be addressed immediately. I cannot understand the philosophy which insists on having a field laying idle. As Senator Sherlock said, grass has been burnt off because it is easier to maintain them that way. Senator O'Kennedy said that grain is versatile and a staple diet for many countries. This problem will have to be addressed because in the long term set aside will be damaging to the psychology and system of agriculture in Ireland. The Common Agricultural Policy will have to be reformed, and I acknowledge the work done by the Minister and our ex-EC Commissioner. Farmers recognise that there is a limited source of funding and the taxpayer will tire of paying for produce for which there is no market. Some aspects of the way it was handled at EC level were damaging to our morale. However, the Minister has performed admirably in the EC and, in common with former Ministers of Agriculture, has fought for, and secured, areas that are vital to agriculture in this country.

Rural Ireland will have to be seriously considered. There used to be 20 million farmers in Europe; there are now only 10 million. They are leaving the land at a rapid pace and it is especially evident in Ireland. This must be addressed because it is creating problems in urban areas through migration, despite infrastructural development in rural regions. Through using the Structural Funds and making some changes to the Common Agricultural Policy, we may come up with a solution to encourage people to stay in rural areas. Many modern amenities required for living there could then be provided from the funds. This is a fundamental issue and must be addressed on a long term basis. I know it cannot be done overnight but this is where Common Agricultural Policy has failed us in the past. We are only addressing this slowly on a national level and it must be quickened up.

Mr. Cotter

I am glad of the opportunity to speak on this important issue. It needs to be discussed and the public need to hear our views and be given some glimpse of the future.

The Common Agricultural Policy has had a dual effect on the development of Irish agriculture. It has been good for it in one sense and bad in another. We had stable agricultural prices which ensured continuity of supply and allowed people to plan for the future with some degree of certainty — that was good. However, all Senators would agree that the Common Agricultural Policy was also bad for the development of agriculture. Protectionism is always bad and has resulted in our processing sector becoming lazy. Many Senators know of factories that operated for three or four months of the year solely for intervention purposes and which made no input into research and development and proper marketing. That is a perfect example of this laziness — it has happened across the EC as well — which is a result of this mismanagement of the dairy and beef sectors in particular. We had a guaranteed market and many of our people spent most of their time trying to find the best ways of exploiting intervention. There was always a cold store around the corner; it was a handy place to dump a product, especially when one was paid for it. The industry recognised this over the past few years and decided that it could not last for ever. That realisation is coming home to us now and is being strongly conveyed to both the Minister and the Minister of State for Agriculture, Food and Forestry when they go to the EC. The old methods will have to change and it will be a painful business.

Those of us living in what is termed rural Ireland, especially in the western counties, are not looking forward to good times. We are afraid and have every reason to be. There are, however, some changes taking place. In my own constituency, Monaghan Co-op has successfully diversified. It is a small co-op but it currently operates a yoghurt factory and also has a range of desserts and other by-products on the market. It was late in entering this area and does not have the financial resources to compete internationally in the area of marketing, but is working as hard as it can and has carved out a market niche for itself. It is a pity it does not have the financial resources to expand its markets further into Europe. It is an example of what is happening. There are factories in County Monaghan, such as meat factories, who are getting increasingly involved in research and development and are beginning to sell successfully. Many of them are small and the economies of scale are difficult. Although they are following the correct path, their resources are limited.

The importance of agriculture to Ireland has never been recognised at EC level. I will give some statistics to put this in perspective. Approximately 15 per cent of our population still work in agriculture, while the corresponding figure for the developed countries in the EC is approximately 3.5 per cent. That is a colossal difference. In the UK, for example, the figure is approximately 4.7 per cent. We are dependent on agriculture for jobs and for GNP. Agriculture provides approximately 10 per cent of GNP. The corresponding figure in the developed countries of the EC is approximately 4.1 per cent. These figures highlight the importance of agriculture in this country. In 1984 the Minister for Agriculture, Deputy Deasy, obtained recognition for that fact at EC level, but this recognition has not been followed through.

It is obvious that we will not benefit from any restructuring of the Common Agricultural Policy. The number of people employed in agriculture will decrease from 15 per cent to the EC average. We must accept that regime which is in place in the developed countries of the EC. Not only will the number of people employed in agriculture decrease, but GNP from agriculture will decrease to the EC average. This will have a devastating effect on those living in western counties where the structure of agriculture is weak.

The average farm size in County Monaghan and County Cavan is under 40 acres. When one visits a Germany 10,000 acre farm which grows 4,000 acres of potatoes and keeps 1,000 cows, one sees the chasm between farmers in this country and those in Germany. A gulf exists between large industrial farms located throughout the EC and small producers in Ireland. We now realise that small producers will be eliminated, yet we are afraid to tell them.

The Minister of State at the Department of Agriculture, Food and Forestry, Deputy Hyland, whose knowledge of agriculture is second to none, is working to try to offset the effects of what will happen. However, he will be unable to do this because there is no substitute for mainstream agriculture and his efforts will be insignificant. Rural development is necessary but the sum of GNP received from agriculture and the earning potential from rural development and diversification will be minimal.

Many small farmers would prefer to work in a factory and earn one week's wages. There is an insufficient number of factories for them to work in. County Monaghan has developed its industrial structures with little input from multinationals and one is surprised by the number of factories throughout the country. The poultry industry has been fully exploited and we even have a quail factory in County Monaghan. One may have read about quail at national school, but most people have never tasted quail. The poultry sector has been fully exploited with little outside help, except from the IDA and FEOGA.

County Monaghan should be used as an example of how things should be done. However, the population of the county, according to the last census, decreased by 3 per cent. We need people to eat our produce. If we could double the population of Ireland, we would have a strong home market and a base for development.

New Zealand, a country which has not benefited from protectionism or intervention, has developed a strong agricultural economy. Denmark has managed to attain a supreme position on world markets. We are dependent on agriculture, yet we have not managed to develop in this regard and that is a shame. Some 15 per cent of the population face unemployment because of Common Agricultural Policy reforms and calls from President Clinton for the liberalisation of world trade.

Mr. Daly

I welcome the opportunity to speak. We have already discussed reforms in the Common Agricultural Policy and the need to halt the decline of rural areas, towns and villages. The implementation of the Common Agricultural Policy has not halted the decline of rural areas. It has not succeeded in creating employment and people must leave small family farms to seek employment outside the regions. The population continues to decline. Many Garda stations, post offices and small national schools have closed. These closures have an impact on the rural population. Beautiful areas in the west have great potential and it is frightening to see the fall in population in places such as Kilbaha, Carrigaholt, Crossooha, Ennistymon and and the Burren area in County Clare.

An integrated system must be put in place because the development of agriculture and the reform of the Common Agricultural Policy will not solve these problems. A new framework for rural development involving the Department of Agriculture, Food and Forestry, Common Agricultural Policy reforms — which will be beneficial and will halt rural decline in the long term — and operations like the Leader programme and the western development schemes must be introduced.

Rural development has been frustrated over the past number of years. A combination of industrial and agricultural activity is needed. We can already see very positive signs of rural revitalisation such as the resettlement programme which has been operated in west Clare by Jim Connolly. Families have been transferred from Tallaght, Coolock and other parts of Dublin to one of the most beautiful parts of Ireland around Kilbaha on the west coast. They have managed to prevent the closure of small national schools and have put some life back into areas which have suffered a decline of population since the Famine.

I am glad that the Minister of State with responsibility for rural development is here because he has already shown a keen commitment to this area. He knows exactly what is needed and represents an area which has suffered a decline similar to that in the areas I have mentioned. I believe he can mobilise the State agencies and Government Departments in a new plan which will result in a major drive to revitalise rural areas.

The available incentives should be coordinated and integrated in a way which will make an impact on the employment figures and halt the population decline. They should provide opportunities for many people, especially those with small family farms, to develop small enterprises in the agri-tourism business or the craft industry. The craft industry in the west has declined to a state where it is almost non-existent and the marketplace is being filled with imported products such as leprechauns made in Japan. I could mention numerous examples where the market for craft commodities is being supplied by imported products, to a large extent because of our failure to develop these products.

In the reform of the Common Agricultural Policy the opportunity should not be missed to look at ways which the whole economy of the western areas can be developed. I refer to these areas because I live there, in what is probably the most remote part of the European Community. It is a most attractive area which should have the greatest potential for development, yet it is the area which is suffering the greatest decline. The regional problem within the Community must be tackled, as well as our own failure to take regional decisions. We cannot blame the European Community for a lack of regional policies and initiatives if we fail to take the decisions which are so necessary to ensure the kind of development and response which we expect from the revised Common Agricultural Policy.

I know there have been quail and snail plants and similar enterprises, but the basic strength of the agricultural industry must be underpinned. This is possible with the reform measures. It is not good enough to expect rural communities to survive where, at present, they do not even have a basic county road network. In the planned reform and in the allocation of Structural Funds, some attention must be paid to the chronic state of the county roads. At present, children cannot get to school and families are finding it difficult not alone to get their produce to markets but to travel anywhere because of the collapse of the whole country road network.

It is important in the integrated development which I speak about that the Minister of State with responsibility for rural development should encourage the Minister for the Environment and other Government agencies and Departments to pay some attention, even at this late stage, to the declining infrastructure, especially in the most beautiful and scenic parts of the west. Investment should take place to enable these areas to develop and retain their population.

My message today is to urge the Minister of State to take some further initiatives. I welcome the initiatives which he has taken so far under the auspices of the Leader programme, the developments which have taken place under the Shannon Free Airport small companies development programme and the work which is being done under the western development scheme. All these things are important but they need to be integrated into a large scale operation involving all Departments.

A member of the Government must be given the overall responsibility to ensure the prevention of the closure of post offices, Garda stations and small schools in rural areas. The incentive and opportunity should be given to many young, enterprising people in small family farms who would live and work in these areas if the opportunity was there to do so. The reform of the Common Agricultural Policy is welcome. It should help to redress the imbalances which have taken place, especially in the severely handicapped, isolated rural areas. If it does not, then it will have been a massive failure. I do not believe we should allow that to happen.

I wish the Minister of State well in his work for rural development. He should have our support in doing what is needed to halt the decline which has been devastating the west of Ireland for the past 40 or 50 years.

Mr. Quinn

I welcome the Minister of State to the House. It seems a short time since we last debated this subject — I think it was about a month ago. I had the sense of almost making history at that stage because I had the impression that I was the first person in many years to speak about Common Agricultural Policy on behalf of the consumer. The consumer has been paying the bill for Common Agricultural Policy over the past years and is a voice which has not readily been heard. I am delighted to say that having listened to Senator Henry today, I realise that I have a colleague and I am sure that I was not making history because it has been in the minds of many others. The point I am making is that we hear the other voice so admirably and so capably expressed. Senator Daly, Senator Cotter and Senator Rory Kiely made the point on behalf of agriculture. I wish to speak on behalf of the consumer.

The lesson from the most recent negotiations is the same lesson which we should have been learning for the past 20 years. It is a lesson to which in this country we really only paid lip service — it is that the only future for agriculture is the marketplace. That is the point I put to the Minister of State today. We have turned our back on that fact and have continued to rely on the artificialities of the Common Agricultural Policy, namely the intervention system. This system is so wasteful and extravagant that any sane person could have seen over those years that it could not go on forever, yet I do not think we recognised that. Instead of preparing our agriculture sector for the inevitable reform of the Common Agricultural Policy and the world of the marketplace, we have spent our energy trying to put off that terrible day.

When the economic history of the last third of this century in Ireland comes to be written, the Common Agricultural Policy will be seen for what I believe it is, a disaster for Ireland rather than the boon which many people considered, and still consider, it to be. It will be seen as what held us back from properly developing our agriculture and food industry. It is a little late in the day but I am an optimist and I believe that it is still not too late to do something about it. We still have the opportunity to build a market-driven agriculture sector and food industry. In order to do this, we need a change of attitude to the whole issue, almost a road to Damascus-type conversion. All of us, and especially may I suggest the farming interests, need to face up, once and for all, to the fact that our only future is in the marketplace and not in intervention. There is a good future for Ireland in that marketplace if we go about doing things the right way.

I made a very modest proposal when I had the honour of being a member of the Expert Food Group. I found it a very useful body to be on, but I was probably one of very few people looking at it from the perspective of the marketplace rather than that of the production area. The cause of our problems in the food industry is that the industry is production driven rather than market driven and I believe that so strongly that I submitted a short minority report to the Expert Food Group whose report was issued last month. I suggested the best way to make the food industry market driven was to take it out of the control of the Department of Agriculture, Food and Forestry. I want to see the appointment of a separate Minister for Food, not a Minister for Food who will always play second fiddle to the interests of the Department of Agriculture. As a consequence the new body we propose, An Bord Bia, would be responsible to the Minister for Food and not to the Minister for Agriculture.

My suggestion is becoming more attractive every day. Developments in the industry are persuading more people that the central issue for agriculture and food, which are so important now and may be even more important in the future, is whether they will be production driven or driven by the needs of the market place. It makes sense if we cannot make the transition to a market led approach for the entire agriculture industry overnight to start with the food industry sector.

I conclude by repeating my point: the only future for Irish agriculture is in the market place. In ancient Rome one Senator gave a warning to the Senate every day: delenda est Cartago— Carthage must be destroyed. The other Senators got tired of him and of his daily harangue but eventually he was proved correct. I make no apologies for repeating my point and give notice that I will continue to repeat it in the years ahead. We must disabuse people of the notion that Irish agriculture can survive by means other than by providing customers with attractively priced products which are competitive with those of other producers. I believe if I repeat myself often enough we will eventually have a Minister for Food rather than a Minister for Food and Agriculture.

Mrs. Taylor-Quinn

I welcome the opportunity to contribute to this debate and agree with Senator Quinn's comments in relation to the marketing of agricultural products. It is one of the most important aspects of the industry and has not received sufficient attention in recent years.

It is increasingly evident that it is vitally important to charge a Government Minister with responsibility for the food industry alone and especially for the food processing sector. If we intend to create more employment nationally we must look at our natural resources of which agriculture is the most important. There is huge untapped potential for employment in agriculture particularly in the food processing sector. Too much beef is exported on the hoof which, with proper packaging and marketing, could be slaughtered and processed at home. Unfortunately that part of the industry is not sufficiently developed and it will not be until it is directed by a Food Department that recognises the importance of customer satisfaction not only at home but throughout Europe. The potential is there because of the unique "green" quality of our produce; our cattle and sheep are fed on good quality grass which is quite different from production methods in other areas of Europe. As a result we have a special product to offer but it is not marketed adequately nationally or internationally. It is important that we address that issue and I hope the Minister will impress on the Department and on Government the need for greater emphasis on that aspect of the industry.

On the subject of Common Agricultural Policy reform, one issue that is causing great concern in the farming community is the recently introduced restriction in beef intervention limits. From the 1 July 1993 there will be a limit of 380 kilos on beef going into intervention. A further reduction of 40 kilos to 340 kilos on 1 July 1994 will be extremely serious for the beef producers and for agriculture generally. Some of our top quality beef will be exempted if this regulation is implemented. All producers, from the small dairy farmer who produces calves to the cattle finisher, will be seriously affected. The Minister, Deputy Walsh, must take full responsibility for the consequences and accept that he has failed to convey the unique position of the Irish producer to his counterparts in Europe. As a result of the methods we employ to produce and fatten cattle which differ from those on mainland Europe we have been seriously discriminated against and it is important that the Minister pursue the issue vigorously.

I understand the Minister intends to take this matter to the European Court on grounds of discrimination and that the French Government may also take a case but the Minister could have saved the situation earlier by urging other measures, aside from the weight restriction, to limit intervention. Other possibilities, for example fat content, were not sufficiently examined or exhausted in the course of the negotiations and that is unfortunate for the Irish farmer. I hope this situation can be retrieved because otherwise the consequences will be serious and extensive. There are enough restrictions in the agriculture sector without introducing more.

Coming from County Clare where there are many small milk producers, I consider the amount of money provided for the milk restructuring scheme — £1.9 million — paltry and unacceptable. It is not adequate to make the impact required. As a nation of family run farms our long term aspiration would be that all dairy farmers would have a viable quota. Unfortunately, a number of farmers operate with quotas as small as 7,000 to 10,000 gallons. One would hope that eventually everybody would have a quota of about 25,000 gallons from which one could make a reasonable livelihood. This unfortunate restructuring scheme will not provide the necessary finance; £1.9 million is only peanuts when distributed across the co-op areas. With the current price of roughly £1 per gallon or £1.80 to buy in milk immediately or £2.70 over a period of a few years, the small farmer cannot afford such expenditure so he or she cannot make progress. Small farmers will not receive the assistance necessary to keep them in agriculture and the traditional small dairy farm will not survive. I appeal to the Minister to examine that situation with a view to giving hope to small farmers.

In County Clare I see young farmers leaving their farms to seek employment elsewhere because they believe in the long term they will not make a living from their farms. Given the directives continually being issued by Europe, they do not see a possibility of making a viable living in the long term. This is extremely unfortunate at a time when we should be giving hope to young people who have the expertise and the commitment to remain is isolated parts of this country so as to maintain local communities. It is important to address that issue. The present proposal is quite ridiculous.

The area aid forms are causing consternation. I am delighted that for those other than cereal holders, the Minister has adopted the Fine Gael proposal to introduce a more simplified form. I welcome the fact that this simplified form is currently being sent out to farmers. I resent the level of intrusion that this form represents. I thought that under the Constitution we had a right to privacy. This area aid form is a huge intrusion on the right to privacy. What is being done is over bureaucratic. I personally resent the level of intrusion that the area aid form entails.

At one time a farmer could simply get on with his work, but now every farm family needs one person on a permanent basis monitoring accounts and the various application forms for aid. Farming has become more a bureaucracy than an honest living and that is a pity. The simpler these issues are, the better for all of us. I appeal to the Minister of State, whom I know to be a sensible man, to do his best to examine the matters I have raised. I take this opportunity of complimenting him on his work as a public representative. We might not always be pleased with the replies that we get from him, but he makes a serious effort to help those who ask his advice and I wish him well.

Minister of State at the Department of Agriculture, Food and Forestry (Mr. Hyland)

I thank Members from all sides for their objective contributions on Common Agricultural Policy reform. The Minister addressed all of the main issues of the reform of the Common Agricultural Policy during his contribution to the House.

I am very pleased to have the opportunity in the context of this debate to report on behalf of the Minister to Members of this House on the outcome of last week's Council which dealt with the 1993/94 prices and related issues. In effect the prices for most products had already been agreed in the Common Agricultural Policy reform negotiations and, as a result, the negotiations to a degree centred on related measures for sectors which are of major importance to Ireland. In addition, the Minister took the opportunity to raise issues of concern for Irish farmers in a number of sectors.

The main issues involved besides the prices were a series of milk issues, difficulties in the beef and sheepmeat sectors, and set aside in the arable sector. In overall terms the outcome represented a reasonable package, given the difficult budgetary situation facing the Community. There are a number of aspects in the agreement which will be of considerable benefit to Irish farmers particularly in the dairying area. As in all such negotiations there were some aspects where we had hoped for a more positive outcome but these were clearly outweighted by the benefits.

I would like to outline briefly the results in the various sectors. In the milk sector the Commission had proposed a 5 per cent price cut in the support price for butter, a postponement of the 1 per cent quota cut, the allocation of additional quota to SLOM III producers from existing national quotas and adjustments in the milk quotas for Spain, Greece and Italy. In the course of the negotiations the Minister succeeded in securing considerable improvements in these proposals. The milk price cut was reduced to 3 per cent of which 2.5 per cent had already been agreed in the context of Common Agricultural Policy reform. In addition, in the course of the prices negotiations, the milk co-responsibility levy was abolished from 1 April and this is worth some £10 million to Irish dairy farmers.

The Minister, Deputy Walsh, also secured an increase of almost seven million gallons in our national milk quota. This is more than sufficient to deal with the legal entitlements of SLOM III producers. It is proposed to use the balance to help solve particular quota problems and to deal with restructuring quota for certain categories of producers. In addition, at the Minister's request, it was agreed that the Community would fund, to the tune of almost £2 million, restructuring arrangements here. Together these measures will be of considerable benefit in rationalising our milk production and have been welcomed by all producers organisations. The Council did not in my view deal realistically with the 4.5 per cent suspended milk quotas and this aspect will now be decided on finally by the Court of Justice.

While the agreement reached in Council does provide for some additional allocations for 1993-94 to Spain, Italy and Greece, in part to address long standing statistical errors, the arrangements involved provide for an actual reduction of production in those countries amounting to almost 500 million gallons. This represents about 2.2 per cent of Community production and should go a long way towards stabilising the Community milk market. The Commission will closely monitor the system in these countries and it will be for the Council to decide whether the increased quotas should be continued in 1994/95 and beyond.

In the beef sector the Commission, in response to strong representations by the Minister, Deputy Walsh, agreed to undertake examinations of the market situation and the intervention system. The Commission has undertaken to report back to the Council by 30 November. In the course of the negotiations, the Minister had sought to convince the Commission to defer its decision on imposing a weight limitation on carcases eligible for intervention. The Commission was unwilling to do this and in the circumstances we are seeking a review of the validity of the decision by the European Court of Justice and a deferral of the decision pending the outcome of that review.

The Commission will also undertake an examination of the market in the sheepmeat sector and report to the Council by 30 November next. Last year the Commission and the Council agreed to grant additional compensation to sheep producers in view of the difficulties experienced by Irish producers. That decision did not address the inherent inadequacies of the current regime and expect that the report will not only deal with the problem in the short term but will propose amendments to address the fundamental deficiencies of the support arrangements.

At last week's Council, agreement was also reached on an increase in the payment rate for set-aside, which in Ireland's case will give a new rate of £134.25 per acre from next year as against £105.99 this year, and on a normal rate of 20 per cent for those opting for fixed set-aside as against 15 per cent in the case of rotational set-aside.

Fixed set-aside will permit farmers to leave the same land in set-aside rather than rotate their set-aside around the farm. This arrangement should provide greater scope for environmental management. On the latter point, a reflection document on set-aside generally which was presented by the Commission was particularly welcome. This document which will form the basis for discussion on possible developments in the policy of land set-aside examines possible options aimed at making the system more flexible, simpler to administer and more environmentally friendly.

I would like now to turn briefly to the applications for compensatory payments under Common Agricultural Policy reform. Farmers claiming aid for arable crops or declaring forage areas for the livestock premia schemes had to have their area aid applications with the Department by 15 May 1993. However, where the forage areas to be declared consist entirely of permanent pasture, the area aid application can be supplied with the first livestock application but not later than 1 July 1993.

In order to resolve difficulties experienced by a number of farmers in securing maps in good time, the Minister arranged that area aid applications could be submitted by 15 May, without maps, provided that the relevant maps were received by 31 May. However, no extension has been granted by the EC Commission to the closing date for receipt of area aid application forms, nor has there been any change in the rules which provide for a penalty of 1 per cent per day for each working day by which applications are received late.

In order to assist farmers to meet the deadline, the Department's offices in Dublin and throughout the country were opened on Saturday, 15 May to receive applications. I am pleased to be able to report that these arrangements appear to have worked quite well. The number of applications received after the 15 May has been minimal and the vast majority of applications were accompanied by maps. I am also happy to say that in general the quality of applications submitted has been quite good, despite criticism which have been raised regarding the complexity of the area aid application forms.

It is inevitable, however, due to the fact that this is the first year of the new Common Agricultural Policy reform schemes, that some errors will have been made in completing the area aid applications. In this regard, the written statement supplied by the Commission at last week's Agriculture Council that farmers who discover and report obvious errors in their applications will be given the opportunity to correct these errors without being penalised is very welcome.

In respect of the livestock premia the Minister recently announced that he had arranged to issue simplified area aid application forms together with help sheets to assist farmers in completing the forms.

The issue of the simplified forms commenced last week and all farmers should have them in the next week or so. They are geared specifically towards farmers whose entire holdings are under grass in 1993 and have been so since 1987. The simplified form does not preclude the use of the original area aid application form should a farmer so wish but it should help enormously in making it easier to apply and qualify for grants in 1993. The Department and Teagasc will be holding meetings throughout the country over the next few weeks to explain the forms to farmers. Details of these meetings will be announced next week. I would like to pay a tribute to Teagasc on their efforts in assisting farmers in completing the application forms to date.

I cannot remember a time when there has not been some criticism of an Agriculture Minister following a prices package or similar negotiations. Most of the criticism have stemmed from unrealistic expectations or from a lack of appreciation of the issues appropriate to the Council. The Minister, Deputy Walsh, has been involved in three long and arduous series of negotiations in the Council starting with Common Agricultural Policy reform and including the December package last year and the current prices and related measures agreement. In all of these negotiations he has endeavoured, with considerable success, to secure the optimum results for Irish agriculture and its related industries. I have no doubt that he will continue to do so in the future.

Sitting suspended at 3.35 p.m. and resumed at 4 p.m.