Seanad Éireann - Volume 145 - 06 December, 1995

Sheep Industry: Motion.

Acting Chairman: Notwithstanding anything in Standing Orders the time limits for the debate are as follows: the Minister shall have 15 minutes to speak; the proposer of the motion shall have 12 minutes; each other Senator shall have eight minutes; and the proposer or another Senator nominated by him shall have five minutes to reply.

Mr. R. Kiely: I move:

That Seanad Éireann, acknowledging the crisis in the Irish sheep sector and mindful of the many thousands of jobs on farms and in factories [983] dependent on the industry, condemns the Government and the Minister for Agriculture, Food and Forestry for the sustained indifference they have demonstrated on the needs of the industry; and hereby calls for urgent steps to be taken to address both the immediate crisis and the long-term structural problems of the Irish sheep sector.

This debate is important for the many farmers involved in sheep production, the agriculture industry and the economy as a whole. There is a serious crisis in the Irish sheep industry which requires urgent remedy. The importance Fianna Fáil attaches to the need to introduce urgent measures for the sheep sector is demonstrated by the fact that our party spokesman in the Dáil, Deputy Cowen, tabled a Private Members' motion on this matter in the Dáil some time ago; we are tabling a motion in this House this evening.

The crisis is so serious there was a very large demonstration of sheep farmers in Dublin a week ago. On Marian Finucane's radio show I heard complaints from a man who was held up in traffic because of the demonstration and he complained about the money he lost. The sheep farmers have lost a lot more. They had the demonstration to let people know their incomes have not been as bad for five or six years. They demonstrated forcefully their concern and disappointment at falling sheep prices and the serious problems that have confronted the sheep sector for some time. These problems must be addressed and it will require sustained negotiating on the Minister's part at EU Council level to ensure emergency issues are dealt with and that the cash crisis which has bedevilled sheep producers is addressed.

Unfortunately, the Minister's efforts to address and successfully tackle those issues have been negligible. Where is the Minister's much trumpeted claim of almost a year ago that the difficulties of this industry would be confronted and [984] overcome? The days of announcing and recycling good news press releases of developments that took place before the Minister took office must come to an end as reality dawns on some commentators and interest groups.

The Minister should be more active in an area in which there have been serious difficulties under his stewardship; an area in which one would have expected he would have shown some flair given that many of his constituents are seriously affected by what has happened in the sheep sector. I am disappointed the Minister is not here this evening and, by his attendance, show his concern for the crisis in the sheep industry. In saying that I mean no reflection on the Minister of State.

In 1980 Ireland got access to the French market and the ewe premium was introduced. In Ireland this was paid on each ewe but in the UK it was paid on the lamb. I have heard that at some public meetings the Minister referred to the fact that perhaps a policy mistake was made when we sought the premium on the ewe rather than the lamb. It is important to point out that at that time there were only 1.5 million ewes in the country, many in disadvantaged areas and many not attaining the lambing rates now available as a result of improved husbandry and breeding practices.

Throughout the 1980s there was a great expansion in the breeding flock. From a total of 1.5 million head in 1980 the herd had increased to 4.6 million in 1994. The expansion of the flock goes back to the decision by the then Minister for Agriculture, Ray MacSharry, to give us unlimited access to the French market and the ewe premium was the foundation on which a sheep industry could be built.

Since 1991, there has been a reform of the CAP as it concerns sheep. At that time the quota regime was also introduced and, with the full support of everyone concerned, a ewe premium calculated across the EU was introduced, rather than on an Ireland only basis, whereby each member state could [985] do its own calculation. This was introduced in the belief that Irish prices would rise to meet French prices; in other words, there would be convergence in relation to the price and the ewe premium would be the support mechanism which would be applied uniformly at every level throughout the Community.

Our experience has shown the theory does not work for Irish sheep producers. In 1992 lamb prices collapsed. In December of that year, the then Minister for Agriculture, Food and Forestry, Deputy Joe Walsh, obtained a top up premium of £6 per ewe — the Minister of State should take note of that. The Minister has a precedent, if he wishes to look at how it may be possible to get recognition for the special status and the vulnerability of the Irish sheep sector and that precedent was set by the Minister's predecessor in 1992.

In 1993 and 1994 prices were static. In 1995 there has been a collapse in early lamb prices due to currency differences, cheap hogget meat and the lower prices in France. It is important that the Minister acknowledged there is a problem of crisis proportions in the Irish sheep industry. Any comparison of average prices on a penny per pound basis for lamb at export in France for the months January to October 1994 as against 1995 shows that clearly. For example, in March 1994 we were getting £1.29 per pound as against £1.17 per pound this year, a 9 per cent drop; in April 1994 we were getting £1.40 per pound as against £1.17 per pound this year, a 16 per cent drop; in May 1994 we were getting £1.43 per pound as against £1.07 per pound this year, a 25 per cent drop; in June 1994 we were getting £1.02 per pound as against 93p per pound, an 8 per cent drop; and there was a 4 per cent drop in July and August 1995 as against 1994.

There has been an increase in prices in October and all the indications are that prices for this month will be up on last year's prices but the Minister cannot take any credit for that. It is poor compensation for the early lamb producers [986] who have sold their sheep and taken a reduced price.

A comparison of the gross margin per livestock unit for single suckling or cattle as against mid season lamb production in the years 1990-92 and 1994 reveals a disturbing trend. The gross margin per livestock unit for single suckling or cattle was £218 in 1990 and it is now £329. The figure for mid season lamb production is static at £242 in 1990 as against £245 in 1994. The subsidies per livestock unit in single suckling have increased from £65 to £173 per hectare. The subsidies per livestock unit for mid season lamb production were £130 in 1990, £104 in 1992 and £98 in 1994. There was a further reduction this year because of the method of calculation of the ewe premium. The gross margin in single suckling and cattle systems has increased by 51 per cent from 1990-94. The gross margin in sheep has remained static but the support payments in single suckling and cattle systems have increased by 116 per cent since 1990. The support payments for sheep have decreased by 25 per cent over the same period. Overall, since 1988 sheep farmers' income has declined by 27 per cent, with farmers in non advantaged areas particularly affected.

Sheep farmers and farm representative bodies have made it plain through public marching and constant lobbying at all levels that, on the basis of the method of calculation, an £8 top up premium is not only feasible but it is justifiable, fair play and what is required. The top up premium, in addition to the extension rural world premium, may provide some solace but we all know that it is only an emergency measure which only recognises an income crisis in sheep farming. It will not compensate sheep farmers who want to return to the position which obtained in the late 1980s when they could market their product and make a living. That is what everybody wants to do but sheep farmers are being discriminated against in the market place and the Minister does not seem to be in a position to do anything about it.

[987] Our main competitor in the French market is the United Kingdom, which enjoys a competitive advantage because of its location and the Channel tunnel. A currency problem has also arisen because of the weakness of sterling. The Minister has not delivered in terms of doing something for sheep farmers. Given the national reserves, we have advocated a reduction in the interest rates to help improve our competitive position vis-á-vis the sterling area. This would be of crucial significance to sheep farmers next year. If we do not deal with this issue, sheep farmers will continue to be at a 7 per cent disadvantage next year, in addition to everything else which has gone wrong in that sector.

Our sheep meat is regarded as organic but we cannot sell our product if the Minister continues to accept the present method of calculation of the ewe premium. In 1991 everyone agreed with the theory which was due to be reviewed after five years in 1996. I call on the Minister to instigate that review at European level. An all embracing committee, representative of the sheep sector — producers, processors and others — and the Department, should be set up to formulate and put our case that there is a clear discrimination and active divergence of price, which is exacerbated by British preference on the French market.

It is clear that the necessary decisions must be taken now. If the Minister and the Government are not prepared to insist that this is done now, then our argument will be defeated. We cannot expect top up premia if we are not prepared to insist on the review of the methods of calculation.

Acting Chairman: The Senator has gone at least two minutes over his time; I have allowed him a certain amount of indulgence.

Mr. R. Kiely: As a result of CAP reform, there is an attractive price for milk, a competitive beef trade and increased prices for tillage farming. The [988] Minister will have to ensure that the sheep farmers are looked after. He said on television recently that he was not too sure whether he would be successful next year in his meeting with the Council of Ministers. We will have flowery talk from the Minister here but he will have to use his flowery talk in Brussels to ensure that the sheep farmers get their due.

Mr. Byrne: It gives me great pleasure to second this motion so ably proposed by my colleague, Senator Rory Kiely. I am also disappointed that the Minister is not here, but I am pleased that a good Munster man is here who might understand more fully the problems facing the sheep farmers and the hard year they have had. We had one of the worst winters and springs in living memory. The sheep farmers sustained heavy losses and had to buy extra feed as a result of the very cold, wet weather. Producers of early Easter lamb got very poor prices, which meant that it was not a very profitable year. The price then collapsed for the main flock from early spring into the summer and autumn.

With all due respect to the Minister of State, spin doctored press releases are not good enough and are a mockery to farmers, thousands of whom were on the street the other day. Most sheep producers are reasonably small farmers with probably no milk or sugar beet quotas and are limited by the quality of their land to sheep production. The Minister did not pay enough attention to the warnings given in this and the other House by Deputies Cowen and Hugh Byrne and others to look more seriously at this problem as the months rolled by. All we got were glossy press releases in the Farmers Journal by highly paid spin doctors which were poor consolation to the average farmer. It was bad enough with the price of lamb being low but the price of wool has also collapsed — it hardly pays to shear sheep.

I plead with the Minister and the Minister of State to take a firm stand. We are raising this issue tonight in order [989] to strengthen his hand in that argument because it is in the national interest. If we lose this market which, as Senator Rory Kiely said, was fought for dearly in the late 1970s by the former Minister for Agriculture, Jim Gibbons, and former Minister and EU Commissioner, Ray MacSharry, the whole industry will collapse — farmers are getting out of sheep production because they saw that the Minister was not making their case in Brussels — and we will find it very hard to build up that market again.

There are alarming outbreaks of sheep scab in Munster, about which I am sure the Minister of State knows. The Minister should pay attention to that before it gets out of control. Some of the farming organisations must share the blame for this because they advocated the abolition of compulsory dipping. We should learn from the experience of the UK where sheep scab is spreading, otherwise the whole industry will collapse around our ears. I ask the Minister to pay particular attention to that area which was highlighted on a recent television programme.

We have discussed mad cow disease, but sheep scab is also very damaging to our image as a lamb exporting country. Anyone producing lamb for the Easter market or the main market during the year will say his money is well earned. I was involved in sheep production and whether the weather is rainy or sunny, it is hard to earn money from it and one can have bad luck with weather and outbreaks of various diseases. Those producers deserve what they earn and should receive better treatment from the Minister. It is sad that he allowed the position to drift without making a serious effort to put our case at Brussels. The average flock size here is quite small compared to other parts of the world and the income of a family farm is dependent on sheep in order to educate their families and support the household. When they cannot sell the lambs or the wool, what can they do?

Our flock size rose from 1.5 million in 1980 to 4.6 million in 1994 due to the [990] hard work of the former Ministers, Deputy Joe Walsh and Mr. Ray MacSharry. The Minister and his Minister of State should ensure that these farmers will not have their only method of making an honest living taken from them. Although the market has collapsed they should be given a ray of hope.

Flashy press releases are no good to the woman of the house if she has no money to buy shopping, or to a young child who needs a new pair of shoes after Christmas. Regardless of what Department it comes from, it is an insult to have spin doctors issuing half-baked, half true statements, mocking people whose income is collapsing. No wonder these people come to Dublin to warn the Minister that he should fight on behalf of this important part of our agricultural industry.

The Minister should make a good effort this side of Christmas. If he does not, the chickens will come home to roost. He walked into a Department in which much good work had been done by his predecessor, Deputy Walsh. He spent his first six months opening buildings and making announcements, but his plan has collapsed, just like the sheep trade. We were supposed to get “push button” offices, so that if a farmer picked up a 'phone he could speak to an expert. All this was a pipe dream. It was fine for a while, but although one can fool some of the people some of the time, one cannot fool all the people all the time. The Irish Independent farming supplement, the Farmer's Journal and The Cork Examiner all said this was the best Minister since sliced bread, but what happened?

Acting Chairman: I must slice into the Senator's contribution because his time is up.

Minister of State at the Department of Agriculture, Food and Forestry (Mr. Deenihan): He was about to put butter on it.

[991] Mr. Byrne: I make no apology for raising this issue and supporting my colleague in his appeal to the Minister. I also appeal to the good sense of the Minister of State to tell the Minister, Deputy Yates — who is a farmer himself and whom I respect — to make an honest effort in the national interest and in the interest of those families who are dependent on the earned income from sheep production.

Acting Chairman: I call on Senator D'Arcy to move the amendment. He has eight minutes. As this is a Government amendment it does not require a seconder.

Mr. D'Arcy: I understood I had 12 minutes.

Acting Chairman: My understanding is that you have eight minutes, Senator. You may have to speak quickly.

Mr. D'Arcy: I move amendment No. 1:

To delete all words after “That” and substitute the following:

“Seanad Éireann endorses the effective measures which have already been taken by the Minister for Agriculture, Food and Forestry to address the difficulties which have been experienced by sheep producers this year; and commends the intensive efforts by the Minister at the Council of Agriculture Ministers to secure further support for the sector.”

The sheep industry has had a difficult time in the past four to five years and 1995 has been especially bad; there was a crisis in the industry in the first part of the year. The industry is worth between £300 million and £350 million to our economy and sustains a large number of farmers and their families, approximately 48,000 to 50,000. Since 1991 approximately 5,700 producers have been forced out of sheep farming, on top of which there has been a reduction [992] in ewes of 350,000. There are serious statistics which cannot go unnoticed. As far as net profit is concerned, the industry depends on premia and payments of one sort or another.

We must ask ourselves what will happen in the future. We must not continue talking ourselves into depression because it does no one any good, least of all the industry. Through the years we have seen ups and downs in the market for one reason or another but what has happened over the past 12 months is slightly more serious.

The increase in New Zealand imports is a disaster, which has created a large surplus on the UK market and is having a devastating effect on prices, not alone in Ireland but across Europe. Let us not forget that this has been brought about by the GATT deal. During the discussions on that agreement I brought this to the attention of the then Minister for Agriculture, Food and Forestry, Deputy Walsh, and warned him of the consequences of such an arrangement. We should ask ourselves why we as European producers allow New Zealand to dump sheep meat on our market. Some of these imports are cheap, frozen products, so the limit of 13,500 tonnes of chilled produce should be imposed again on New Zealand. There are large numbers of farmers across Ireland who have entered the Easter trade market, the position of which now appears hopeless as a result of the GATT agreement, which favours New Zealand sheep producers.

The IFA has time and again criticised the flawed system of ewe premia. The current calculation is that there will be a premium of approximately £19.71 per ewe this year. If the calculations were based on Irish prices the premium would be £27.73 per ewe, which is £8 more. This is what the argument is about and I cannot understand why this point cannot be conceded in the EU. The Minister is doing everything in his power to persuade the Union to provide a top-up premium of £8 per ewe. I have the greatest confidence that he will succeed.

[993] It is important that the realities of the situation are brought to the attention of the House. A number of difficulties combined to depress the lamb market in Ireland in the early part of the year. Turbulence in the currency market at that time created difficulties for sheep and lamb exported from Ireland by upsetting the traditional trading patterns to France, our main export destination. The weak performance of sterling gave UK exporters a significant price advantage over Irish exporters in a volatile market. In addition, traditional French exports of light lamb to southern Europe were discontinued because of the strong French franc and this product was diverted instead to the domestic French market. The UK will export approximately 100,000 tonnes of sheepmeat to France next year.

Another factor was the restriction of exports of live sheep to the Continent from both Ireland and the UK. Irish live sheep exports were 16 per cent below corresponding 1994 levels in the first half of 1995. The sizable UK live market trade was almost completely stopped and product was exported in carcass form instead.

A third factor was the significant decline in lamb consumption which took place in the UK over the past three years — of the order of 20 per cent — in response to higher retail prices following the termination of the variable premium support system in the market. This demand shift resulted in the release of greater quantities of British lamb for export to France. Had that decline in consumption not occurred the marketplace would be much healthier. There is also the reality of strong competition from white meat. The presence of an exceptionally large quantity of 1994 season hoggets on the Irish market in March and April at a time when prime new season spring lamb became available seriously depressed the going price for the new season products.

The Minister has taken a series of measures to deal with this situation. Having consulted with the various interest groups involved he submitted a [994] memorandum to EU Commissioner Fischler in March 1995 outlining the serious market situation in Ireland and seeking additional support by way of the ewe premium for the very low market prices which they obtained in Ireland. His proposals were that where market prices fell significantly short of average EU prices, an additional top up compensation should be provided and he also sought extension of the rural world premium to all sheep producers. These are specific solutions to the present problem.

The Commission has responded in the form of a direct market intervention which was confined to Ireland. A scheme of aid for private storage which provided subsidies to lamb processors to buy up and store the equivalent of 11,000 tonnes of 1994 season hoggets played an important part in controlling the downward trend in prices and allowed the market to recover and provide more realistic prices for the 1995 season lamb. The APS measure cost £300,000. It eliminated the hogget problem and restored market confidence at a time when panic selling of lamb seemed to be threatening. That measure was widely recognised by the industry at the time.

At the June Council of Ministers the Minister again put the issue before his fellow Ministers and the Commission. Subsequently he secured a commitment from the Council to provide market management measures for a second time and to review the operation and level of the ewe premium. This was a very important commitment and is the foundation of his current efforts at the Agriculture Council.

In July a second scheme of aids for private storage took 756 tonnes — the equivalent of 41,000 lambs — off the market both here and in Northern Ireland and provided quite generous levels of subsidy which cost the European Union approximately £800,000. This second market measure was especially timely and effective in that it not only removed a sizeable quantity of lamb from the market but it created [995] conditions which by the end of the summer allowed prices to pick up and rise to levels above those which existed in 1994. The value of this measure was fully recognised by the industry. Current lamb prices are about 4.5 per cent above last year's level and this satisfactory price level has been in place for the last six weeks. Indeed, the gap between 1995 and 1994 overall is of the order of 5 per cent. I am prepared to still argue that it is not enough, but at least we are on an upward trend at the moment and we hope this trend continues.

At the end of July the Minister agreed to the earliest ever payment of advances of the 1995 ewe premium which together with the rural world premium provides £80 million direct to producers to support their income in the difficult market situation. He estimates that the final amount of the 1995 premium will be £120 million, a figure which in comparison to that paid last year will put an additional £20 million into the pockets of sheep producers. The ewe premium overall should be almost £3 per head higher this year than last and will help cushion the loss suffered through the market weaknesses early in the year. It is important to emphasise again that the main difficulty was in the late spring/early summer period and that the main adverse consequences fell on those who produce lamb for that period. Any solutions must address the real problem.

The Minister has ensured that retention periods for the 1996 ewe premium, while complying with the requirements of EU legislation, strike a proper balance in regard to orderly disposal of lambs. There has been a synchronisation of retention dates with Northern Ireland and there will be a single retention period in Great Britain. All those changes will help avoid tension in the market.

Arguments are being made for a top up of the ewe premium of £8 and for a rural world premium of £5.37 for producers in the non-disadvantaged areas. A declaration made by the Agriculture [996] Council on 21 June 1995, is as follows, and I am confident the Commission will abide by this:

The Commission undertakes to take market management measures to alleviate the current difficulties in the sheepmeat market, in particular in Ireland. In the light of the result of these measures it will consider if further action is necessary in particular as regards the possibility of an upward adjustment in the level of ewe premium and an acceleration of its payment.

I am satisfied that the Minister will take full advantage of that declaration. The last point I wish to make is in regard to marketing. We have always had arguments about marketing. Unfortunately our sheep producers are confined to some degree to the French market. I appeal to An Bord Bia to take full advantage of the current situation in the German market to spread our market base. When producers are confined to one market and many factors combine to act against the industry in one year, that industry experiences problems. The adjustment in finances here are great. The exchange rate is now IR£1.034 to Stg£1.00. That is far too high and is creating a problem not alone for the sheep producers, but for beef farmers, mushroom growers and everybody else. I appeal to the Minister to ensure that any market prospects, irrespective of where those markets are, should be followed up to try to widen our base and lessen our dependency on one market. I commend the amendment to the House.

Mr. Townsend: The decline in income in the sheep sector did not arise when the present Minister came to office; it has been building up over a number of years. Sheep production, excluding headage payments and premia, accounted for 5 per cent of total agricultural output in 1994. When headage and premia are included, the sheep sector contribution increases to 8 per cent of agricultural output. Sheep numbers peaked in 1993 to 8.7 million and [997] declined to 8.46 million in 1994. A further slight decline is expected in 1995. When people get out of an enterprise it is a sign that they are not making money. Another important figure — the latest figure available — is that in 1993 74 per cent of the ewe flock and 78 per cent of producers were within the disadvantaged areas. I will come back to this important point later.

The returns from early fat lamb producers has been in decline for about five years. The gross margin fell from approximately £65 per ewe to approximately £40 per ewe in nominal terms, which would be much greater if inflation was taken into account. The fall in returns for mid-season lamb producers has not been as great; it has fallen from £53 per ewe to an estimated £49 this year. Again, if inflation is taken into account the fall would be greater. In the early 1990s early fat lamb was yielding a gross margin of £10 per ewe higher than mid-season lamb production, but by 1995 this had altered to the position where mid-season lamb production is yielding about £9 per ewe greater than early lamb production.

There is no doubt there is a serious decline in the income of early fat lamb producers. While the decline for the mid-season producers is smaller it is still quite serious. We all know the reasons for the poor prices for early lamb. We are told the French market is being supplied with chilled New Zealand lamb. There is also a carry over of a supply of hoggets from 1994 and resistance of French wholesalers and consumers to high lamb prices. All these factors are outside the control of Irish farmers but the Government and the EU may have some control over them.

Preparing for this debate tonight, which I welcome, I got some figures from Teagasc. According to those figures, efficiency plays a large part in farmers' gross income from sheep production. Teagasc carried out tests on sheep grazing on good quality land. The bottom 25 per cent made a gross margin of £286 per hectare, the middle 50 per cent made a gross margin of £528 per [998] hectare, while the top 25 per cent made a gross margin of £843 per hectare.

The top sheep farmers are achieving almost three times more profit per hectare than the bottom group and 60 per cent more than the middle one. The factors which directly affect profitability are stocking rate and lambs weaned. The top group, with a stocking rate of 14.4 ewes per hectare and a weaning percentage of 136, sold 19.6 lambs per hectare as compared to the bottom group, with a stocking rate of only 7.1 ewes per hectare and a weaning percentage of 112, resulting in only eight lambs sold per hectare. These figures relate to sheep produced on similar type of soils and removes the variation caused by land quality. This means that one of the main reasons for the variation in performance between the top, middle and bottom groups is in the management of the flocks.

The data shows there is more scope for improved management of Irish sheep flocks. Headage and subsidies, which are paid on a per ewe basis and are therefore unrelated to efficiency, form almost 50 per cent of gross profit per ewe and have done little to improve the efficiency of Irish sheep production. However, sheep farmers should not rely on these subsidies in the long term. Technical efficiency will become crucial if we are to remain competitive. If Irish lamb is to compete on export markets, then it must be produced efficiently.

The IFA prepared a document, with which I mostly agree, and it is to be complimented for trying to do something about the situation. I have no doubt that the Minister will do his utmost to relieve the problem. The IFA has six policy demands. It demands a ewe premium top up of £8 per ewe and the rural world premium of £5.27 per ewe for producers in non-disadvantaged areas. I have a problem with its second demand. Some 75 per cent of our sheep producers live in disadvantaged areas. If the demand for sheep collapses or they are not making an income, these farmers, unlike those living in low lands, will not be able to turn their land to any [999] other enterprise. Sheep farmers living in disadvantaged areas should get that premium.

The IFA also demands a single country method of ewe premium calculation or alternatively, a permanent ewe premium top up mechanism, which speaks for itself; the removal of the 7 per cent stabiliser worth £4.56 per ewe in additional premium payments — it would be worthwhile if that could be achieved — and the extending of the extensification premium worth £4.39 per ewe to sheep and paid to flock owners who conform to the necessary stocking rate requirements. That makes good sense and should be done. Great play has been made about REPS and the extensification premium. The Minister should press for the reintroduction of the 13,500 tonne limit on the volume of fresh or chilled imports from New Zealand. That is one of the main reasons the price of early lambs has decreased.

While it is good to get publicity for this serious problem, this motion is dishonest. The Minister is doing everything possible to change the situation but it has been building up over the past five years. If the present Minister and Government are to be condemned, those——

Mr. R. Kiely: Steps were taken over five years ago.

Mr. Townsend: ——who were there before them should have taken remedial action and introduced some of the points demanded by the IFA. If that had been done gradually over the past five years, possibly only a couple of them would be needed now. While I fully endorse and support the six demands of the IFA, I cannot support this motion.

Mr. R. Kiely: That is a contradiction.

Acting Chairman (Mr. Cregan): Everything is a contradiction.

Minister of State at the Department of Agriculture, Food and Forestry (Mr. Deenihan): I am pleased to get this [1000] opportunity to discuss in the Seanad this evening the situation in the sheepmeat industry because it enables me to put the problems of the sheepmeat sector in their proper context and to outline the efforts which both I and my Department have made over the past eight months to secure additional support for the industry.

I thank and compliment Senators Townsend and D'Arcy for their practical approach to this matter and their support for the Minister's efforts. I also thank Senator Kiely and his seconder, Senator Byrne, for their contributions and for raising this matter. However, I would have liked to have seen more proposals than criticisms. Although Senator Byrne is a good friend of mine, he was unfair to the Minister as regards his PR machine. The only reason the Minister is getting a high amount of publicity is because he is an active Minister and is seen to be doing a good job. He has only been in that office for a year but has made a major impact in that period of time. This criticism has been thrown at him in the Dáil as well — it is not exclusive to this House. It seems to be part of Fianna Fáil tactics to reduce his impact, but it is widely recognised that he is a good performer not only in this country but also in the European Union, where it counts.

It is important that I define clearly and accurately for the Seanad what the problem is, what has been its extent and what are the underlying causes. This is the only way in which workable and realistic solutions can be found and in which we can do justice to our case and win the support of the Council of Ministers and the European Commission for the additional support which we have been seeking since the early part of this year.

I accept that 1995 has been a disappointing year for a certain segment of sheep producers. The essence of the problem is that prices during the prime early season production period failed to reach expected levels. Producers who concentrate their supply of lambs to prime market saw considerable [1001] reductions in their returns this year. There are a number of factors underlying this poor market performance. Among the most important causes were external factors, such as currency fluctuations, which gave sterling an advantage and which also created problems in trade between France and some southern member states, with knock on effects for our trade with France.

In addition, the continued decline in consumer demand for lamb in the UK for the past number of years, following the termination of the variable premium arrangements, has led to a reduction in Irish exports to the UK and an increase in British lamb exports to France, our main export market. There was also one important internal factor — the negative influence of over fat hoggets during the early part of the year, which was largely a speculative trade.

The lamb sector produces a high price quality product and there is intense competition for the lucrative markets of the EU. It is necessary, therefore, to review the production and marketing strategy, which may have been satisfactory in the past, with a view to seeing that we are properly positioned to meet future competition.

A very large proportion, 80 per cent, of Irish lamb is exported, and 75 per cent of this goes to the French market. As a result, French market prices will have a very strong influence on Irish market prices. The industry is, therefore, very exposed to external market forces. However, the problem can be alleviated by diversifying, by opening up markets and by exploiting all possible market opportunities. This has happened to a certain degree in the last few years with our expansion into the Mediterranean markets, and this year sees a 33 per cent increase in Irish exports to Germany. Senator D'Arcy mentioned that we should concentrate on the German market, and I am sure he is glad to see that we have increased our exports to the German market. There are considerable opportunities in Germany from what I saw when I visited the [1002] country to promote the sale of Irish lamb.

Market development is a slow process. The French market will continue to be vitally important to us. It is where good prices are to be had, and France has one of the highest per capita consumption levels of sheepmeat. We need to ensure that our approach to this market is exactly right.

The EU sheepmeat market is well supplied and is very price competitive. Sheepmeat is an expensive product and it must not be forgotten that it competes with other cheaper meats. The UK, our main competitor on the export market, had a distinct advantage this year because of the currency situation with a weak sterling. Over the past five years the UK has increased exports by 68,000 tonnes. Consumption of sheep has dropped in the UK, but this decline has not been bridged by the growing levels of consumption in Germany and Spain. Predictions for 1996 are that consumption will continue to drop in the UK, but will remain stable in the rest of the EU.

The only way to be successful in this demanding and competitive market is to ensure that we have the right product, especially the kind of product that will justify a higher price. We must be conscious of where the competition is coming from, of emerging trends and of advances being made by our competitors.

Mention was made of the New Zealanders, whom we all know are penetrating the British market at present at an alarming rate. New Zealand lamb wound up in this country last summer. The competition is there and we must face up to this reality.

It is totally incorrect to say that the Minister or the Government have been indifferent to the problems of the sheep farmers and the sheep industry. The Opposition does not reflect reality, because the truth is that the problems of the sheep sector have been tackled head on. Action has been taken to redress these problems. The accusations of indifference or lack of action is a complete misstatement of the facts and [1003] ignores the various measures adopted in the course of the year to improve the market and to seek additional support for the sector.

As early as last March a memorandum was sent by the Minister to EU Commissioner Fischler detailing the problems facing the sector and explaining why the ewe premium scheme as currently operated was incapable of adequately compensating Irish producers for low market prices. This memorandum also outlined possible solutions to the problem, especially by way of a top up premium or the extension of the rural world premium to producers in members states, where prices are 10 per cent or more below average EU prices. The Minister has availed of every opportunity over the past year to highlight the absence of price convergence under the current system and the need to redress the imbalance arising from this.

It is clear that the Minister's response to the difficult market situation has been quick and effective. No effort has been spared in convincing the European Commission of the difficulties facing Irish sheep producers and of the need to introduce additional measures to support the market when this was necessary. For example, following the representations made in March, the Commission introduced an aid for private storage scheme for Ireland at the end of April in order to take the overhang of hoggets off the market. This scheme played an important part in controlling the downward trend in prices at the time and allowed the market recover and provide more realistic prices for 1995 season lamb. The APS measure cost £300,000, eliminated the hogget problem and restored market confidence at the moment when panic selling of lamb appeared to be threatened. The value of this measure was widely recognised by the industry at the time.

The problems of the sheep sector were again raised at the EU Council of Ministers in June when a commitment [1004] was secured from the Council to provide further market management measures and to review the operation and level of the ewe premium. In response to this commitment, a second scheme of aids for private storage was introduced in July and removed 756 tonnes, the equivalent of 41,000 lambs, from the market, both here and in Northern Ireland, and provided quite generous levels of subsidy, which cost the Union approximately £800,000. This second market measure was especially timely and effective in that it not only removed a sizeable quantity of lamb from the market but created conditions which by the end of the summer allowed prices to pick up and rise to above 1994 levels.

It is a matter of record that the value of these APS measures have been fully recognised and acknowledged by the industry. The market situation would have been considerably more difficult in the absence of these measures. Contrary to what some of the Members on the Opposition benches would have us believe, the APS measures did support prices. Producers' incomes were also helped by the earliest payment ever of the first two advances of the ewe premium, which again was a direct result of the Minister's efforts in the Council.

The Minister has diligently kept the problems of Irish sheep producers firmly on the negotiating table. The issue has been raised at virtually every meeting of the Council since last March and I can say with confidence that every Minister for Agriculture in the EU, in addition to the European Commission, are fully conversant with the difficulties in the Irish sheep market. The Minister is committed to pursue this matter until his efforts have delivered tangible results.

In view of the budgetary situation in Brussels, we were always aware that there was no scope for special concessions until the 1996 budgetary year, which began in November, and that any additional aid was unlikely to be agreed until December. These are the crucial weeks, therefore, and efforts will be redoubled, because it is recognised that [1005] the sheepmeat sector is a vital part of the agriculture industry. One must recognise that negotiation at EU level involves persuading the Commission to come forward with a proposal and subsequently ensuring that the proposal receives sufficient support in the Council of Ministers. This is why so much effort has been devoted to convincing the Commission and individual Ministers of the merits of our case.

As well as looking to the Commission to provide assistance for the sector, there are a number of areas in which we can and must act immediately. Not all of the problems of the sheepmeat industry are caused by external factors alone. There are weaknesses in the industry, which we need to remedy. A greater effort needs to be made to achieve quality on a more consistent basis. For this reason, the Minister has requested An Bord Bia to carry out an in depth analysis of the different aspects of the Irish sheep industry, with particular attention to the export market.

This report is near completion and should be the basis for formulating a strategy for the period ahead. I urge the farming organisations and other interests in the sheep industry to cooperate fully with An Bord Bia in this respect. It will come forward with a good proposal and, with the support of all concerned, it could turn the sheep industry around in the coming year. It is important that it is supported. Negotiations will take place shortly with the farming organisations in this respect and I urge them to support the initiatives. A number of things are already clear. The aspect in which Irish produce is most vulnerable is in regard to quality and consistency of product. The French market on which we are so dependent will penalise for poor quality product. If we do not produce exactly what the market demands there are many competitors who are fully prepared to step in and take over our market share.

With a predominantly export trade and a difficult market, quality becomes all important. Quality, convenience and [1006] value for money is what the consumer wants. For too long too much of our throughput has consisted of over-fat lamb. Producers get better prices for the larger lamb and, as a result, they keep lambs to over-fat condition. This is detrimental to the overall industry. Optimum quality must be the primary objective of all those involved in the industry. Dry hoggets are not in the interest of the Irish sheep industry, especially when they come on the market close to Easter and depress the price of spring lamb.

A working classification system which rewards the producer for quality is crucial to the improvement of the standard of Irish lamb production. The critical issue is that it is workable and effective. Indeed, a voluntary scheme stands a better chance of being effective. We are making substantial progress on this issue. The intention is that carcass classification will be standard practice in the industry by 1 January next.

The logic of the carcass classification system is that processors pay for lambs on the basis of quality, otherwise producers will not have an adequate incentive to produce the right quality lambs. The reverse will also apply and, of course, poor quality lamb will have to be penalised. I am well aware of the ability of Irish farmers to recognise that it pays to produce quality produce and so it is clear that this change can deliver very effective results.

In 1996 there will be factors which should work to our advantage. The 100 day retention period for the ewe premium will end two weeks earlier than in 1995. This influences markets at the critical Easter period. This is two weeks before the peak early lamb trade, which gives an opportunity for the marketing of a limited quantity of sheepmeat before the spring lamb hits the market. Also, the introduction of a single retention period by the UK will be of considerable assistance in this regard.

I am pleased that prices have firmed considerably in the last few months. Indeed, since mid-September prices have been on average 5 per cent higher than in the corresponding period in [1007] 1994, which means that some producers have done reasonably well this year. The improvement in prices has also made it somewhat more difficult to negotiate a special deal for our producers because Ministers of our partner member states in the Council of Ministers will be faced with the difficulty of explaining to their own producers why special measures should be introduced for Ireland. The justice of this case is very clear to all and the Minister is determined to press ahead with the demand for a supplementary premium. I do not expect any developments, however, until later in the month when the Council meets on 19/20 December.

The motion before us does not fairly or accurately reflect the efforts or the progress which both the Minister and the Department have made in the course of the past year in response to the difficulties being experienced by the sheepmeat sector. The approach has been proactive and energetic and the efforts made have been successful in so far as having measures introduced which have restored stability and confidence to the market at critical times. I recommend the alternative motion as a true and accurate reflection of the situation.

I am always glad to come to the Seanad, where I started my political career. The debates here have always been stimulating and to the point.

Mr. Dardis: We hope the Minister does not end his career here.

Mr. Deenihan: If I do, it is better than ending up on a county council.

Mr. O'Brien: I welcome the Minister to the House to discuss this important issue for sheep farmers. We make no apologies for raising this issue. It is disappointing that Government Members have indicated that we should not have tabled this motion. Where have they been for the last six months? This matter is of major concern to all sheep [1008] farmers and the Government knows that.

We want to strengthen the Minister's hand when he goes to Brussels and to encourage a change in attitude. Fianna Fáil will support any attempt to improve the lot of sheep farmers. In 1995, 40 per cent of early lamb was sold at a loss. If the Minister is in any doubt about that he can talk to the sheep farmers. They held a demonstration here two weeks ago and we all met them. I am sure the Minister also met them and heard their plea.

Mr. Deenihan: It was not their first demonstration in the last few years.

Mr. O'Brien: It probably was not. The motion tabled by Fianna Fáil is in the interests of the sheep farmers and I am disappointed to hear it being criticised. These Houses are the venues in which we can air people's views. Tonight we are trying to air the views of sheep farmers and to assist them in getting a better price for their produce.

Sheep farmers suffered a great deal in the period from April until the last few weeks. The Minister said that prices have increased in the last two or three months but they have only increased in the last two or three weeks to any significant level. It is good to learn that this week there is a substantial increase in the price of lamb. However, the Minister should take on board what has happened to sheep farmers in the last eight months and see what can be done to replace their losses.

Mr. Cotter: I welcome my colleague and friend, Deputy Deenihan, to the House. It is good to see him about the place again. I support the Minister and the farming community which is facing great difficulties at present.

I agree with the Minister that criticism without constructive ideas is not much good. Members can read the Minister's speech, see what is constructive in it and if they do not agree with it they should at least put forward something constructive in its place so we will [1009] have some idea of what direction to take. My constituency is composed of small farmers. This type of issue is very sensitive in places such as Cavan/ Monaghan where the size of farms is smaller than it is in other parts of Ireland.

We are all aware that it is easy to tip a small farmer out of business. Much of the time the small farmer is dependent on borrowed money in order to stock the farm. If at the end of the year he is unable to pay back the money, the bank manager will not be interested in renewing the loan the following year. I have encountered many cases where farmers have been pushed out of business because they cannot get credit. I have come across cases where people could not even get enough money to buy fertiliser for the land because the bank manager could not get a guarantee that the money would be repaid. The Minister and the Minister of State are conscious of this and it runs through their thinking. All the constructive action they take is aimed at protecting, in so far as they can, the whole farming community, including the small farmers I represent.

Market forces are at work. The French market presented problems for us this year for various reasons. These problems were exacerbated by the strength of the Irish pound vis-à-vis sterling. Sterling is weak and there is not much the Irish Government can do to bring its value up to parity with, or below, the Irish pound. Those of us who come from areas where a substantial number of people is employed in processing meat and other products for the English market know the difficulties people are facing. However, the Government cannot intervene in British affairs and cannot do anything about the value of sterling.

Economists tell us we have a booming economy and that there is no danger of inflation rising. This is a difficulty in one sense because we are building up a foreign surplus which is leading to a strengthening of the pound. This difficulty [1010] arises from an economy in full flight and it is impossible to interfere with this.

I support the work the Minister and the Minister of State have done. Twice so far this year, at appropriate times, they intervened in the market by taking a large amount from it to ensure prices would be maintained. If they had not done so, prices would probably have fallen to way below the levels they reached. They are holding discussions with the European Union. Because the Union is a managed sector, they must force it into action, but this is difficult to achieve. We know from the problems of Irish Steel that we cannot go to Europe and come back with a bucket of goods the following day. Our competitors are not anxious to see interventions here to support people. In many cases they would prefer to see people go out of business so that they themselves would have an increased market share.

I am happy that the Ministers are doing everything in their power. I know Deputy Deenihan for years and when he gets his teeth into something he does not take them out quickly. Anybody who played corner forward on a county football team against Kerry knew they had played a game when they had finished.

Mr. Deenihan: I met very few lambs from Monaghan.

Mr. Cotter: That would be true. The Minister of State's record as a private citizen and as a public representative point to the fact that he will do whatever needs to be done.

For the sake of the people I represent, I hope next year will be better. All the efforts made to convince our partners in Europe of how serious the problem is have paid dividends. I hope that by the end of the year announcements will be made which will ensure that people will stay in business, continue to thrive and will be able to respond to the Minister's suggestion that we must improve the quality of our products.

[1011] A great deal of emphasis is put on the fact that the quality of Irish lamb sold on the French market is not as good as it should be. I hope we will be in a position next year to improve the quality of our products and obtain higher prices for them so that everybody will be a little richer. Many small towns in rural Ireland depend on small farmers who are trying to make a living from sheep. This issue is important to us and no one should doubt our sincerity. We are keenly interested in trying to solve these problems. I am confident the Minister is doing exactly what is required and I ask everybody to support him.

Mr. Dardis: I welcome the Minister to the House for this important debate. I hope I will be constructive; it is my intention to be so. We have blamed our problems on our currency, French consumers, lack of quality, events in Britain and New Zealanders. It is time we attached some blame here at home. Quality is not much different to what it was last year. I do not agree that nothing can be done about the currency. I will come later to what I believe should be done about these matters.

The Progressive Democrats support this motion. With regard to early lamb at Knockbeg, figures from Teagasc show that there was an income of £58.80 in 1994 and £48.80 in 1995, a reduction of 17 per cent. The net margin on a mid season lambing flock was £35.33 in 1988 and £22.56 in 1994, a reduction of 36 per cent. It is a wonder that in these circumstances only 10,000 people protested outside Leinster House and that they behaved themselves. What would trade unions do if they were faced with a decrease of 36 per cent?

Mr. Farrelly: The Senator's party was in power during some of that period.

Mr. Cotter: Will the Senator apologise for his existence?

Mr. Dardis: No, I would never do so. We should live in the real world and [1012] deal with issues as they are today and not as they were five or six years ago. I do not underestimate the difficulty which confronts the Minister but something must be done and I intend to suggest what can be done. The net margin on early lamb at Lyons' Estate was £33.27 in 1994 and £22.22 in 1995, a reduction of £11. It is not a surprise that 10,000 farmers protested.

In his Dáil statement the Minister spoke about the reduction in average lamb prices as did the Minister of State here today. The Minister gave figures of 4 per cent and 6 per cent. The Minister of State said there has been a 5 per cent increase since September. This strikes me as being spin doctor speak. They are trying to find figures which are good.

Mr. Farrelly: It is a fact.

Mr. Dardis: Senator Farrelly should tell people who are trying to make money from sheep in the west, the midlands or in the Minister's own constituency that this is a fact. If it were a fact, 10,000 farmers would not have protested.

Mr. Farrelly: That is not true.

Mr. Dardis: I accept the Minister has stated facts but these are selective. He said the full ewe premium would be £2 to £3 a head more than it was in 1994. On 7 November he said he was well aware of the income situation and that no effort has been spared by him or his Department to assist sheep producers and that they were not indifferent to the situation. The Minister of State said the same this evening. I do not think anybody displays indifference, but what was done? We have had two tangible results from all this activity, each of them in the area of aids to private storage.

The farm management survey figures from Teagasc show that in 1994 family farm income amounted to £233 from dairying, £130 from tillage, £87 from cattle and £80 from sheep. We know the direction in which the last figure has gone since 1994. In that year 92 per cent [1013] of the income of sheep farmers came from direct payments. The Wexford lamb producer group produced figures which show that the net profit per ewe this year is £11.40. The subsidy amounts to £21; thus we have gone past the 100 per cent level. This underlines the vulnerability of this sector to decisions made in Brussels.

A standard refuge is to commission a report. An Bord Bia was instructed to carry out an in-depth analysis of the different aspects of the sheep industry. One of the conclusions of a report prepared for An Bord Bia is that lamb prices in individual member states show no signs of convergence; the opposite appears to be happening. Sheep farmers were assured under CAP reform that prices would converge, in other words, there would be an average price across the board. The claim for the £8 top up ewe premium is justified on the basis of what has happened. It shows that something needs to be done about the method of calculation.

In June the declaration from the EU Agriculture Council stated that the Commission undertook to take market management measures to alleviate the current difficulties in the sheep meat market, particularly in Ireland. In the light of the result of these measures it was to consider if further action was necessary, particularly the possibility of an upward adjustment in the level of ewe premium and acceleration of its payment. This is now December. Who has acted on this undertaking? I do not see any evidence of action. The battle will be at the Council of Ministers meeting in Brussels on 12 December and we want the Minister to come home, as Deputy Reynolds did on one famous occasion, with money in the bag.

Mr. Farrelly: We are still looking for some of that.

Mr. Finneran: The Deputy is spending it now.

Acting Chairman: The Senator is in possession.

[1014] Mr. Dardis: The tactic on the Government side on these occasions is to waste time talking so we do not get eight minutes to make our points. I depend on the Chair to afford me protection.

The matter is on the table; they were meeting at Council asides. I remember the Minister saying on one occasion that he had a bilateral meeting with Commissioner Fischler after a Council meeting. What good is that? We get the money at the meeting not outside the door. That is what we want on 12 December.

Mr. Farrelly: That will happen.

Mr. Dardis: I hope it will and I will be the first to congratulate the Minister.

Mr. Farrelly: Was that what happened to the last Taoiseach, Deputy Reynolds? Was he outside the door when he got the money?

Acting Chairman: I ask for order in the House.

Mr. Dardis: We know what is required of Brussels and the IFA has clearly spelt it out — a top up premium of £8 per ewe; a rural world premium of £5.27 per ewe for producers in non-disadvantaged areas; consideration of the method of calculation; removal of the 7 per cent stabiliser; an extensification premium worth £4.39 and reintroduction of the limit on New Zealand imports. However, there are things which can be done at home. For example, quality is constantly mentioned. There are responsibilities on the industry to produce, but there are also responsibilities on us to sell a quality product. That responsibility falls primarily on An Bord Bia. What resources are we putting into An Bord Bia to ensure that high quality Irish lamb, which is superior, will be sold effectively and competitively on international markets? That is something we can do at home. Researching quality must also be considered; it is as if the farmer has responsibility in a vacuum to produce [1015] this quality. He must be assisted in doing so.

Two sheep vets who were in Teagasc are no longer there. If we do not have basic research, how can we compete effectively in an international environment? I would like someone to explain that to me. We are looking for two vets. Teagasc wants to introduce an AI programme but that cannot be funded either. These are things we can do at home. The margin at the top of the scale is approximately two and a half times that at the bottom. There is a job for researchers, for Teagasc and for advisers. They did it in the past and they should be allowed to do it again.

Acting Chairman: The Senator's time is up.

Mr. Dardis: I ask the Chair for injury time on the basis of what happened earlier.

Acting Chairman: I am doing that already.

Mr. Dardis: As regards sterling, one could assume that the Government had nothing to do with this matter. It is a serious problem for exporters, but there is a solution — reduce the interest rates. That will affect the exchange rate and make us competitive.

Mr. Deenihan: We are reducing it.

Mr. Dardis: If the Government was doing its job properly, the rate would not be 103.6p to the £. There is a fundamental difference of opinion on this matter. Someone should talk to the Minister for Finance about it because it is his responsibility. What about the dispute in the local offices of the Department? Why not resolve that? That would help the situation, and then do something about imports. I hope the Government does not trade off Irish Steel for the livelihood of Irish sheep farmers; I am not suggesting it will.

Mr. Farrelly: Any more red herrings?

[1016] Mr. Dardis: I am prepared to throw in red herrings all evening if that is what the Senator wants. I hope I do not see the Minister for Agriculture, Food and Forestry, like Captain Bligh at the bridge of the Bounty, with sails set in the floods of Gort using it as a photo opportunity when he should be in Brussels doing a job for Irish farmers.

Mr. Farrelly: I suppose Senator Dardis and the Progressive Democrats were always right when they were in office. When the Progressive Democrats were in Government the GATT negotiations took place and the figure for New Zealand lamb imports was agreed. Why did the Government not ensure that it was not boneless lamb which was allowed into this country as this would have reduced the total amount of lamb coming in from New Zealand? Senator Dardis mentioned the money which the former Taoiseach, Deputy Reynolds, was promised but when we went looking for it it was not there. He has a short memory. I am disappointed at the views he expressed here tonight about the Minister for Agriculture, Food and Forestry. This problem did not start on 14 December 1994.

Mr. R. Kiely: It was exacerbated then and nothing was done about it.

Mr. Farrelly: There has been a serious problem in this sector which the previous Government ignored.

Mr. R. Kiely: Measures were taken by that Government.

Acting Chairman: I ask for order.

Mr. Farrelly: Deputy Joe Walsh did likewise in every other area over the previous three and a half years. Before he became Minister, it was said he was the man to save the Irish farming community. He never left the former Minister, Senator O'Kennedy, alone.

Mr. R. Kiely: He got a top up for the ewe premiums.

[1017] Mr. Farrelly: He had a team trying to continuously undermine him but when he became Minister he did not solve any problems in the Irish farming community.

Mr. R. Kiely: He did better than the present Minister.

Mr. Farrelly: I welcome the opportunity to speak on this important issue. A number of speakers may not recognise the seriousness of the problem unless they are involved in the industry. The income of sheep farmers has decreased substantially since 1984, as the previous speaker said. It is interesting to note that during a temporary arrangement nothing happened to improve the situation which kept sliding.

Mr. Dardis: The numbers went up. I ask the Senator to get his facts right.

Mr. Farrelly: The truth always hurts those who are righter than right.

I ask the Minister for Agriculture, Food and Forestry if something can be done about the subsidy on hoggets. Some time ago it was agreed to pay a subsidy on hoggets and this caused serious problems to lamb producers' incomes this year, especially early and spring lamb producers. This agreement was a retrograde step for those involved in lamb production. When negotiations on this issue take place later this month, because we are on our own, we should see if there can be some change in 1996 and beyond.

The reality this spring was that hoggets held over for the retention period flooded the market for early and spring lamb producers. We should do something to alleviate the problem and restore a reasonable income to those involved in early lamb production. Substantial numbers of producers have pulled out of early lamb production due to last year's position.

I witnessed the discussions that have taken place on different levels among various groups and organisations, not [1018] only in County Meath but throughout the country. There have been representations and lobbying to get the ewe premium for 1995. Everyone supports that proposal, of course, but when you are fighting on a single issue, unless you can convince your colleagues that something will be done, it takes guts and negotiating skill. The Minister has the skill and has proven it over the past 12 months. I have no doubt that he will succeed with the help of some others that I hope he can convince to support him and support the measures necessary to help the industry.

Not so very long ago French sheep farmers had serious problems with their own incomes and they took drastic action up and down the country. I happened to be at the receiving end of that action one day and I would not support it in any shape or form anywhere in Europe. The French should be reminded that they got special concessions that year.

The subsidy on hoggets is one way of ensuring that early lamb producers will be protected by not allowing a glut of hoggets on the market after a retention period. I do not mind whether the retention period is changed or not, but they should not be left until February, March and April to destroy the market.

We must be realistic. The bottom line is that those processing lambs will always use the opportunity of a glut to reduce prices. It is all determined by what price they can get on the French market. If we really want to tackle the problem, that is where it should be done. I have already made these points known to the Minister, Deputy Yates, and I hope that some action will be taken on 12 and 13 December.

I have confidence in the Minister's ability to negotiate some improvement in this year's subsidy. The use of subsidies is not the way I would like to see income protection developing over the next five or six years, although it has been allowed to happen that way over a period of time. I wish the Minister well in his endeavours to deal with this problem as he has successfully dealt with [1019] many other problems that had been left behind when he took over the job on 14 December last year.

Mr. Finneran: The Private Members' motion from the Fianna Fáil Party specifically states:

That Seanad Éireann, acknowledging the crisis in the Irish sheep sector and mindful of the many thousands of jobs on farms and in factories dependent on the industry, condemns the Government and the Minister for Agriculture, Food and Forestry for the sustained indifference they have demonstrated on the needs of the industry; and hereby calls for urgent steps to be taken to address both the immediate crisis and the long-term structural problems of the Irish sheep sector.

That motion was not tabled by my party without due consideration. It comes as a direct response to the massive representation from sheep farmers who had to stop work on their farms and come to Dublin on a number of occasions recently. Up to 10,000 of them were here to demonstrate only a week ago.

Coming from County Roscommon, I know the sheep industry extremely well and I am aware of the difficulties facing it. No sheep farmers could go along with the amendment the Government has tabled to counteract the Fianna Fáil motion that tries to highlight the difficulties they are experiencing.

The Government amendment states that:

Seanad Éireann endorses the effective measures which have already been taken by the Minister for Agriculture, Food and Forestry to address the difficulties which have been experienced by sheep producers this year; and commends [I suppose it should be condemns] the intensive efforts by the Minister at the Council of Agriculture Ministers to secure further support for the sector.

[1020] The barometer by which we should measure how the Minister and the sheep industry are performing is the number of farmers who are staying in agriculture, as well as the number of ewes in the country now compared to three or four years ago. The facts show there are 5,000 fewer sheep farmers than there were three years ago. In addition, there are 130,000 fewer ewes than three years ago. That is the barometer we have to go by when we address the problems of the sheep industry in this House.

I am sorry that the Minister for Agriculture, Food and Forestry is not here, although I appreciate the presence of the Minister of State, Deputy Deenihan, who is an excellent Minister. I compliment him, but he will not be at the Council of Ministers meeting next week in Brussels. This motion is so important that the Minister should have come to hear the views of the House and to address the matter himself. Obviously, he does not consider this House to be important or else he does not consider the crisis in the sheep industry to be important. However, we have to deal with the matter in his absence.

The sheep industry is in crisis because the last raise sheep farmers got for their produce was in December 1992. Could any other sector or group of people cope with a situation where they have not received a penny increase since the end of 1992? Yet the Minister tables an amendment to our motion endorsing the “effective measures” he has taken to maintain the sheep industry. Who does he think he is codding? He is certainly not codding the sheep farmers who are up in arms. Their livelihoods are going out the window and there seems to be total inaction by the Government and the Minister. That is the reality and while it may not be the nicest thing to say, it is as well for us to speak about it because it faces us every day.

The sheep farmers have brought the matter to the gates of Leinster House. The sheep industry is in crisis and effective measures are now needed. Sheep [1021] farmers and their umbrella organisations have asked that two matters be dealt with immediately — the extension of the rural world premium and an £8 increase in the ewe premium. Those overdue measures should be brought on stream immediately and the Minister should be in a position to get clearance in Brussels next week.

Some criticism has been made that the original decision to put the premium on the ewe might not have been in the best interests of this country. Senator Dardis outlined some of the excuses which have been made recently. Everyone looks for excuses when they cannot deliver what they are supposed to when in Government and they try to blame somebody else. I have heard people say that placing the premium on the ewe might not have been the best decision to take on behalf of sheep farmers. I have no doubt sheep farmers would agree that it was effective and that due to the premium being placed on the ewe, the ewe population increased from 1.3 million to 3.4 or 3.5 million. It allowed farmers to go into the sheep industry and to increase their numbers.

The long-term supports and the ongoing re-evaluation of prices for sheep and sheepmeat has not kept pace. Nothing has been done in the sheep industry to increase the price since December 1992. A couple of measures were mentioned by the Minister, such as the APS. Although they are effective for a small section, they are not the answer to the crisis in the sheep industry in that they dealt with an oversupply of hoggets; they did not deal with the core issue.

The Council of Ministers must be made aware that the convergence of prices has not taken place. The Minister has a responsibility to explain the difficulties sheep farmers face at this time. The intention and the hope that there would be a convergence of prices has not taken place. The prices which the Irish sheep farmer is realising for his produce has not measured up to what was expected. The Minister has a duty to explain to the Commission and to his [1022] colleagues on the Council of Ministers that the sheep farmer has fallen behind, that there is a crisis in the sheep industry and that more sheep farmers will go out of business unless measures are taken.

What is the alternative for a farmer who must leave the sheep industry? Where would a sheep farmer get the capital to go into the milk or cattle sector? I see no alternative for the sheep farmer who must pack in his business other than the farmer's dole because he has no capital to go into any other area of farming. Agri-tourism would not provide a full income. This motion requests the Minister to take effective measures and to face up to the reality that there is a crisis in the sheep industry and it is his responsibility as the Minister to deal with it.

Mr. Belton: I welcome the Minister of State to the House. He has been very diligent since taking office. The Minister for Agriculture, Forestry and Food, Deputy Yates, is in the Dáil at present and cannot be in two places at the same time as he does not have supernatural powers.

Mr. Finneran: This is where the crisis is being discussed.

Mr. Belton: There has always been a crisis in the various sectors of agriculture. External markets have been a factor as regards prices and various mechanisms in the EU have helped to deal with fluctuating markets. This year has been no different from others and sheep farmers have been in Dublin before. There is no point in saying that everything has happened in the past few months.

Mr. R. Kiely: We know they were.

Mr. Belton: Who were the friends of sheep farmers at that time? Did Senator Kiely open his mouth then? No Senator complained about the scabies scheme, for example. We should face facts and realise that sheep farmers are the losers [1023] in this case. I am glad to say prices have improved in the past few weeks and we want this to continue.

Although negotiations in Brussels will be extremely difficult, I am sure the Minister will do his best, as he has always done. Everyone, including the farming organisations, know the factors which work against negotiations in that area. While it is politically popular to blame a Minister, I do not believe that the Minister has failed, because external factors are involved. Supply and demand has always been a major factor.

I have confidence in the Minister and sympathy for farmers, particularly those in my area, who are taking a beating. We must deal with the facts and give support when due. It is vital that the Opposition, particularly Fianna Fáil, support the Minister. It is the Opposition's role to back the Minister when farmers are in trouble rather than criticise him and make cheap snide points as if he were to blame for everything.

Mr. R. Kiely: I am pleased Fianna Fáil tabled this motion, although it was criticised by the Government side. The motion states:

That Seanad Éireann, acknowledging the crisis in the Irish sheep sector and mindful of the many thousands of jobs on farms and in factories dependent on the industry, condemns the Government and the Minister for Agriculture, Food and Forestry for the sustained indifference they have demonstrated on the needs of the industry; and hereby calls for urgent steps to be taken to address both the immediate crisis and the long-term structural problems of the Irish sheep sector.

Senator Townsend said the second part of the motion was dishonest. I disagree with him, because sustained indifference has been demonstrated as regards the needs of the sheep industry. We have been taken to task for criticising the Minister. The criticism is justified. We support any Minister who does good for [1024] farmers, but when a Minister is not pulling his weight we will point it out. I was disappointed with the Minister's speech. He did not say how the problems of the sheep sector will be addressed. He told farmers how to produce quality lambs without telling them what assistance they will receive to do so.

A leaflet produced by the Wexford lamb producers group states the profit a farmer receives from 100 ewes at £11.40 per ewe. However, as Senator Dardis pointed out, there is a £21 subsidy for each ewe. If the subsidy did not exist, the farmers would not make any profit and, as Senator Finneran said, their only alternative would be to sign on for the farmer's dole.

Senator Townsend said sheep farmers must adjust to living without premia. However, sheep farmers depend on subsidies and would not exist today but for these premia. He said we must come around to the idea of farming without subsidies. However, farming is dependent on such subsidies, a point proved since Ireland joined the EU. Sheep farmers are particularly dependent on them.

The Minister mentioned the EU Agriculture Council declaration on 21 June 1995 which stated:

The Commission undertakes to take management measures to alleviate the current difficulties in the sheepmeat market in particular in Ireland. In light of the result of these measures, it will consider if further action is necessary in particular with regard to the possibility of an upward adjustment in the level of ewe premium and acceleration of its payment.

That was in June and to my knowledge there has been no upward adjustment in the ewe premium. This is what farmers are seeking now and the Minister of State did not say that when the Minister meets the Council of Ministers next week he will demand any top up ewe subsidy in the ewe premium. There is a precedent for this move. It was achieved [1025] in 1992 by the former Minister, Deputy Joe Walsh, who was criticised earlier.

This is the first thing the Minister should do and, as I said earlier, he does not seem particularly qualified. Members on the Government side mentioned the Minister's actions, but it is his performance in Europe that counts. He must perform well there to ensure the sheep farmers can make a decent living. Any other section of the community would be up in arms if it faced with a similar reduction in its income to that endured by sheep farmers in the past five years. This year is the worst yet. The Minister mentioned the private storage scheme. It probably helped, but it was not enough. It is fine to say that to get it was an achievement in itself, but it was not enough for the sheep farmers.

[1026] I am disappointed with the Minister's reply, but I am delighted this motion was debated. Senators Dardis and Finneran made valuable contributions as to why the crisis in the sheep industry must be addressed. We are told certain measures will be taken but nothing has happened. It is fine for the sheep and farming organisations to hear flowery language from the Minister but it will not work here. The flowery language must work in Europe and I wish the Minister every success there. I hope he will return with good news for the sheep farmers. However, in order to do so, he must take stronger action if these farmers are to be satisfied and achieve a reasonable standard of living. Their incomes do not allow this at present.

Amendment put.

The Seanad divided: Tá, 20; Níl, 20.

Belton, Louis J.

Burke, Paddy.

Cashin, Bill.

Cotter, Bill.

Cregan, Denis (Dino).

D'Arcy, Michael.

Doyle, Joe.

Enright, Thomas W.

Farrelly, John V.

Gallagher, Ann.

Howard, Michael.

Kelly, Mary.

Magner, Pat.

Manning, Maurice.

Neville, Daniel.

O'Sullivan, Jan.

Sherlock, Joe.

Taylor-Quinn, Madeleine.

Townsend, Jim.

Wall, Jack.

Níl

Bohan, Eddie.

Byrne, Seán.

Cassidy, Donie.

Daly, Brendan.

Dardis, John.

Farrell, Willie.

Finneran, Michael.

Fitzgerald, Tom.

Honan, Cathy.

Kelleher, Billy.

Kiely, Dan.

Kiely, Rory.

Mooney, Paschal.

Mulcahy, Michael.

Mullooly, Brian.

O'Brien, Francis.

O'Kennedy, Michael.

Ormonde, Ann.

Roche, Dick.

Wright, G.V.

Tellers: Tá, Senators Burke and Magner; Níl, Senators Fitzgerald and Ormonde.

An Cathaoirleach: There is an equality of votes. I have, therefore, pursuant to Article 15.11.2º of the Constitution, to exercise my casting vote. I vote for the question in this case. The numbers are now: Tá, 21; Níl, 20.

[1027] Amendment agreed to.

[1028] Question put: “That the motion, as amended, be agreed to.”

The Seanad divided: Tá, 20; Níl, 20.

Belton, Louis J.

Burke, Paddy.

Cashin, Bill.

Cotter, Bill.

Cregan, Denis (Dino).

D'Arcy, Michael.

Doyle, Joe.

Enright, Thomas W.

Farrelly, John V.

Gallagher, Ann.

Howard, Michael.

Kelly, Mary.

Magner, Pat.

Manning, Maurice.

Neville, Daniel.

O'Sullivan, Jan.

Sherlock, Joe.

Taylor-Quinn, Madeleine.

Townsend, Jim.

Wall, Jack.

Níl

Bohan, Eddie.

Byrne, Seán.

Cassidy, Donie.

Daly, Brendan.

Dardis, John.

Farrell, Willie.

Finneran, Michael.

Fitzgerald, Tom.

Honan, Cathy.

Kiely, Dan.

Kiely, Rory.

Lanigan, Mick.

Mooney, Paschal.

Mulcahy, Michael.

Mullooly, Brian.

O'Brien, Francis.

O'Kennedy, Michael.

Ormonde, Ann.

Roche, Dick.

Wright, G.V.

Tellers: Tá, Senators Burke and Magner; Níl, Senators Fitzgerald and Ormonde.

An Cathaoirleach: There is an equality of votes. I have, therefore, pursuant to Article 15.11.2º of the Constitution, to exercise my casting vote. I vote for the question in this case. The numbers are now: Tá, 21; Níl, 20.

Question declared carried.

Sitting suspended at 8.20 p.m. and resumed at 8.30 p.m.