Seanad Éireann - Volume 115 - 10 December, 1986

Agricultural Produce (Fresh Meat) Act, 1930, (Exporter's Licences) (Fees) (Amendment) Regulations, 1986, and Pigs and Bacon Act, 1935, Regulations, 1986: Motion (Resumed).

Debate resumed on the following motion:

That Seanad Éireann approves the following Regulations in draft:

Agricultural Produce (Fresh Meat) Act, 1930, (Exporter's Licences) (Fees) (Amendment) Regulations, 1986, and Pigs and Bacon Act, 1935 (Part II) (No. 12) Regulations, 1986.

[698] copies of which were laid in draft before the Seanad on the 13th day of November, 1986.

—(Senator Dooge.)

Mr. Hourigan: I have some brief remarks to make on these two regulations introduced by the Minister today which propose a reduction of inspection fees from 75p per pig to 50p. This goes some way towards easing the difficulties currently being experienced in the pig and bacon industry both at primary production level and at processing level.

There is a great need to rationalise the entire bacon and pig industry at this time and reference to this was made by the Minister. It is true that the producers at their level have responded quite remarkably to achieving greater efficiency and they must be helped further to achieve even greater efficiency by feed rations being made available to them at more competitive prices. Obviously in pig production feed ration prices are a major element of cost and would significantly affect the lack of margin that may exist in a pig enterprise. In recent times pig producers have been going through a difficult time and the margins have been pretty slender. This has been an area of agricultural activity where only absolute efficiency has enabled people to survive.

An important aspect in the pig industry, as in the case of the whole agricultural spectrum, is improvement in quality. At present, approximately 80 per cent of our pigmeat is consumed on the home market and by and large any expansion or development would have to come from the export side. Therefore, we must ensure that we produce to the requirement of that export market wherever it might be. We have to find that market and produce to the requirement of that market. Regardless of what we might think of the product we produce, if housewives in the United Kingdom or in any European country want a particular type of rasher, they are entitled to it. We must produce to meet that sort of need as well as keeping an eye on the home market to ensure that we develop even further the potential that exists there. Essentially, [699] we are relying on massive development of the pig industry on the international scene. Therefore, we look to the United States and other countries and we have to produce to meet their requirements. We are not producing the products required by the United States market. I know the Minister and others concerned hope that we will work to that end and produce precisely to those market requirements.

In recent years there has been a dramatic change in the pig producing sector. Pig production is now becoming more than a large operation carried out by far fewer people than heretofore. In relation to the margins I referred to there is no way the person keeping a few pigs, as was traditional in times gone by could survive now from an economic point of view. Therefore, we are talking about pretty efficient operations at production level. A high level of efficiency has been achieved by the limited number of persons who are in pig production in a serious manner. It is incumbent upon us to ensure that at processing level — bacon factory level, processing factory level and so on — efficiency matches the efficiency of the primary producer and efficiency in marketing is also brought up to the proper level.

There are quite a number of imports into this country at present. People get quite excited about such things from time to time. The only way to counteract and to combat that situation with regard to pig meat is to make sure that we are producing the sort of commodity the Irish housewife wants. That is one way of ensuring that imports do not become a major source of concern to us.

In the broader sense there is, of course, a continuing urgency for us to be more aware of the need to produce a better standard of food. The purity of Irish foodstuffs is not exploited and we should develop that as we have many advantages in this area at present. Because of the non-use of antibiotics and the low level of pollution in Ireland we should be able to sell our message and promote our Irish food industry in a better way, not just [700] from an export point of view but also from an import point of view.

As has been repeatedly said by many people, a high proportion of the foodstuffs we are importing could be substituted by home produced foods. This applies right across the spectrum and one is talking about perhaps a couple of hundred million pounds out of a total food import bill of £900 million. Much could be done to help our balance of payments and also to create employment. There is a massive area which must be examined in greater depth. I know the Minister of State who has responsibility for the food industry has bent his efforts in recent times in this direction. It is a very vital area and the progress he has made so far is very encouraging.

There is a long way to go. We must raise our standards to the requirements of the United States and other valuable markets. We must be very conscious of the necessity, not just the desirability, of doing that. It is absolutely essential. There are a number of definite possibilities in the pipeline which will materialise, I hope, in 1987 in the whole area of new market potential and so on.

There is still a substantial amount of money outstanding which has not been paid for veterinary inspections. This is a major weakness in so far as those who are paying the levy of 50p, as proposed in these regulations, are concerned. This is something that needs to be corrected because, so far as I can recollect, £1.3 million has not been collected. There are arrears of that amount. That is quite serious. The figure was much higher before the levy was reduced from £1.10 per pig to 75p per pig. That helped to rectify the problem to a large degree but a number of people in the business are not paying this levy. I urge the Minister to make sure that the appropriate legislation is introduced at the earliest stage possible so that the levy now set at the level of 50p per pig will apply right across the board. If it does not, it loses its meaning and cause much friction and frustration on the part of those persons who pay it.

I compliment the Minister on taking steps to bring down the inspection costs [701] from the 75p to 50p. This is very much needed in the industry. It is the type of thing that is badly needed in the overall farming scene as well but particularly so in the pig industry. It is worthy of the full support of this House.

Mr. T. Hussey: When I was told by the Whip this morning that this draft order had been placed before the House and was being discussed in the Seanad, I took it that as usual the Minister was looking for an increase in the fees but for once this was a pleasant change. I said to myself: “All I have to do now is to go down to the library and read what I said last year.” When I looked at the Order Paper I figured out that instead of increasing the fee, it was being reduced. I then said: “I will have to say the direct opposite now.”

I am very happy that the fee is being reduced by 25p per pig. It may not look much but it is a lot in the industry where profit margins are so small. We all know that profit margins in the pig industry have been very small in recent years because of the high cost of feedstuffs, the risk of disease and the availability of markets at different times of the year. All those things have made the profit from pig production very small. For that reason I compliment the Minister on being able to offer a reduction in fees to pig producers. It is a change because over the past few years we have been increasing levies for disease eradication, veterinary inspections and so on. That has been the pattern. Sometimes when producers get their cheques and returns either from the creamery or from the meat factory they are astounded when they look through their dockets and see all the levies and deductions made for one reason or another. It can be very disheartening for producers.

The pig industry has gone through a major transition in recent years. We have seen the pattern of pig production change completely from what we know 20 odd years ago. I remember when I was a child practically every family in the west of Ireland kept pigs. They kept a couple of sows and sold the bonhams at an early [702] stage. They usually kept two or three of the smaller bonhams to rear into pigs. This was the pattern right down along the line and they were the major producers of pigs. In the sixties we saw that change. We saw the pilot areas introduced. My own parish of Clonbeirne was one of the first areas in the country selected as a pilot area and new methods were tried out. At that time the notion of a modern piggery was thrown about and one or two farmers decided to go ahead and build a modern piggery. They were very successful for a number of years. Then the cost of buying the feedstuff for pigs became so high and the profit margins so small that those piggeries had to close down after a few years. It was a great pity.

Pig production now has been taken over by the large producers and, as far as I can understand it, most of those pig producers are located outside the disadvantaged areas. I have seen some of those factory places and it is marvellous what they can do. It is marvellous how they operate and it is marvellous the number of pigs they can produce in any given time. It is very important for those people to have markets available. I know we have markets available to us. Japan is one of the areas to which we have been exporting pork. The Japanese are very selective and they will not take every type of pork, so it is up to the producers here to try to produce the material that is suitable for those markets. The same can be said for the United States market. We have a market in the United States and I was shocked to note that last year a Limerick firm had to import bacon from Denmark in order to fulfil its orders for the United States. It is a pity that that should have to happen.

The industry here needs to wake up to the needs of the marketplace out there. Now that the 50 per cent FEOGA grant is being extended to the area outside the disadvantaged areas where it has been in operation it is up to those people to modernise and improve their processing and make sure they have the orders for the United States market that I believe [703] is there. I consider our bacon to be far superior to anything that can be got in the United States. We hear this from visitors from the United States who come to this country and who are delighted to sample our Irish rashers. In most cases the one thing they will bring back to their friends in the United States is a few pounds of Irish rashers. That is a great compliment to our producers and our processors here. We have the product and it is a matter of producing it in the right quantities and fulfilling the orders in the United States. There is no reason in the world why any Irish exporter should have to bring bacon from Denmark in order to fill his orders for the United States.

I understand from the Minister that skim milk is now available at 10p per gallon. This should be very acceptable to producers because we know that milk is a very important ingredient in the production of pigs. I am sure if there is the right mixture of skim milk and meals pigs can be produced more cheaply than they are at present.

We have seen recently the rationalisation of the pig industry in the west of Ireland where three groups amalgamated. I should like to compliment all those involved because we were worried for a while that those processing plants would close down and there would be widespread unemployment as a result. They are giving very useful employment to lots of people in that part of the country where employment is so scarce at present. The management, the unions and the workforce are to be complimented on succeeding in rationalising the industry there and ensuring the jobs of so many people involved in the industry.

I have not much more to say on this except that it is a welcome change to see fees being reduced. As a final observation on what the Minister has said here today regarding the collection of levies, I am a little perturbed to see there is still £1.3 million outstanding even after the reduction of the fees from £1.10 to 75p [704] per pig last year. If the Minister has statutory powers to collect those fees he should exercise those powers because too often we have seen factories closing down with millions of pounds owed to the Revenue Commissioners and so on. I would not like to see that develop in this industry. That £1.3 million could be very important ploughed back into the industry either to develop the market or to help the processors in modernising their premises. The Minister could find many ways of using it that would be to the long term advantage of the industry and for that reason it should be collected. There was £5 million outstanding at one stage before the fees were reduced from £1.10 to 75p. I do not think that should be allowed to continue.

We are promised legislation in the New Year that will, I believe, harmonise inspection standards and charges as between domestic pork and other slaughter house and export plants. If that is done the industry should have no crib about paying those fees. I exhort the Minister to have those collected. Again I hope it will be a contribution towards the development of the industry. Small as it may seem, it is important to the industry especially when the profit margins are so small already. I hope this will, in some way, indicate to the industry that the Government are serious about helping them and that they are prepared to come to their assistance at a time like this when we know the industry are in need, when they are faced with many problems out there in the market place. Unless they are prepared to go out and sell their product aggressively, as is being done all over Europe, they will not make a success of it. It is up to themselves to go out there and sell our Irish bacon. There is no reason why we should not be able to produce bacon as well as the Danes, the French or anybody else.

Mr. Quealy: I welcome the reduction in inspection fees. I would ask the Minister whether he is going to collect those fees. A sum of £5 million in arrears built up in 1982-85 and in the last year and a half it is £1.3 million. The factories are [705] not competitive and cannot compete against the pork butchers.

We have been promised legislation for years but have not got it. At one stage the levy was £1.10, then it was 75p and now 50p. I think it is even more than 50p because you must provide offices and facilities for inspectors in the factories. There are pork butchers in any kind of shack. If we had an outbreak of any disease in those pork butchers' premises, it would be the deathknell of the Irish pig industry. We would not be able to sell anywhere if we had an outbreak of disease which was traced back to some of the pork butchers' premises. While we are waiting for this legislation they are not going to be able to collect even 50p. There are very strong words there about licences being revoked. What do you do when you revoke a factory licence? You put more pigs on the market. We know what happened last June and July when a few factories closed even temporarily. There was no place to kill a pig. Pigs are a very perishable commodity and if we have not got places to kill them, we are in terrible trouble.

I welcome the new FEOGA grants for modernisation of factories and killing premises. It is only in one of those new factories that we will get the efficiency that is needed. I had discussions with the Minister and I am hopeful that something good will come out of them in the near future. The Irish pig farmer is the most efficient in Europe and he is producing the best pig in Europe, but we have not got efficiency at factory level and I am hoping we will have efficiency if people take up this new FEOGA grant.

Senator Hussey referred to the American market. Unless we get people to take up this market the pig industry will be going nowhere. The cost of killing pigs at present is too high. The return for pigs is about £50 per cwt. and farmers would need to be getting at least £55 or £56 per cwt. To be competitive in the world market the price should be around £50 per cwt. The cost of killing pigs in the factories is higher than in Denmark or in Belgium. I read lately that pig meat exported from here to Belgium and [706] cooked in Belgium can be brought back here at 20p a pound cheaper than it could be cooked here. That is cooked ham. Where do we go from here? What kind of pig industry can we have if those are the kind of costs we incur?

I welcome the decision to increase the figure to £50,000 because this was a terrible difficulty for pig farmers. It was a good decision to get that figure increased to £50,000. I wish the Minister well in reducing the levy. I also wish him well in collecting the levy. I am thinking in terms of the legislation. What I would like to see today is legislation to control the pork butchers. The sooner the Government bring that on stream the better.

Mr. Lennon: There is not much to say at this stage but the occasion should not be let slip without at least congratulating the Minister on doing his utmost in this line of business. As Senator Hussey quite rightly pointed out, it is a rare thing these days to have a Minister coming before any House to tell the Members that something is going to be reduced in price. This is a rarity and one should not lose the opportunity to thank the Minister for his effort in this respect. While we are talking about very small money, pennies really, Senator Quealy, to whom I listened attentively and who is in pig production in a large way, would tell you that, indeed, 50p or 25p a pig in profit can mean a lot at the end of the day.

I listened to Senator Hussey talking about the way of life in the west and perhaps we can talk about the way of life all over the country. In bygone days everybody kept a few pigs around the place. We have moved from that situation to the big producer, the person who spends thousands of pounds on housing, trying to be efficient and trying to compete in the markets that are there today. There is no doubt in the world that these people need all the help they can get because they have, so to speak, put all their eggs in one basket. If people who have, in many cases, borrowed large sums of money to go into the business of pig production, are losing money and have to close down, not only is their [707] income gone, but also all the money they put into the type of housing that is suitable for pig production and is not suitable for any other purpose. For that reason I welcome any help given to the pig producer in this respect.

When one looks at this inspection fee of 50p at present, one cannot but think of the inspection fees for cattle at present. Perhaps the Minister might take a look at that in the not too distant future. I have some little experience in that field and very often find that, with the amounts of money being stopped at factories for the inspection, the vet on some occasions has far more at the end of the day in terms of profit for himself than the man who produced the cattle. I urge the Minister to take a hard look at this. I am taking this opportunity to ask him to do this because margins of profits have fallen steeply. I noticed quite recently when selling a few cattle that between the levies the haulage and so on it amounts to £10, £12 and often £15 before you can kill a beast. Perhaps the Cathaoirleach will say I am wandering away——

An Cathaoirleach: I have no doubt about it.

Mr. Lennon: I am drawing attention to it because I feel it is an opportune time to draw attention to it when the Minister sees fit to reduce this fee from 75p to 50p. We are talking about far more money under the other heading. I mentioned Senator Hussey's comments earlier about the small producer. Well, he is gone. I remember the old days and James Dillion, Lord rest him, who used to say: “One more sow, one more cow, one more acre under the plough.” You do not find anybody now with those few sows around the place. It is the Senator Quealys of this world perhaps who are in the business of producing large numbers of pigs. I am not necessarily trying to help his case. My brother-in-law is involved in pigs in quite a big way. I see the amounts of money that are poured in to try to improve efficiency and to try to stay in business. I thank the Minister for his [708] efforts in this field and I hope he will not forget the request I made in regard to the fees for cattle at factories.

Mr. McDonald: I want to make a few points on these very important orders which the Minister has presented to the House today and to join with my colleagues in complimenting him on being abreast of the rather low trough in the pig industry from a farm point of view. Farmers who are specialising in pigs or who have pigs as one of their major husbandries have experienced a very difficult period and I am glad to note that the Minister would appear to be keeping abreast of the situation.

This measure which reduces the fees somewhat will help because margins have been squeezed to the very last and many people are quite happy to break even. The provision of the low interest rate Euro hard currency loan to people in this capital intensive industry has been a Godsend and should prove very beneficial to those who availed of it.

The whole question of fees for services to the agricultural industry should not really be left to an annual introduction of orders of this type. The legislation here goes back to the thirties. Perhaps the time is right to have a comprehensive review of the entire situation. Agriculture has changed considerably and while some time ago, as a politician coming from a rural constituency, one would be advocating long term policies for agricultural development, now the industry seems to change by the day and we appear to be getting into a situation where the European Commission will have greater powers and greater freedom of action to introduce directives dealing with specific portions of agricultural industry and husbandry such as this. In the first regulation dealing with beef the only problem I see — there are a few anomalies but they have already been mentioned — is that there is where a farmer decides that he will slaughter a heifer for his own use for the freezer. It is daft if he has to pay CBF a levy for that. I know the Department do not enforce that but, nevertheless, for the [709] small amount of money collected the levies are a bone of contention — in the very area where they are imposed and on everyone who comes in contact with them. It is an extraordinary policy.

The Department charge a fee for the return of a very small amount of money, £1.3 million or whatever the figure the Minister told us earlier on today. At the same time, they are putting in £200 and £300 million in grant-aid in different areas. It is just creating administrative posts and in the process annoying everybody who comes into contact with the system. Would the Minister consider taking an overall look at the problem? Instead of trying to retrieve £1½ million through these two measures which he has introduced in the House today, that could be looked upon as part of the services the Department provide through their not insignificant budget for the development of the agricultural industry as a whole. Perhaps the Minister could argue that those sectors which are receiving the services should make a contribution towards them. If one is to count up all the levies and all the stoppages a practising farmer reads on his returns whether it is from the co-op, the creameries, or the beef factories, or the bacon factories ——

An Cathaoirleach: I think this is confined to pigs.

Mr. McDonald: On the Order Paper—

An Cathaoirleach: Read the Minister's speech.

Mr. McDonald: I read the Minister's speech but was the first item on No. 2 not moved?

An Cathaoirleach: I do not mind the Senator making a reference, but do not widen the scope too much.

Mr. McDonald: I beg your pardon. I thought we were dealing with the other item on the Order Paper.

An Cathaoirleach: You did what other people had done.

[710] Mr. McDonald: Perhaps we will have an opportunity to go in more depth into the problem of the beef sector.

Like other speakers I warmly welcome the reduction in the levy but I still hold the view that, since it has not been possible for the Department to collect the levies up to now by virtue of the fact that people refuse to pay them for one reason or another, there should be a better system of servicing the industry without depending on this kind of piecemeal collection. Perhaps the Minister will avail of the opportunity at some early date to review the entire system of aid and service to the industry. While we are dealing with the levy which is, I suppose, based on live pigs ——

An Cathaoirleach: My information is that pigs are paying exceptionally well at the moment.

Mr. McDonald: During the summer they had a difficult period. The second half of November and early December is always the best time. If you could keep all your pigs until that time you would be doing very well but everybody knows that is not possible; you have got to keep the cycle going.

There is a problem in regard to imported processed foods. Cooked hams from sister States in the EC it would appear are coming in much cheaper than the price at which Irish factories can produce them. Perhaps we have been too slow in grant-aiding firms who were setting out to provide an import substitution service in this area. We are in an era of convenience foods and I hope the Minister will look very closely at that and ensure that the Irish percentage of this increasingly valuable market will be maintained and will have an advantage over imports.

We experience difficulty in competing on the international market within the Community by virtue of the rather expensive cost of transport from any of the Irish areas to the central European markets. If that works that way, why is there not a corresponding disadvantage [711] for European exporters who put agricultural based commodities on the Irish domestic market at very favourable prices compared with the Irish prices? That is one of the great conundrums I have never been able to solve. If that is a reason for the difficulties in the bacon industry, I ask the Minister to concentrate his mind and see how best we can overcome them.

In conclusion I compliment the Minister on being very much abreast of the industry. This reduction in the aggregate fee will be of considerable benefit to many people. I hope it will be taken as an earnest of the Minister's interest in this industry. On the whole they had a very difficult year. Perhaps they are in for better times and I wish them well.

Minister of State at the Department of Agriculture (Mr. Hegarty): I should like to thank Senators for their kind remarks and general support. It is extraordinary nowadays to be reducing something. Small and all and as the amount is, it is quite significant for the bigger producer. I fully endorse Members' comments with regard to our producers here. They are at present the most efficient producers in Europe. If they were not so efficient and so committed and, indeed, almost locked into the industry, they would not have survived this summer. I accept that it was a very difficult period. Part of that problem was due in no small way to the fact that the processors had difficulty in this context. At one stage most of the representations coming in to me were: how would people get their pigs in anywhere? Thankfully that is now resolving itself.

We are updating legislation from time to time to meet the changing situation. I should like to say to Senator McDonald that I think we are doing reasonably well now. Some might say that if you give people an inch they take a mile. The remainder of what is left is important. We provide a very thorough veterinary inspection. It is only fair that people should be asked to pay a little towards that. In the case of cattle it is £3.25p. This [712] fee and the fees for pigs and sheep do not in any way cover the cost of the service given. They are a contribution towards the cost. In answer to Senator Lennon and Senator McDonald, yes, there are substantial IDA grants as well as FEOGA grants available to the industry if that industry is export oriented.

The reduction of 25p is small but what it means, in effect, to put numbers on it, is £500,000 of an injection into the industry. I agree fully with Senator Quealy, Senator Lennon and Senator Hussey that slaughtering premises are in need of updating. We try to help them to do this through grant-aiding. If they upgrade they will have new markets. Apart altogether from the new legislation, there is no future for them unless they upgrade. Al these small operations will disappear fairly quickly. For the sake of the industry, it was hoped to have the new legislation before Christmas. As somebody who was plugging away at various bits and pieces of legislation. I realise it is difficult to get it through. You are in competition with a great deal of legislation other people seem to think is more important. However, we are assured that we will have that legislation early in the New Year. We will give a little period of grace. There will be a short period when these unsuitable premises will get an opportunity to get their act together. Then the axe will have to come down on them.

We are serious about collecting as of now because we have given our commitment. The industry asked for a commitment to the legislation. They did not say they would not pay until the legislation was in place. Their commitment to us was: “We will pay when you are serious about the legislation”. They went ahead forthwith and paid. Now, they have backed off on their part of the agreement. Whatever problems it may cause for the industry, we have to keep our side of the bargain. We owe it to the taxpayers. We will have to implement the new amounts regardless of the consequences. I have to make that quite clear. It would be unfair if I did not.

One of the problems the industry has at present is that while our producers are [713] probably as large as any of the competitors in Europe, our factories are not as large. There are many small, inefficient units. This whole business of economy of scale has helped our competitors and has put us in a fairly difficult trading situation — not in an impossible situation. There is goodwill towards Irish bacon right across the UK. It is very acceptable. They regard our bacon as having a particular flavour. Whether or not when we drop the sodium, the water and the fat, the flavour will go with it, I do not know. It is something other people will have to worry about. Perhaps the salt and sodium have something to do with the extraordinary fine flavour. I am sure people are keeping a close eye on that.

With regard to the United States market, as mentioned by Senator Hussey, it is a matter of regret that more of our plants are not up to US standards. I hope, however, that the situation will change and this very lucrative United States market will be open to us. It is true that some of our plants are coming on-stream now to qualify for a USA licence. There are generous grants available for this purpose. I sincerely hope they will be availed of. We must produce what the consumer needs. The trends here will be towards the leaner carcases and towards leaner meat generally. Anybody who strolls around our own supermarkets will see that people are interested in the leaner products. We have the raw material to produce that type of product and I think we should watch it.

We have this permanent food committee. We are placing a lot of emphasises on the pigs and bacon scene at the moment. If individual Members of this House have particular points they would like to make to the committee, I would be very pleased to take representations from them or get a consensus of the opinion of this House and put them to the committee.

We hear a great deal in this House about needing funds to do this and that. If money could solve all agricultural problems they would have been solved a long time ago. I have been working long enough both as a farmer and a public [714] representative to realise that what we need more than anything else in the food scene is for the people who know something about food, both the producers and processors, to get together and figure out for themselves what the consumer needs both here and abroad and produce it. It is my experience that it is just as easy and no more expensive to produce the right goods as the wrong goods. There is no cost factor involved either in the production or the processing. It would solve 70 per cent of our marketing problems in the UK if we could produce what the supermarkets want. I should like to thank the House for their kind comments.

Question put and agreed to.