In the last Administration we had two Ministers of State, one of whom was responsible for food. It is a mistake not to have a Minister with responsibility for food.
Adjournment Matters. - Beef Prices.
The Minister is the Minister for Food.
He is a Minister for mistakes. The beef slaughter scheme was introduced by the EU to ensure employment in beef factories, especially in the off season. Last year, however, the prices which obtained in October and November were not maintained and those who held on to their cattle for winter fattening did not get the price they expected. Beef prices should be maintained or improved. Last year cattle made over £1.06 per pound but in January winter fatteners realised only 80p per pound, a dreadful loss. We are all concerned about prices but it has reached the point where the Minister has almost accepted that the number of cattle for slaughter will be reduced. It will involve beef cattle and this matter is of serious concern to farmers who are fattening cattle.
The competition authority said it appears incredible that the prices paid to beef producers were static at 80p a pound for many months but suddenly, in the space of ten days, processors were able to pay 96p a pound. The prices were suddenly increased, but nobody realises that they were still below those which obtained in October/November 1995. It was also stated that the beef prices would recover. However, I am concerned that the cartel could ensure that beef prices are reduced for winter fattener cattle from 1 January.
The Farmers' Journal carried an article about the legal threat to the beef slaughter premium. I am also concerned about this matter which involves livestock breeders and live exporters. It is not right and it is a pity that live exporters are threatening the small amount of money farmers receive from Europe. Any money we receive from Europe should be welcomed because slaughter premia help to increase employment. The beef premium has a spin off in terms of the millions of pounds that are spent on supplying feed to ensure cattle are fattened. We must ensure that the employment provided by the beef premium is protected.
The Farmers' Journal also stated that the slaughter premium is in line to begin on 1 January next year involving 7p or 8p a pound, but the factories predict that in January beef bullock prices will be less than they are today. Why should that be so? This problem occurred last year. The slaughter premium should be maintained. We must ensure that farmers who must go to the expense of fattening cattle are adequately compensated. However, the Minister is inclined to state that farmers will receive lower prices in January than they receive today. This is not fair to winter fatteners and the matter must be addressed.
I thank Senator Kiely for raising this matter. It is an important issue and I appreciate the Senator's concern about beef prices. I compliment him on the obvious amount of research he carried out on this issue. I am pleased to have this opportunity to set out the current situation in the beef market and the continuing efforts to ensure that the incomes of beef producers and winter fatteners in particular will be underpinned in the new year. Following one of the most difficult periods for beef producers in recent times, I am glad that a degree of normality is returning to the industry. Over the last number of weeks, there has been a good improvement in the prices of all categories of cattle and it is my earnest hope that this will continue into the new year.
Since 20 March the Government has spared no effort in dealing with the matter. The full services of my Department, the diplomatic services, An Bord Bia and other Departments and Government agencies have combined to protect our most important industry. The net effect of this offensive is that most of our markets, which were closed in the aftermath of the crisis, were reopened soon afterwards. A number of important markets, notably Iran and Libya, still remain to be resolved but I hope that these will come on stream again soon.
Effective market support measures were also put in place almost immediately and these helped to maintain order and stability in the sector at production and processing levels. The Minister succeeded in putting in place a flexible intervention system whereby weight limits were relaxed and extra categories included. The processors' margin was also increased. Since the beginning of the crisis, the EU has taken over 50,000 tonnes of Irish beef into intervention from an EU total of 430,000 tonnes. This helped to underpin prices by removing surplus production from the marketplace.
Export refunds have also played a key role in stabilising the market. The increase granted by the Commission on 1 May has been a major factor in giving processors a competitive edge on third country markets. Despite the difficulties in export markets, Irish traders have maintained a significant presence there. Overall, cattle slaughterings are up by almost 10 per cent this year and steer slaughterings are up by 28 per cent. By any standard, this is a credible performance.
Due to the importance of market support measures in maintaining reasonable returns to producers, I will continue to seek to have the most effective arrangements in place for the new year. At the beef management committee meeting on 29 November, the Commission reduced the carcase weight limits for intervention purchasing by a further 10 kilograms per month for January, February and March 1997. This means that carcases must be under 380 kilograms for January, 370 kilograms for February and 360 kilograms for March to be acceptable for intervention. In addition, the Commission decided to exclude 04 grade steers for intervention, thereby reverting to the categories which were permitted before the BSE crisis.
With regard to the weight limits, the Minister has succeeded, in the face of major opposition from most member states, in maintaining the higher weight limits since the crisis. However, it is now clear that the Commission wishes to move towards the 340 kilogram limit which applied before the crisis. I have continuously warned producers that intervention weights would be reduced and there was a need, therefore, for all producers to bring their production systems into line with a situation where there was a major surplus of beef on the market. However, the Minister will do his utmost to prevent further reductions in carcase weights in order to provide producers with adequate time to adjust to the new environment brought about by the BSE crisis.
While the reduction in weight limits is a cause of concern, I am disappointed by the exclusion of the 04 steer category from intervention. Due to the high proportion of our steers in this category, their exclusion could severely restrict the number of animals which would be eligible for intervention over the next three months. The Minister has, therefore, asked Commissioner Fischler to reverse this decision and I am hopeful of a successful outcome. This would ensure that intervention would continue to play a key role in underpinning market prices over this key disposal period.
The live trade also offers a very important outlet for Irish cattle by providing competition with the factories in the marketplace. The Minister will keep the situation under review and should developments in the marketplace in the new year warrant an increase in the live refunds to maintain cattle prices at reasonable levels, then he will not hesitate in seeking such an increase from the EU Commission.
The deseasonalisation slaughter premium is also a vital income support measure for winter fatteners. I am glad to inform the Senator, that as a result of the Minister's efforts at the June Agriculture Council, he succeeded in having this premium continue for 1997 and beyond. This premium, which is worth some £16 million and which was agreed as part of an £86 million compensation package arising from the crisis, will be of particular importance to winter finishers who sell their cattle in the early part of next year.
I wish to remind the House that the Minister also succeeded in negotiating a further compensation package worth over £30 million for Irish beef producers in the context of the beef reform measures at the October Council. Following the adoption of the regulatory provisions for this package at next week's Council of Ministers meeting the Minister intends to draw up a scheme, following consultation with the various organisations, to ensure that producers most affected by the crisis will be compensated. Winter finishers who benefit tremendously from the premium payments will also be recipients of this additional compensation in one form or another.
In conclusion, while no guarantees can be given on the maintenance or improvement of current beef prices, the Minister will seek to ensure that the market support measures will be operated effectively to maintain reasonable prices for producers. In addition, the premium payments in conjunction with the compensatory measures will ensure that the income of winter fatteners will be adequately supported in 1997. I, and I am sure Senator Kiely, hope 1997 will be a good year for beef producers.
No guarantee was given. The Minister's reply was very vague. I wanted to know if prices would be maintained but the Minister refused to answer that.
The marketplace will determine what price will be paid, as the Senator knows well.