Dáil Éireann - Volume 501 - 24 February, 1999

Other Questions. - Pigmeat Sector.

36. Mr. Creed asked the Minister for Agriculture and Food his views on whether supply management is a necessary policy instrument at EU level for the pigmeat sector; and if he will make a statement on the matter. [5434/99]

Mr. N. O'Keeffe: Under the common organisation of the pigmeat market the only market support measures fully funded by the EU budget are export refunds and aids to private storage. In the short-term Ireland has pressed for the maximum use of existing supports to address the current weakness in the market. In view of the current [73] imbalance between supply and demand and the downward pressure this is having on producer income, there is a case for some form of supply management to be considered.

A Commission working party on which all member states are represented has been established to discuss other possible measures to deal with current difficulties in the pigmeat sector, including various forms of supply management.

Mr. Creed: Does the Minister of State agree the time to make the case for supply management is when the CAP negotiations are ongoing? While quotas may not enjoy unanimous support in the dairy sector, they have succeeded in ensuring price stability. The Minister of State knows more about the pigmeat sector than anybody else in the Chamber. Does he accept that, to prevent income crises, quotas should be introduced?

Mr. N. O'Keeffe: I agree with much that the Deputy said. No one has worked harder on behalf of the pigmeat sector than the Minister.

Mr. Sheehan: What has he done?

Mr. N. O'Keeffe: Aids to private storage and export refunds have been put in place. They have been the subject of much debate at Question Time and on the Adjournment.

Mr. Sheehan: Prices have collapsed.

Mr. N. O'Keeffe: There are indications from the European Union – there was a management committee meeting yesterday – that prices are on an upward trend.

Mr. Sheehan: There is no evidence of that here.

Mr. N. O'Keeffe: How many pigs does the Deputy have? A working party has been established. Deputy Creed has made proposals on supply management to which the European Commission has not yet reacted. Ireland is not a major player in the market. We produce only three million pigs. If this is interfered with, there will not be continuity of supply in terms of exports.

Mr. Crawford: Does the Minister of State realise the seriousness of the situation for family farm units in the Border region, especially Cavan, Monaghan and Donegal? The Minister and his Ministers of State from the deep south have become much more interested since prices fell in the South but for many months there was a difference of 20p per kilo in the Border region. Is the Minister of State prepared to act to prevent a recurrence? Slaughtering facilities have closed down. Is the Minister of State prepared to provide grant aid so that farm families who depend on pig production can have their produce from the Border region slaughtered, processed or marketed?

[74] Mr. N. O'Keeffe: I am aware of the position in the Deputy's part of the country. I have had meetings there, as has the Minister. The pigmeat sector is not covered by the Common Agricultural Policy in terms of supports. I can give no guarantees that the provision of slaughtering facilities will be grant-aided. On the information available from Forbairt, there is sufficient capacity available on the island. A catastrophe in another part of the island – a major fire in County Antrim – has caused problems in the Deputy's area. If the sector is to survive, there will have to be continuity of supply and different arrangements between producers and processors. There is a need to put an integrated system in place. We are dealing with a perishable product. I am here to defend the sector, not just processors.

Mr. Penrose: An Irish rasher on a plate at breakfast is almost a rarity. There is much concern about State aids and the need to ensure a level playing field. Producers should be compensated for the amount they have to pay by way of the pig levy which stands at £1. Other member states are not reticent when it comes to helping their farmers.

An Leas-Cheann Comhairle: A question, please.

Mr. Penrose: Are we adhering too strictly to EU rules? Does the Minister of State support the establishment of further producer groups as a means of ensuring continuity of supply? The integrated system in the beef sector has failed to ensure continuity of supply to meat factories. Does the Minister of State agree, therefore, that there is a need to provide a financial incentive to ensure continuity of supply between producer groups and processors in the pigmeat sector?

Mr. N. O'Keeffe: I am glad the Deputy agrees with me that producer groups are the way forward and that there is a need for an integrated system. The £1 levy cannot be removed as it would be regarded as a State aid.

Mr. Creed: The Minister of State's predecessor did it.

Mr. N. O'Keeffe: He also reduced beef premiums and left us £200,000 short. We are suffering as a result in the negotiations.

Mr. Creed: We are talking about the pigmeat sector.

Mr. N. O'Keeffe: The Deputies have short memories. Permission was sought from the European Union to remove the veterinary levy but we ran into a stone wall. It would also be regarded as a State aid.

Mr. Ring: The Government has no clout in Brussels. The Minister of State is like Maggie Thatcher – “no, no, no”.

[75] Mr. Creed: The Minister of State said that supply management could be considered. Does he agree that the policy instruments being considered as part of the CAP reforms will be in place until 2006? Is his Department taking an initiative regarding supply management at EU level, in the context of the ongoing negotiations, to ensure pig producers, especially the 300 family farm units, have an income?

The Minister of State outlined the steps the Minister has taken since the crisis erupted. Will he agree, however, it has not put a penny on the price of bacon to the producers? Following negotiations at EU level, his predecessor had the capacity to deliver on the sole instrument – the slaughter levy – that would at least put £1 on every pig for the producer. Does the Minister of State accept his actions to date have meant nothing to producers and that to ensure as many family units as possible survive, he must at least deliver on the slaughter levy in the context of the negotiations in Europe?

Mr. N. O'Keeffe: The proposals before the working groups include a reduction in the slaughter rates and an early market payment to producers for a three month period only; more reliable means of measuring and evaluating pigmeat market parameters; more frequent livestock surveys and more co-ordination of EUROSTAT and national surveys to give early warning signs of trouble – when the numbers start to grow; penalties for exceeding producer and milk quotas; intervention for piglets; reducing sow numbers, including a cull sow scheme – a French proposal; postponing inseminations to reduce the numbers; creation of a solidarity fund by levying farmers on the price of goods to support them in bad times – a kind of stabilisation fund; harmonisation of environmental regulations in each member state – each regulation is a cost on producers and non-implementation gives them an advantage; and a buyout scheme for pig producers. These involve supply management. The EU Commission is considering them but has not produced any response, and I cannot say if it will. However, the indications from the management meeting yesterday are for an upward trend in prices. I cannot say whether this will cover the costs of production, but the trend is in favour of the pig producer.

Mr. Creed: Prices will fall as surely as they will increase.

Mr. Connaughton: Irrespective of the good works and deeds of the Minister and the Minister of State, the position is getting worse. Following a tour of pig farms throughout the country, is the Minister of State going to stand back until the position rectifies itself? He did nothing for seven or eight months and is hoping for an upturn in the next two to three months when he will not have to do anything. By then the country will be short of several hundred pig farmers.

[76] The Minister and Minister of State have done nothing except engage in a brainstorming session on what they might do. They should do something to bring a small amount of substantial relief to those affected. Pig farmers need to believe that the Minister and Minister of State are acting in their interests because they currently believe they have been let down.

Mr. Ring: The Minister of Sate is one of them.

Mr. N. O'Keeffe: I repeat that as far back as last May, the Minister made efforts in Brussels to get aid for the pigmeat industry in the form of export refunds. He succeeded in getting that last July. Last August and September he went to Brussels and obtained aid supply in respect of export refunds and food aid.

Mr. Connaughton: What was done for the pigs?

Mr. N. O'Keeffe: We have done everything possible. We put in place weekend killing to get rid of the backlog of slaughter pigs.

Mr. Connaughton: Nothing was done.

Mr. N. O'Keeffe: We did not hear about pigs from the Deputy until the Dáil resumed last October.

Mr. Connaughton: Denmark got its problems regarding pigs resolved.

37. Mrs. B. Moynihan-Cronin asked the Minister for Agriculture and Food if the supply of pigmeat under the Russian food aid scheme has eased any of the problems facing Irish suppliers; the plans, if any, he has to alleviate some of the current difficulties in the pigmeat sector; and if he will make a statement on the matter. [5255/99]

Mr. N. O'Keeffe: The EU food aid package for Russia includes a provision for the supply of 100,000 tonnes of pigmeat. The supply of this meat is to be decided by means of a tendering system, which is open to operators on a community wide basis. The deadline for tendering for the first tranche of 30,000 tonnes is 8 March 1999. The supply of 100,000 tonnes of product from the EU market is expected to have a positive effect, given the current oversupply and consequent weakness in prices to producers.

I have taken a number of important measures to alleviate the current problems in the sector. In 1998 I succeeded in gaining agreement from the Commission for the introduction of an aids to private storage scheme, under which EU funding is provided for the storage of pigmeat for a maximum period of six months. The scheme is still running and to date more than 200,000 tonnes of pigmeat have been temporarily removed from the market throughout the Community. Ireland has more than 1,000 tonnes of pigmeat in storage under this scheme.

[77] On a number of occasions last year, I also secured substantial increases in the level of export refunds. A further increase in refunds was agreed in February 1999. These increases have been of considerable help to exporters and, in conjunction with a number of other member states, I am continuing to press for EU action to help the situation for producers. This action includes improved market support as well as action related to supply control to address the more general supply-demand imbalance which underlies the market weakness at this time.

Mr. Penrose: Given the Minister of State's deep involvement in the pig industry, what impact does he anticipate this tender for 30,000 tonnes will have on prices? What impact had the aids to private storage scheme on prices? It appears to have had a negligible impact on export refunds. Is it his view that this is the way to help the pig industry or is there an alternative method of ensuring that moneys he fought hard for and won at ministerial level will end up in the producers' pockets rather than elsewhere?

Mr. N. O'Keeffe: We envisaged that both schemes would take a certain amount of pigmeat off the market, which arose from a surplus. That did not happen. Nevertheless, we continued with the schemes and continued negotiations at European level, including at the Council of Ministers and management meetings to make the schemes more friendly to the processor to encourage them to put more pigmeat in storage. Since approximately 1 January the tendency has been for producers to take up some of the schemes and make them work in their favour. We cannot make them do this. They live in a free society and we have no power over them. Given that the schemes are now working, there is a trend towards increased prices for pigmeat. That is the view of the EU as of yesterday.

Mr. Farrelly: Following the introduction of these schemes has the Minister of State been able to clarify the discrepancy in the difference in price between the North and the South? It is approximately £10 to £12 per animal. That has not changed. Has he investigated the possibility of a monopoly in the South which is keeping prices down in the North?

Mr. N. O'Keeffe: I am not aware of a monopoly in the bacon processing business in any part of the country.

Mr. Farrelly: Does Avonmore Foods have a monopoly?

Mr. N. O'Keeffe: Avonmore Foods have been engaged in amalgamation talks involving the Competition Authority. Pig prices have suffered in the northern half of the country arising from the facility that was burned down in Northern Ireland where pigs were being slaughtered. That led to a sharp fall in processing. I understand [78] from State agencies that there is sufficient capacity to slaughter all the pigs on the island.

The pricing of pigs is a commercial decision. My Department does not get involved in price. We are the regulatory authority and we put in place the procedures for the industry to operate.

Mr. Farrelly: The firm I mentioned earlier is monopolising the price with the result that the producers in the Leas Cheann-Comhairle's part of the country are getting £10 less per pig. This warrants an investigation by the Department.

Mr. N. O'Keeffe: I am not aware of any monopoly in operation, nor of any Irish firm operating in that manner. I am satisfied the processors are operating in a fair and even-handed way.

Mr. Deenihan: Is the Minister of State aware that of the 20 pig farmers in Kerry only five will survive in this business? A further five farmers have drastically reduced their number of sows. One farmer reduced his from 1,800 to 500. What can the Minister of State do for these people?

Mr. Creed: They will not qualify for Objective One status.

An Leas-Cheann Comhairle: Allow Deputy Deenihan to ask a question.

Mr. Deenihan: Dutch and Spanish bacon is being imported into places such as Kerry which attracts approximately two million tourists each year. I ask the Minister of State to launch a campaign, through An Bord Bia, to use local pigmeat as much as possible. Kerry producers believe that if there was more local consumption, they would not face such serious problems.

Mr. N. O'Keeffe: We intend to launch a pork and bacon campaign in the near future. We might ask Members of the Houses of the Oireachtas to participate so they can taste our fresh quality products.

Mr. Deenihan: What can I tell the 20 farmers in Kerry?

Mr. N. O'Keeffe: I am delighted the Deputy raised this question because Kerry is the home of one of the finest food organisations in the world. I hope it recognises the value of those 20 farmers, otherwise they will experience many problems. The price of pigs collapsed last August. It fell from a high of 137p or 141p per lb to 60p or 65p per lb.

Mr. Connaughton: It was 58p per lb.

Mr. N. O'Keeffe: Prices collapsed after a buoyant period because of the collapse of the markets in the Pacific Rim. The economies of Japan and Korea were not able to take up the quantities of [79] pork available, so they had to export it. There was an expanding supply world-wide because the consumption of white meats is growing in places such as North America and Canada.

Mr. Deenihan: What can these farmers do to stay in business?

Mr. N. O'Keeffe: I have indicated there is an upward trend in pig prices.