Seanad Éireann - Volume 158 - 18 February, 1999

Agenda 2000: Statements.

Minister for Agriculture and Food (Mr. Joe Walsh): I welcome this opportunity to speak to the House on the agricultural aspects of the Agenda 2000 proposals. We are at a critical stage of the negotiations. The Council of Agriculture Ministers will meet in Brussels on Monday next and the meeting is likely to continue for most of the week. The German Presidency is determined to reach agreement on CAP reform at that meeting. Whether they will be successful in achieving that objective remains to be seen, but one way or the other we are coming closer to the stage when far-reaching decisions, which will be vital for the future of Irish agriculture, will be taken. The European Council meeting in Bonn on Friday, 26 February is scheduled to consider among other things, the outcome of the Agriculture Council meeting. The European Council meeting in Vienna last December confirmed that political agreement on the Agenda 2000 package as a [377] whole should be reached not later than the end of March.

It is precisely because the decisions to be taken are of such major importance that I have devoted such a high priority to forcefully putting Ireland's case at successive meetings of the Council of Agriculture Ministers. I have also used every opportunity to put Ireland's case in a series of bilateral meetings with Commissioner Fischler and with my ministerial colleagues. Here at home I have consulted widely to get the best possible advice and input. I will refer to these contacts in greater detail later.

The last statements in this House on the Agenda 2000 CAP reform proposals took place on 2 April 1998. The Commission presented detailed proposals on 18 March 1998 which contained major changes, by reference to the outline proposals of July 1997, that adversely impact on Ireland. The more significant changes which affect us were the reduction of beef premia to create the national envelopes; a reduction in our male beef premium ceiling; a reduction in our suckler cow premium rights; the abolition of beef intervention and its replacement by a scheme of aids to private storage and an increase from 10 per cent to 15 per cent in the price reduction for milk. All these changes involve a loss of one kind or another for Ireland. In addition, the Commission put forward other changes from which Ireland will not gain. These include the allocation of milk quota to mountainous regions, the restoration of the maize silage subsidy and changes in the beef extensification measures.

I accept that European agriculture has to be positioned to cope with the rapid changes taking place in agriculture and in society in general. I agree it must be ready to meet the challenges which will inevitably arise from the enlargement of the Union and the next round of World Trade Organisation negotiations which are due to commence before the end of this year.

There are a number of structural surpluses in Europe in various agricultural commodities. There is enlargement, with a number of Eastern countries applying for member status, and there is the WTO round. All these imperatives mean there must be reform of the Common Agricultural Policy. It is critically important for Ireland that we reduce those structural surpluses and bring balance into the market. Ireland has a greater interest in this aspect because we have such a dependency on exports outside the EU and within the EU. It would be preferable for Ireland, as a member state depending largely on agriculture, to have that reform brought about before enlargement. Anyone who has visited Poland, Hungary or a number of African countries will have seen massive tracts of good fertile land which are very easily worked but under-invested. In the next decade, when these countries put investment into farming and agriculture, they will be competitors for Ireland. It is important for Ireland that this reform be put in place before enlargement and the WTO round [378] and that we reduce the structural imbalance which exists for a number of products.

Since the proposals emerged, I have made it clear at meetings of the Council of Agriculture Ministers that the proposals in their present form would seriously damage Irish agriculture and the Irish economy. From the outset, I have indicated in the strongest possible manner my concerns about the effects of the proposals on Irish farmers' incomes and the lack of equity between member states and different types of production. I have also taken every opportunity to put this case in bilateral meetings with Commissioner Fischler and with ministerial colleagues, most recently when meeting Commissioner Fischler in Dublin earlier this month and again in bilateral discussion with the Commissioner and the President of the Council, German Minister, Herr Funke, in Brussels on Tuesday of this week. The Taoiseach has also put forward this point of view in his bilateral discussions on Agenda 2000, most recently with President Chirac and Prime Minister Jospin in Paris and with Prime Minister Kok in The Hague this week.

It is significant that I obtained acknowledgment of the importance of the beef and milk sectors to Ireland by having written into the conclusions of the Agriculture Council last May a statement that the dependence of particular member states on specific sectors would be taken into account in the final agreement. For example, the beef and milk sectors together account for 70 per cent of the Irish agricultural output and for 4 per cent of Irish GDP. This is not the case in any other member state. Each of these two sectors is more important to the Irish economy than the entire agricultural sector is to nine other member states.

Through the conclusions agreed at the May meeting, the Council has recognised that major Irish economic interests are at stake in the CAP reform negotiations. I intend to ensure this recognition is honoured by the Council. In other words, agriculture is vastly more important to the Irish economy than to the economies of any other member state. This should be kept in mind for agriculture, farming and for rural communities. There is no point in going down the road of other countries who decided a number of years ago that market forces should be brought to bear and let the best man win. We have seen this happen in other countries, notably, New Zealand, where one would need a farm of at least 800 to 1,000 acres to make a living and where farmers with 100 cows get the equivalent of our dole. The United States, the champions of private enterprise, recently introduced a rescue package worth six billion dollars to support the agricultural sector.

We must take note of what takes place in farming and agriculture in other member states. We need to retain multi-functional agriculture to support farming. Some of the proposals mean the price realised by farmers will be less than the cost of production. We cannot expect farmers to [379] produce commodities for less than the cost of production. We have seen what happened in the beef, sheep and pig industries in the last couple of months. Despite substantial direct payments a complete imbalance exists.

There is still a complete imbalance there and the industry needs to be restructured. As ours is a relatively small economy, we have to be extremely careful about direct aids. If there is any co-financing we would not be able to afford those direct aids to the same extent as more powerful economies.

For example, in relation to the beef sector there is a 30 per cent price reduction in the proposal and supply control measures have also been proposed by the Commission. These proposals go far beyond what is needed to restore market balance and will fall disproportionately on extensive grass producers. Surely, it is more important to support farmers who have this natural production method than the unnatural method of stall feeding from, in some cases, recycled meat and bonemeal. In Ireland, 95 or 96 per cent of production is from grass, out of doors, using natural production methods for steer beef. It is a low cost method with little input of concentrates and is environmentally friendly. Studies year in and year out, particularly the Teagasc studies on farm incomes, show that beef farming has the lowest return of any enterprise. We need to support the extensive system here. One of the reasons there is such a low margin in steer beef production from grass is that the average age for sale is from 25 to 27 months. On the Continent they have a bull beef system whose quality is not as good as steer beef by any means. Bulls there are slaughtered at a much earlier age – 15 to 16 months. We have to keep our animals on the farm ten or 11 months longer and it costs more to do so.

It is possible to achieve market balance through a lower price reduction than the 30 per cent proposed and a different approach to supply controls. I have put forward proposals for a solution on those lines to the Commission and to my colleagues on the Council of Ministers.

Another issue of major importance to Ireland is the level of compensation in the beef sector. The Commission proposals aim to shift the balance of compensation in favour of intensive production. I have stressed the need for changes to be made to favour extensive production and that a satisfactory outcome to this matter is crucial for me.

It is also central that an effective intervention system is retained to ensure that in the event of temporary market disturbances it will be possible to provide a floor in the market. I am not arguing that intervention should be kept as an outlet in itself, but as a support in the disruptions that unfortunately occur from time to time in the beef sector.

We had a classic example of that last autumn when the Russian economy collapsed. We were offered major increases in export refunds and [380] major supports with aid for private storage, yet prices collapsed below the cost of production. Were it not for a relatively small intake into intervention at the end of last year and for the first quarter of this year, beef farmers would have been in deep trouble.

I am critical, and have been over the years, of intervention as a system because it is no solution to anything. However, in cases of serious disruption in the marketplace, that emergency system needs to be there.

A further difficulty in the beef negotiations is a perception among other member states that Ireland fared well out of the 1992 reforms. I have pointed out that in 1992 the Council decided deliberately to encourage extensive production and structured the premium system accordingly. It was not surprising therefore that Ireland, where 99 per cent of beef is produced extensively, would benefit from the premium system. I have also pointed out that extensive production is a low profit production system and that our beef prices are as much as 25 per cent below European levels.

The Commission's proposals in the milk sector also give rise to difficulties for Ireland. They involve a 15 per cent price reduction and compensatory premiums which would only compensate for 60 per cent of price reduction. This inadequate compensation is unacceptable. The proposals also involve a milk quota increase of 2 per cent at EU level, but the proposed allocation of this increase between member states is uneven. Ireland's share, for example, would amount to only a 1 per cent increase. So, it would be 1 per cent for Ireland and up to 8.4 per cent for other member states. There are no circumstances under which I would agree to that degree of inequity. It is clearly discriminatory and is unacceptable.

The milk system has worked out relatively well and I do not see any great reason to spend 2 billion ecus per annum to change it. However, if there are to be changes involving an increased allocation of quotas, Ireland will have to get its fair and equitable share of that, if that is what the Commission wants to push through. We will hold the Council of Ministers to the commitment it gave in writing in 1984, when we were first allocated a quota, that Ireland would get priority access to any additional quota. That commitment is as valid today as it was in 1984.

On arable crops, the compensation being proposed for the 20 per cent price cut is clearly inadequate. I am also seeking to have this redressed as well as maintaining the separate base area for maize. A number of other countries have a major advantage over Ireland in that maize is a major crop for them. We do not have that advantage. Their concentrate feed production system has the advantage of maize silage while we have only a small acreage under maize. Also, the concentrate feed production system has the benefit of cheaper cereals input while our grass based system is at a disadvantage. We have been making those points clearly and forcefully to the Commission and [381] bilaterally to other member states as well as to heads of Government and Ministers.

On rural development we are supportive of the Commission's proposals, although significant changes are necessary, such as widening the range of eligible activities to include research, advice and promotion. Research is critical for the future of this natural resource industry of agriculture. University academics and Teagasc officials are carrying out fundamental research and those programmes must continue. We also have valuable training programmes. Training is important and we are so good at education and training that we need to continue it in relation to agriculture and farming generally.

Thankfully, the vast majority of young farmers have a formal three year post-leaving certificate education qualification which is tremendously important because they will be competing not so much in the domestic market but internationally. It has to be international because 85 to 90 per cent of agricultural production is destined for foreign markets. We export to about 56 countries worldwide and we must remain competitive. Because our younger entrants to farming have to be top of the range, we need to continue this intensive research, advice and promotion.

In relation to promotion, An Bord Bia, the Irish Food Export Board, needs to be further supported and funded. Even though the board has an annual budget of approximately £17 million, that figure is infinitesimal given that Irish exports of food and beverages are worth over £5 billion. We need to support food and beverage promotion to a greater extent given the competitive international arena in which we are operating.

I am concerned at the impact of the reform proposals on the sheep sector. We have an important sheep and lamb sector. Irish lamb is a delicacy, yet the industry is neglected in these proposals. It is not mentioned at all and there seems to be no place for the sheep and lamb industry. We have between 46,000 and 47,000 sheep farmers engaged in a valuable part of the farming industry. Lamb is a very important product. I have expressed my concerns about the flaws in the sheepmeat régime and I have pointed out that the consequences of the reform proposals for the beef sector would make the sheepmeat situation even worse. For example, there is a proposal to reduce supports for beef by 30 per cent. That is bound to impact on lamb and sheepmeat; there are no circumstances under which there will not be a knock-on effect.

At each meeting of the Council of Ministers and at bilateral meetings I have stated that if the sheepmeat industry is not addressed in the reform proposals, the entire industry will be wiped out. For example, in extensification, sheep as livestock units are taken into account for stocking density, yet there is no extensification premium for sheep. I have pointed out the anomalies and flaws in that system which I want to resolve. It is disappointing that there is no support from other member states, who regard sheep farming as a marginal [382] activity. I have sought support from and alliances with other member states who have a sheepmeat industry; it is tough going but I will continue to highlight the matter.

A complicating factor in the negotiations is the future funding arrangements for the CAP. A report on EU financing arrangements was published by the EU Commission last October. This report addressed the complaints by some member states that the burden of their net contributions is excessive. A number of member states, most notably Germany, have said that for the past 25 years they have been net contributors in supporting the CAP and they are getting weary of it.

There is a new Government in Germany which is less committed to agriculture and the European ideal. The old CDU felt that some reparation should be made in rebuilding Europe after the Second World War, an idea which is now gone. The Germans are saying if a country wants to support agriculture, why does it not do it from its own resources? This is a major disadvantage to Ireland as we are still a relatively small economy and we do not have the resources of the major countries. This is a worry for us.

We have had financial discipline in Ireland in the past ten or 12 years which has paid substantial dividends. We understand the need for financial discipline; nonetheless the CAP is a common policy throughout Europe and has served it quite well. We need to retain the Community preference. On this my position is unequivocal. Co-financing is completely unacceptable to me and to the Government as a whole. At last month's Council of Agriculture Ministers' meeting, I pointed out that the Common Agricultural Policy has been built up over 40 years on three central principles – market unity, Community preference and common financial responsibility – and that it has contributed enormously to the solidarity which has cemented the Community over the years. I stated that, for these reasons, we cannot now begin to dismantle that achievement in order to provide a partial answer to a problem that goes far beyond the CAP.

While I am reasonably confident that, in the light of the discussions at that meeting and in other fora, the Irish views – shared by some other member states – on co-financing will prevail, there is no doubt that a majority of member states favour a tighter budgetary framework for CAP reform. In this connection a number of member states have put forward options for the stabilisation of expenditure on the CAP. In addition, France has put forward the concept of degressivity. In Europe, one has to cope with new words in the lexicon of Euro speak; “degressivity” is a reduction in direct payments to farmers by a certain percentage annually. Direct supports are reduced gradually, for example, by 3 per cent or a fixed amount per annum.

This concept now appears to have the backing of a significant number of member states and even of the Commission itself, although the Com[383] mission has not yet put forward a formal proposal. I am concerned that degressivity will impact more on those sectors, such as beef, which are more dependent on direct payments and less, or not at all, on those sectors where direct payments are small or even non-existent, such as the wine sector.

It is nice for the French to say that degressivity is a new concept and they think it is a good idea. Their Chateau Lynch Bages, Chateau d'Yquem and Chateau Pétrus will not be affected as there is no direct support for wine production. However, countries like Ireland with routine and mundane natural production systems for beef, lamb and pigmeat will be severely affected by the concept of degressivity. In its present form it could give rise to distortions between sectors, regions and member states and in my view Ireland would be disproportionately affected. I will be stressing that if degressivity is to be applied, the different circumstances of each sector will have to be taken in to account. It will also have to exclude small scale producers and, in the event of its being applied, I will be seeking an exemption limit as high as possible to exclude as many as possible of Irish producers. For example, at the moment the exemption limit is 5,000 euros, which is about £4,000. This will catch a big number of farmers. I have asked the Department to investigate whether farmers receiving £5,000, £7,500, £12,500 and £15,000 can get more of that in direct payments, whether for cereal, beef or sheep, and to see to what extent Irish producers will be affected.

While it is clear from what I have said that there will be stricter budgetary discipline applied to the reform, I will insist that the resources available must be adequate to fund a worthwhile and equitable reform. I have already emphasised that there is no point carrying out a reform that is inappropriate simply to save money.

Throughout the negotiations, I have been mindful of the need to consult as widely as possible here at home about the implications of the Commission's proposals and on alternatives to them. That is why I set up four consultative groups early last year to which farmers, processors, academics and other interested persons were appointed. I was also, of course, conscious of the value of direct consultations with the farm organisations and indeed I met the four farm organisations yesterday in preparation for next week's crucial Council meeting. That is part of the social partnership which has worked well here for the past ten or 12 years where we seek the consensus of everyone involved. All these consultations have been very helpful in enabling me to gauge the strength of opposition to these proposals by Irish producers and the Irish agricultural industry.

A Chathaoirligh, I have set out for you the present state of play and indicated the type of changes which I am seeking to have incorporated in the final agreement. My main objective will be [384] to secure an agreement that will contain lower price reductions and higher compensation for the three sectors, beef, milk and arable crops, and a non-discriminatory allocation of any increase in milk quotas, together with other changes that will be favourable to the development of extensive natural production methods in Irish agriculture. I have tried to be as frank as possible given that I am still in the course of negotiating on these reforms.

I now look forward to a constructive debate on these issues in this House and I will be happy to take on board any suggestions which would assist me in next week's crucial negotiations. I do not know if they will be concluded; the German Presidency is anxious to do so. I will not be pushed or bullied into a conclusion just because the Presidency wants it. There will be a further meeting of the Commissioner and the Council of Ministers in March. We will have to have detailed, comprehensive and bilateral negotiations with the Commission and an informal session with the Council. The outcome to these negotiations can only be acceptable if it is fair and equitable and if the unique Irish system of multi-functional, natural agriculture is supported, allowed to continue and to develop. Those involved in agriculture should have confidence, heading into the next century, in the parameters laid out for farming and the agricultural industry.

Mr. T. Hayes: The agriculture industry is going through a vicious recession. Seldom, if ever, have almost all sections of the industry collapsed at the same time, particularly in a year when the rain has not stopped. The result is devastating, to say the least, for most family farms.

This is the background to yet another important challenge to Irish and European farmers. Within the next six weeks the outline of Agenda 2000 EU farm policy will be agreed. This could have a negative or positive impact on farmers over the next six years. I take this opportunity to wish the Government well. It is an onerous task to negotiate such a deal on behalf of Irish farmers. It always has been an uphill battle to negotiate on behalf of Irish agriculture at EU level, particularly in recent years. The member states of the European Union have never accepted the unique position of agriculture in the Irish economy.

Irish farmers feel under threat. They are frightened and insecure by the lack of help they are getting at home. It is easy, therefore, to understand their genuine concerns about the Agenda 2000 negotiations and the ramifications for future generations of farmers. However, Irish farmers are a resilient group who can fight, and have fought, adversity with hope and courage. Even if they received a moderate leg up from the Government, they could compete with the best in the world, but I am extremely concerned about the capacity of the Government to deliver.

The Government announced the recommencement of the Libyan live cattle trade last [385] October. As a result, farmers kept their cattle in the hope that prices would rise. That did not happen. Many of these cattle are still in yards throughout the country, eating scarce and expensive fodder. They are worth even less now than they were a few months ago. The Minister then sought an intervention system to establish a floor price for cattle. The meat factories torpedoed that and the Minister was pushed aside.

The European Union was made aware of the deepening agriculture crisis early last year and was informed about the dire shortage of fodder. The Minister still did nothing. A fodder scheme was due to be announced at the Ploughing Championships, but the Minister for Finance, in his usual unsympathetic manner towards the farming community, kicked it to touch. It was left to the hapless Minister for Agriculture and Food to announce a lucky bag type of fodder scheme days later.

Minister of State at the Department of Agriculture and Food (Mr. N. O'Keeffe): A sum of £40 million was a big lucky bag.

Mr. T. Hayes: What did it mean when it was delivered on farm? The £300 was probably given to people who did not even need it. The Minister of State is aware that silage and hay bales which cost £8 each last year now cost £30.

Mr. N. O'Keeffe: They are back to £8 again.

Mr. T. Hayes: Despite the worsening situation, the budget did not bring any better news. The farm assistance dole type scheme, which might be of benefit, will not be implemented until later this year. What good is that? The REPS payments also ran into difficulty, as did the retirement scheme. What is happening with the control of farmyard pollution scheme? The installation aid scheme announced by the Minister was a feeble attempt to assist young farmers. The list of failures is endless.

This background explains why we have so little confidence in the present Administration in relation to Agenda 2000. We face a formidable challenge in the negotiations. As a nation, we must draw a line in the sand beyond which we are not prepared to go. I believe in reform; we cannot stand by and ignore the commercial realities of world trade. It is better to have an input into change and to manage it to suit our circumstances. To do this, we must have clarity of thought regarding our objectives and we must develop strategic friendships with other EU states which have similar problems.

We must make certain matters clear. We should oppose any attempt at Commission level to introduce co-financing. Imagine the German Government, with its financial strength, deciding for its own best reasons to pay a double or triple suckler cow payment to the 2 per cent of its population who are farmers. Contrast this with Ireland's ability to compete – nearly 10 per cent [386] of our population of 3.5 million are farmers. This concept is contrary to the Treaty of Rome and will undermine the Common Agricultural Policy.

We must stop the renationalisation of EU markets as it, too, is contrary to the Treaty of Rome. The free movement of goods and services in member states is the cornerstone of the treaty. Countries such as France, where we have built up good markets for our beef and lamb, are now hiding behind the country of origin labelling system. Farmers in France are getting up to £1.20 per lb for beef while Irish farmers must accept 75p to 80p per lb. Some of these cattle were sourced in this country since we know there was vibrant trade in that market last autumn. This insidious and dangerous development must be discontinued.

The proposed Agenda 2000 negotiations are vital for agriculture. The current proposals with regard to compensation for the proposed changes are not acceptable. According to the Minister, we would lose approximately £250 million which we simply cannot afford.

The Government has a daunting task ahead. It is also a daunting task to sell up to 500,000 tonnes of beef every year. Ireland must export nine out of every ten animals in the national herd of 7.5 million. There is a huge number of suckler cows in the European Union and the current cattle population in Ireland is probably the largest ever. To balance the European beef market it will be necessary to remove some of the 12 million breeding cows from the European Union. As long as every country takes its fair share of this decrease, it will suit us. The proposal to cut the intervention price to 60p per lb is extraordinarily severe in our circumstances. No Irish farmer would produce beef at that figure, it would be below the cost of production.

To make matters worse, there is a proposal to pay farmers a maize subsidy of between £100 and £150 per acre. Maize does not enjoy widespread popularity in Ireland for climatic reasons. It is the equivalent of our silage crop and this would be a devastating blow for Ireland because maize is grown only in certain parts of the State.

There are ways of reducing beef output without dramatically reducing the price. We must radically change our attitude to the industry, find out what the market wants, breed that and supply it on a continuous basis. Farmers must be paid for quality, and flat pricing at the meat factories must be outlawed. Factories must be prevented from undercutting each other in the export market. With proper competition from live exports, factories will be forced to pay the going rate for cattle.

While we would like to open up the live export trade, we are aware that these markets are neither stable nor secure. This trade depends on the continued use of EU export refunds. All the signs point to the refunds being substantially reduced in the world trade talks. Our beef and sheep meat should be targeted at where there is money to purchase a top quality product, Europe.

[387] BSE has crippled the beef industry. We were the net losers in that shake up of the market. A window of opportunity, however, is slowly opening. Our best quality cattle, particularly our weanlings, are finding strong markets in continental Europe. The 100,000 cattle we exported in 1998 found good homes and there was a good financial return to farmers. We could have exported more but did not for two reasons, inadequate shipping facilities and the unacceptable standard of many of our weanlings to foreign buyers. There are niche markets in Europe for different types of cattle, dead and alive. The Italian market wants one type while the English market wants another. The difference in price of up to £150 per animal for top quality weanlings last autumn was frightening.

The pig industry is in its worst crisis ever. Small pig farmers are experiencing the most difficult period in farming history. It is time for the Government to step in to help these people, particularly those with less than 300 sows. I appeal to the Minister to do something to help these people. No section of the community has gone through the torture they are going through. There is a great deal of co-operation and good will from banks and feed companies but it is imperative that we do something. This situation has dragged on for months and these farmers are losing money hand over fist.

The Minister mentioned rural development. We must hold firm in the negotiations on rural development and renewal. We are proud of our unique rural structure.

I wish the Government well in the negotiations and hope it brings back something worthwhile. The future of people in rural areas depends on its negotiating skills.

Mr. R. Kiely: The timing of this debate is very important because agreement will have to be reached between the Agriculture Ministers on the reform of CAP. I welcome Senator Hayes back as the Fine Gael spokesperson on agriculture. While I do not agree with everything he said, there was some sense to his contribution, unlike the previous debate, when the first battle for Fine Gael farmers' votes in the Leinster Euro-constituency was fought between the Senator and the member of the European Parliament.

The thrust of the Agenda 2000 proposals is to continue the reform of CAP along the lines of the 1992 reform – lower support prices, with compensation to farmers in the form of direct payments and further reinforcement of structural, environmental and rural development policies so that consumption in the EU market and export sales to third countries will increase. The agricultural production potential of applicant countries in central and eastern Europe can be more readily absorbed as a result. The scope for the EU negotiators in the next round of World Trade Organisation negotiations will be stringent, but in [388] their present form the proposals would seriously damage Irish agriculture.

I compliment Minister Walsh who has made the concerns of Irish farming clear at every meeting of the Council of Agriculture Ministers. From the outset he indicated in the strongest possible terms his concerns about the effect the proposals would have on the incomes of Irish farmers and about the lack of equity between member states and different production methods.

It must be acknowledged that European agriculture faces absolute limits for subsidised exports of agricultural produce as agreed in the GATT negotiations in Uruguay. With the current level of prices, our margin to sell agricultural products on the international market without subsidy would decrease steadily.

While the potential in the internal market is limited, the outlook in the world market is bright. All forecasts point to an increased demand for food. We should consider how we can maintain our dominant position in the international market. Europe is the second largest exporter of food and agricultural produce in the world. Ireland exports produce worth more than £1.1 billion each year to markets outside the EU. Together with its intra-EU trade, 80 per cent of agricultural production is exported.

Agenda 2000 is a blueprint for a long-term agricultural policy. The Commissioner will argue that we should not change direction because of temporary disturbances. If we accept that the economic crisis is affecting world trade more seriously than expected until now, then it is clear in what direction we are to change our agricultural policy. It is argued that with our current policy intervention stocks would pile up to 1.5 million tonnes of beef and over 5 million tonnes of cereals in a few years. Irish farmers will remember the 1980s and early 1990s when record intervention stock had an immediate impact on their incomes. Sales out of intervention were in direct competition with Irish exports. However, I emphasise that intervention is most necessary for Ireland because private storage would not work, as the recent pig crisis proved. I am sure the Minister will fight for some form of intervention when he meets the Council of Ministers for talks on Agenda 2000.

Providing these services within the current CAP reform, for example, set aside, would have to be set at approximately 25 per cent, and milk quotas would have to be reduced, as would eligibility for beef and suckler cow premium rates. This is not a bright prospect for our farmers; the Commission has proposed an alternative strategy in Agenda 2000 which should increase internal and external competitiveness by significantly reducing price support and continuing income support through increasing direct income payment. However, competitiveness is not just a question of price. Food quality and safety are essential requirements of the consumer, and the agri-food sector must respond. Environmental and animal welfare concerns are growing and must be integrated in the new CAP. New chal[389] lenges will arise from forthcoming agricultural negotiations in the World Trade Organisation framework. Major exporters have already announced they will push for further liberalisation of the agricultural trade. We need a consolidated position to defend the European model of agriculture. Therefore, there must be agreement on our future agricultural policy.

The Agriculture Ministers have committed themselves to reaching a positive conclusion on the Agenda 2000 negotiations in February, so there is not much time left. However, a number of questions remain to be answered. One issue that arose last year was the spectre of a budget freeze. It is clear that this would not only kill CAP reform but it would also result in no money being available to maintain the status quo. Some of the suggestions for reducing expenditure were that the dairy sector could be left out of the reform process. However, there is still major division among member states on the future of the quota system with four, including Ireland, in favour of continuing with that system until 2006 with a review in 2003 or 2004. They also agree on a limited increase in quota, although its distribution remains an open question. Ireland's position on distribution should be taken into account.

There is supposed to be a milk increase, but it is agreed that that will amount to 1 per cent for Ireland against 8.4 per cent for some other countries. When Ireland was allocated a quota in 1984 we were treated as a priority, and we should be treated as a priority now because the question of Ireland's priority is as valid today as it was in 1984. I am sure the Minister will do everything in his power to ensure Ireland will be treated equitably and will receive its fair share of the quota when he meets the other Ministers.

Other member states have spoken in favour of maintaining the Commission's proposals, although they have specific concerns in one area or another. The so-called “London Club” of the United Kingdom, Sweden, Denmark and Italy want the quota régime abolished by 2006 and have asked for higher price cuts to make Community producers more competitive on the world market.

The main problem for Ireland seems to be how the additional quota is to be distributed. Irish farmers are highly dependent on the dairy sector, and the dairy industry has been quite successful in expanding its EU share of other markets. The proposed distribution of the quota is based on objective criteria and is targeted at farmers or regions with particular difficulties that are broadly recognised. No doubt this committee would have views on how any quota increase should be distributed but so will everybody else, and there is seldom anything in common between the different suggestions put forward. Any additional quota would increase pressure on farm gate prices while quota costs cannot be expected to decrease adequately. The consequence would be a further reduction in the average dairy farmer's income.

[390] Our beef sector contributes about the same value as the dairy sector to total agricultural output. Regarding this sector, the Commission says it urgently needs a reduction in price support to rebalance internal meat consumption to the benefit of beef. The Commission proposes to reduce price support substantially, and EU annual per capita consumption is estimated to increase by O.5 kg and sales on the internal market would increase by almost 200,000 tonnes. A significant improvement is also expected in international competitiveness but 30 per cent is the minimum price reduction which would achieve substantial exports from refunds. This is not acceptable in Ireland. There is a broad acceptance in the Council of the need for a sharp cut in intervention prices, with strong divisions over allocation of compensation.

On the direct payments issue there is a general view that a balance between member states should be improved, but there is still a certain discord between extensive and intensive producers. There is also the question of the Commission's proposal to distribute part of the compensation in the form of a national envelope in order to increase flexibility for member states. The main questions remain open on the scale of these national envelopes, the details of the extensification premium and the introduction of a private storage scheme to replace public intervention. As I have said, Ireland is against this.

Last year was a dismal year for most Irish farmers; for a substantial part of the year prices for beef, sheep and pigs fell to their lowest in 25 years. Irish prices for beef are much lower than those in other EU countries; Irish prices are at the bottom of the league. In addition, severe weather conditions caused a fodder crisis. These problems must be solved, but they should not hold us back from finding a common perspective for the future.

I compliment the Minister on the 1999 fodder scheme, details of which I received today. A further £20 million is to be made available in addition to the £20 million paid out in December 1998. There are certain conditions involved and the funds will be distributed on a district electoral division basis. I have been informed that there can be anomalies in administering this scheme, a point the Opposition also raised last week. Some farmers who deserve the scheme's benefits are not receiving it, and some who do not deserve it are getting it. There is a feeling that Teagasc should visit farmers to see which farmers deserve what. The scheme would be more practical if operated in this way. The Minister should ensure that Teagasc operates on the ground to ensure the fodder scheme funds are paid out properly.

The Commission must be seen to be sensitive to the specific concerns of Irish agriculture while at the same time recognising that Ireland will have to negotiate a consensus between 15 member states. Moreover, we have to find a sustainable consensus between farmers, the food industry, consumers and taxpayers and meet the [391] social and environmental requirements in the context of a renewed European model for agriculture.

The Council of Ministers' proposals for beef include a reduction of 30 per cent in price supports over the three years 2000-2; compensation for the price support reduction by certain increases in direct payments, also phased in over the years 2000-2; a suckler cow premium between 145 euros and 180 euros; a special beef premium for steers from 109 euros to 170.3 euros; a new beef premium of 44.9 euros per dairy cow; an annual amount per member state national envelope to be distributed at the discretion of the member state within parameters set by the EU – Ireland's envelope will be 131 million euros, an increase in the extensification premium from an average of 44 euros to 100 euros but with more restrictive eligibility conditions; the abolition of the suckler cow premium supplement in Objective One regions; a reduction in suckler cow premium quotas with effect from 2000 – the reduction in Ireland's case is 8 per cent; a reduction in the special beef steers premium quotas with effect from 2000 – the reduction in Ireland's case is 22 per cent but, as we have under-utilised the quota in the past, the effective reduction is 8 per cent; and the abolition of intervention from 1 July 2002 and its replacement by a scheme of aid for private storage, which is unacceptable to Ireland, as I stated.

The IFA's strategy for beef reform is to bring the EU market into balance by a strict supply management beef policy while defending Ireland's national suckler cow quota level, and the introduction of measures to promote beef consumption; to achieve full compensation for price support cuts, to be achieved in part by a lesser price cut than the 30 per cent proposed; and to retain and improve support for extensive grass based production in order to maintain competitiveness with grain based production. Intensively produced beef from cereals, pigmeat, and poultry meat are benefiting from cereal prices which already receive significant support from the EU arable regime. The 30 per cent cut in EU cereal prices in the first CAP reform, with the second CAP reform proposals which involve a further 20 per cent cut in cereals support prices with compensation, would result in market prices for cereals being significantly below the cost of the production equivalent. Provision for research and advisory services in agriculture, food and forestry is excluded under the new regulations on support for rural development.

On milk, the IFA seeks a reduction of 15 per cent in price supports over the four years 2000-3, to be compensated by the following new direct payments, also phased in over the years 2000-3: a new dairy cow premium of 100 euros based on a ‘virtual' dairy cow herd; an annual amount per member state national envelope, to be distributed at the discretion of the member state within parameters set by the EU – Ireland's envelope will [392] be 40.7 million euros, an increase in each member state's milk quota of 1 per cent, with priority to be given in its allocation to young farmers and the increase to be phased in over the years 2000-3; and an increase in milk quotas for mountain areas, as defined by EU law, amounting to 1 per cent of the total EU quota, to be phased in over the years 2001-4 – Ireland does not benefit from this increase. Ireland is against the abolition of milk quotas between now and 2006.

Ireland has a strong self-interest in achieving a reasonably balanced EU beef market because we are most vulnerable to a structural surplus in the EU due to our requirement to export almost 90 per cent of production. Reducing exportable surpluses is positive in the context of the World Trade Organisation because the volume requiring export refunds would decline.

The Minister for Agriculture and Food, Deputy Walsh, made clear at meetings of the EU Council of Ministers last March that the Government cannot accept the proposals in their present form. The proposals will not provide for the equity between member states and different types of production, and will involve an estimated annual loss of £226 million to Irish producers. The Minister informed the Commissioner and his colleagues on the Council of the economic significance of the Irish interests that would be affected and he obtained acknowledgement of the importance of beef and milk to Ireland by having written into the conclusions of the Agriculture Council in May 1998 a statement that the dependence of particular member states on specific sectors would be taken into account in the final agreement.

The most difficult problems to be addressed relate to the beef sector. The 30 per cent price reduction and the supply control measures proposed by the Commission go far beyond what is needed to restore market balance in that sector and will fall disproportionately on extensive producers. Another issue of major importance to Ireland is the level of compensation proposed. It is also essential that an effective intervention system is retained to reassure producers in the event of temporary market disturbances.

The other main difficulties concern the milk sector. Ireland would prefer to see the current regime continuing for the present but with provision for a review, perhaps in 2003, in the light of developments at the World Trade Organisation. If a quota increase is to be part of a final agreement, Ireland will not accept any discrimination against us in its allocation. As I said, Ireland was recognised as a priority country in 1984 and if there is a quota increase we will have to be treated as such, because the argument for treating us in that way is as valid now as it was then. The compensation being proposed for the 20 per cent price cut in arable crops is also inadequate.

The European Commission recently submitted a report on the funding of the EU budget in response to complaints from some member states [393] that their net burden of contribution was excessive. One solution suggested by the Commission was that the expenditure side of the budget could be amended to provide for national co-financing of CAP expenditure on direct payments at a level of 25 per cent. The co-financing option is not acceptable to Ireland as it would do little to address the net contribution problem and the cost would fall disproportionately on member states like Ireland with the highest dependency on agriculture and, therefore, on those least able to afford it. Our position as an island state on the periphery of Europe is another reason for treating us differently within a co-financing arrangement.

A growing number of member states are now coming out in favour of budgetary stabilisation, which would have implications for agricultural expenditure and the agricultural guideline. Our firm view is that the minimum overall level of agricultural expenditure must be adequate to fund current agricultural expenditure plus a reform that is fair to producers and member states. It is essential that our unique position be acknowledged by other Agriculture Ministers and member states, otherwise the consequences for Ireland will be detrimental. At the meeting to finalise the reform of the CAP, I have no doubt the Minister will ensure that Ireland's case is recognised.

Mr. Quinn: I welcome the Minister of State, Deputy Davern, and acknowledge the two other Ministers who were here – we have been well attended by Ministers today. This debate concerns agriculture, focusing on Agenda 2000. We should ask ourselves how we can lead the agricultural and rural community so that we can guarantee, as far as possible, that family farms and rural communities survive and thrive in the years ahead.

I am concerned because I do not believe we will get to the root of the problem in this debate; I also believe that recent discussions elsewhere on this matter have not done so. Commissioner Fischler visited the Oireachtas Joint Committee on Agriculture and Food two weeks ago and I raised my concerns with him at that stage. Senator Tom Hayes stated that the future of Ireland and that of people living in rural areas will depend on the negotiations. I do not believe that is correct. I have no intention of damaging those important negotiations but it is not correct that our future should depend on them. Time is limited in respect of what will happen to the agricultural community in the future and we must we take action ourselves rather than relying on others.

I read a Wilbur Smith novel a number of years ago – anyone who has read his books knows they make smashing holiday reading – which told the story of a group of people on a number of rafts heading towards a waterfall on a river in Africa. They were panic stricken and asked how they could avoid the waterfall. A number of them [394] bemoaned the fact that they had come across the waterfall and they worried about what would happen. They tried to delay the rafts so that they would not reach the waterfall and its attendant rapids too quickly. People on one or two of the rafts said “Let's see if we can manage survive”. I do not recall the full story but the latter group took steps to ensure that they would survive when their counterparts were killed going over the waterfall. This story is a good example of where we find ourselves in terms of the current debate.

If the agricultural community is to survive in the long term, we cannot depend on Europe to continue to bail us out. When they are given responsibility for food, Ministers of State at the Department of Agriculture and Food become committed to food, the consumer and the steps which must be taken. The Minister, Deputy Walsh, is a good example of this because he established an expert food group and created Bord Bia when serving as a junior Minister. However, when he became Minister for Agriculture and Food he forgot about the consumer. The Minister made an excellent contribution but he did not use the word “consumer”. Senator Rory Kiely is the only Member to have so far used that word.

The Minister used the words “compensation”, “compensatory” and “intervention” on a number of occasions. The long-term survival of the agricultural community will not depend on compensation, support or intervention; it will depend on our recognising that the consumer will solve this problem. Unless we change our attitude we will not be able to solve the problem. Products such as Bailey's, Kerrygold and Golden Vale's “Cheese Strings” are thriving on world markets not because they are Irish but because they are good products. To the best of my knowledge these products are produced without any support from the European Union.

I am concerned that whatever words I use in my contribution might give the impression that I do not wish the Minister well or that I do not offer him my support in the forthcoming negotiations. This is not the case. However, support from the European Union should only be regarded as a temporary, stop-gap measure because I do not believe Europe will continue to solve our problems in the future. We must ensure that our economy becomes consumer-driven and we must take the necessary steps to ensure that we survive, even if the agricultural community, as happened in Germany, is reduced in size. Senator Hayes stated that only 2 per cent of the German population is reliant on agriculture for its income whereas the figure in Ireland is 10 per cent. It is inevitable that Ireland's agricultural community will diminish unless we take action and challenge many of our preconceptions.

I take this opportunity to focus my remarks on the changes in agricultural production to which, perhaps, serious consideration should be given. The current controversy regarding genetically modified foods is a good example of this. One of [395] the most important challenges facing the global food industry involves genetically modified foods and it is a matter of direct concern to every citizen in Ireland. I appeal for a balanced debate on this subject. Earlier in the week, The Irish Times called for a sane, rational, calm and scientific debate but that has not happened as yet. If we have a balanced debate, it is highly likely that the outcome will be based on rational grounds and will be to the most benefit to the greatest number of people.

I visited the United States last month for a meeting at the Food Marketing Institute. It must be remembered America's Food and Drugs Administration – the FDA – protected its citizens from thalidomide when other countries introduced that drug 30 years ago. That body has a very high standing and it was responsible for recommending the irradiation of meat in order to ensure that e.coli would be eliminated. The word “irradiation” is anathema in Europe and I am not making the case for the introduction of irradiation. I merely wish to make the point that genetically modified foods have been accepted in the United States without any difficulty. However, the attitude among those developing such foods in Europe seems to be different to that of their counterparts in the United States. There is a need for a major, strong and well balanced debate in this area. This issue will be decided by the general mass of consumers.

In Ireland, there is no superior body to adjudicate between the interests of customers and the producers of food. I exclude from that the Food Safety Authority of Ireland, the chief executive of which, Dr. Patrick Wall, was very impressive when discussing this topic earlier in the week. Dr. Wall stated that there is nothing to indicate in published scientific research that genetically modified foods represent a risk to public health. I am not making a case for the introduction of such foods but there must be a balanced debate.

It is vital to realise that, in the age in which we live, customers are the judge and jury in matters of this kind. Some people may not like that but it is the truth and it is something with which the food industry and the agricultural community will have to come to terms. Customers make decisions on this kind of issue. For example, it was customers across Europe and beyond who drove the response to the BSE crisis. It may be that they over-reacted or that they went beyond what was purely necessary in scientific terms to protect themselves but the fact that the Minister for Agriculture and Food advised us not to sell T-bone steaks is a good example of that. Perhaps he over-reacted, perhaps not. However, customers have the power to decide which they exercised with devastating effect during the BSE crisis. That will be the pattern in the future and we should bear it in mind when discussing genetically modified foods.

The key issue is what and how the customers of the world will decide about genetically modified [396] foods. If the debate goes in one direction they will decide on the basis of hasty, inadequate information. I accept that they could still make the right decision, even on that basis. If the debate takes a different direction, they may make their decision on a far more reasoned and informed basis. Even if they do, their decision might still be wrong. However, everyone would prefer that customers make the decision about genetically modified foods on the basis of the most complete input of scientifically based information. To do so they will need two things, the first of which is the assistance of the scientific community.

There is a growing body of specialist food scientists who provide the potential expertise for us to make informed and reasonable decisions on matters such as this. Unfortunately, too many of them are working for the food producers full-time, on a consultancy basis or on research projects. It is desirable that food scientists, especially in the universities, accept their responsibility to act as general watchdogs of the public interest with regard to emerging food technology and the State can help here by funding such activities.

There should be an open, forthcoming attitude on the part of the producers of these new processes and products. This has not happened. Producers have engaged in repeated attempts to obscure what is happening and to present the world with a fait accompli, to rubbish anybody who dares to raise questions and, in the case of American multinationals, to use political clout in an attempt to impose American standards on the rest of the world. They have resisted attempts to properly label and segregate genetically modified products and they have arranged things in such a way that we are no longer able to trace the impact of genetically modified foods if problems arise later.

It is not surprising that there has been fierce public reaction against this kind of bullying. People have rightly stood up against it because they have realised that, ultimately, it is the customers who will decide what will happen. By contrast producers have not shown that they accept reality. They appear to be living in a previous age where large companies could get away with more or less whatever they wanted. As a result, we are in the middle of a debate that is highly charged with emotion rather than with reason and scientific fact.

It is in all our interests to draw back from this kind of confrontation and to try to debate the matter differently. Earlier this week Dr. Patrick Wall referred to the need for calm, scientific debate. The danger is that we will throw the baby out with the bathwater. It is possible that, given the way in which the multinationals have behaved and the few scare stories that have emerged, customers in Europe and other parts of the world will turn against genetically modified foods altogether. They could die if they get such a bad name that people do not want to touch them. If that happened we might pass up some enormous [397] advantages and opportunities for Irish agriculture. We, therefore, need a calm, scientific debate.

While the evidence is not yet there to indicate the advantages, Dr. Wall has said there is nothing in published scientific research to indicate that genetically modified foods represent a risk to public health. There is enormous promise in technology, which we may never see if we cut it off at the bud. These benefits could include cheaper and safer food which is more adaptive to varying tastes and preferences.

Of course if genetically modified foods are dangerous the risks might well outweigh the benefits and we would not want anything to do with that. However, the reality is likely to be much more complicated. The best scenario is one in which possible risks are recognised and taken very seriously by producers, the public and Governments, who regulate the production and sale of food. Having controlled these risks to an acceptable degree we should push forward the frontiers of a technology so potentially promising that those who manage to make use of it will ensure that the agricultural community will not only survive but thrive.

We are a long way from that kind of co-operative approach to development. What we have is an adversarial situation with the big guns of the multinationals lined up on one side, apparently backed by the clout of the American Government, faced on the other side by the growing ranks of concerned customers who, as yet, are not well informed but are very sensitive to food scares – they cannot be blamed for that – and are also very aware of their own power. This is a recipe for unproductive confrontation.

I appeal to everybody to stand back, take a different approach and hold this debate in a calm and rational manner. The community of food scientists has an urgent job to do. The producers of genetically modified foods need to quickly change their tune and the customers in Ireland, Europe and the world, need to put emphasis on getting more facts and reason into this debate so that the eventual outcome is in the best long-term interests of all.

I have used this opportunity to address the issue of genetically modified foods because it has not been debated before. While it is in the hands of the Minister for the Environment and Local Government rather than the Minister for Agriculture and Food, it needs to be debated now because of its huge impact. If we do not hold a debate and if we do not make the correct decisions we in Ireland may lose the opportunity to be somebody on the raft that survives rather than the one that goes over the waterfall.

I wish the Minister every support in the negotiations over the coming weeks. I know it will be of huge importance to the agricultural community. I do not want us to mislead ourselves into believing that the long-term future will depend on such things as intervention, compensation and support. Rather, it will depend on whether we in [398] Ireland can produce a survival kit that will ensure those of us in the agricultural community thrive even if agriculture as a whole in the rest of the world is of less importance because fewer people are able to produce the foods needed.

Minister of State at the Department of Agriculture and Food (Mr. Davern): I am sorry the Senator did not mention the social and cultural aspects, which are also vital for rural Ireland.

Mr. Quinn: Of course.

Mr. O'Brien: I welcome the Minister of State and thank the Minister for Agriculture and Food, Deputy Walsh, for addressing the House earlier. There was some concern last week that this debate would not be held. I am pleased it is taking place.

All farmers and their families will want to forget 1998. The collapse of key markets left beef prices disastrously low with margins severely hit. The weather was the worst in living memory, with continuous rainfall and a summer that never was. While the fodder shortage is of concern to farmers today, there are many challenges for the future. The Agenda 2000 proposals in their present form will severely damage Irish agriculture and the economy.

Agriculture is a major economic sector. It creates high levels of employment and contributes a great deal to annual exports. The success of farming is vital for the local rural economy because towns and villages depend on a vibrant local farming sector for their survival as the spin-offs of agriculture are enormous.

Next week the Minister for Agriculture and Food will lead Ireland into the most important negotiations at EU level since we joined the Community in 1973. It is very important that the House unites in support of the Minister and his team, to wish them well and to compliment them on their stance and work to date.

The Agenda 2000 proposals in their present form would have a disastrous effect on farmers' incomes and will drive huge numbers from the land because they would be unable to survive. We have a major dependence on the beef and milk sectors. This must be acknowledged by the EU, as the EU Council of Agriculture Ministers recognised in its statement last May. This recognition will be crucial in the weeks ahead and is an example of the work the Minister and the Government have done in preparing for next Monday's Council meeting.

While reforms are necessary for a number of reasons, including the need to achieve a better balance between supply and demand in certain product sectors, the introduction of the new WTO round later this year and EU enlargement, the Irish position is special due to our dependence on agriculture and our system of production. The Common Agricultural Policy has been built up over 40 years on central principles of market unity, Community preference and com[399] mon financial responsibility and it has contributed enormously to the success of the Community. While there is pressure to restrict CAP expenditure, particularly by member states which are net contributors, the success of the CAP must not be damaged and resources must be adequate to fund worthwhile and equitable reform.

The milk sector has survived reasonably well in recent years. The industry must be complimented for restructuring at every level from the farmer to the processor. The Council's declaration in 1984 that Ireland would be given priority when allocating an increase in quotas must be honoured in full in any final agreement.

The beef sector has suffered greatly since the BSE crisis of 1996 and particularly in the past year due to the collapse of the Russian market. Beef prices are almost 25 per cent below the European average. Price reductions, as proposed in Agenda 2000, must be offset by an increase in compensation payments. An intervention system must be retained for Irish beef and our grassland system of production must be acknowledged.

The Minister and the Government will use every available means to ensure that the worst elements of these proposals are changed and I wish them well. The CAP can be reformed but it must be balanced and equitable so that Irish agriculture and the food industry can continue to develop for the benefit of those engaged in these sectors and of the economy.

While Agenda 2000 is a major challenge, one of the sectors facing greatest difficulties at present is the pig sector. Pig farmers have lost an enormous amount of money in recent years. In my own counties of Monaghan and Cavan pig producers have always contributed greatly to the local economy, but many are now left in great difficulties because prices have collapsed.

The past year has been difficult for farmers. However, the announcement last week by the Government that a fodder scheme will be introduced will greatly assist farmers. I also welcome the announcement by the Minister for Social, Community and Family Affairs, Deputy Dermot Ahern, of the introduction of a new farm assist scheme in April. This new scheme will assist 14,000 low income farmers.

It is important that we are debating this issue today given that the Minister will be attending a Council meeting in Brussels on Monday. I take this opportunity to wish him and his team well. Senator Rory Kiely and Senator Quinn mentioned consumers. Consumers are important as farmers depend on them to use their products.

Mr. Callanan: I welcome the Minister of State, Deputy Davern, to the House, although he is a Tipperary man.

Mr. Davern: That is a racist comment.

Mr. Callanan: The reform of the Common Agricultural Policy will have long-term effects on [400] the farming community, on rural Ireland and throughout Europe. I acknowledge and welcome the fact that the Government, the Taoiseach, the Minister for Agriculture and Food, Deputy Walsh, and the two Ministers of State, Deputy Davern and Deputy Ned O'Keeffe, are totally committed to ensuring that Ireland gets the best deal possible. The farming organisations and other political parties fully support the Government in its efforts, although they may not put forward proposals.

Senator Quinn said there should be a debate on genetically modified food. This would help to allay people's fears about it. We are involved in food production but scare tactics will undermine people's trust in the quality of food. I support the call for such a debate.

The Minister and the Government want to protect rural Ireland and agriculture. As producers of food, we look at what is happening around the world. We see quotas, over-supply, market management and starvation. It is reprehensible that millions of people are dying from starvation when there is an over-supply of food, but that is a debate for another time. However I would stress that those engaged in food production – and I am one of them – should do their best to produce a good quality food to the highest standards. We have a family farming structure in this country based on small to medium sized farms. That would be typical throughout Europe. The situation is very different on other continents, for instance in New Zealand or America. They too have their problems, despite having gone into quality ranch style farming. We know of the aid the US Government had to give to American farmers last year despite what is happening. We also know of the New Zealand challenges. It is essential this debate centres on rural Ireland, family farms and high quality food production for the consumer. That must be ensured at all times.

I will now return to the reforms and what is wrong with the proposals before us which were well set out by the Minister for Agriculture and Food this morning; I am sure he is supported by the Department and the Government. I will read briefly from the Minister's statement.

The last statements in this House on the Agenda 2000 CAP reform proposals were on 2 April 1998. The Commission presented detailed proposals on 18 March 1998 which contained major changes, by reference to the outline proposals of July 1997, that adversely impact on Ireland. The more significant changes which affect us were the reduction of beef premia to create the national envelopes; a reduction in our male beef premium ceiling; a reduction in our suckler cow premium rights; the abolition of beef intervention and its replacement by a scheme of aids to private storage and an increase from 10 per cent to 15 per cent in the price reduction for milk. All these changes involve a loss of one kind or another for Ireland. In addition, the Commission put forward other changes from which [401] Ireland does not gain. These include the allocation of milk quota to mountainous regions, the restoration of the maize silage subsidy and changes in the beef extensification measures.

He went on to state that the cuts are serious. There is no aid for the sheep industry; they are unacceptable. As regards the beef industry, there must be supply management. Throughout Europe there are approximately 700,000 suckler cows over quota. If we are to bring supply management under control and protect direct payments, then the first thing to fall should be the over-supply quota for suckler cows in Europe. That would be advantageous for us.

We have slipped in having a good beef industry, we have a cattle industry but we have not done well over the past few years. We have not bred exclusively and developed a proper beef breeding structure or put a structure in place which would cater for a good sound beef industry. That must change. I would urge, when these negotiations are over, the Government, the Ministers and the Department together with relevant organisations – it will take the total involvement of farmer producers, processors and the Department – to ensure we have a good sound beef industry based on good sound breeding which, in turn, is based on good sound beef management controls. We have gone the way of paying premia on anything with four legs and a head, classifying it as a so-called beef premium. We cannot sustain this, in honesty.

In relation to the general farming scene, we talk about the family farm. However, I am disappointed that modulation – whereby we would have a structure to direct support towards the smaller producer – was not mentioned in the debate today or in the Dáil yesterday evening. Many cases have been cited in the media and elsewhere of single large payments going to individuals. It could be well argued that at a time when finance for agricultural support and the farming industry is limited, we must direct funds towards those in greatest need. I was sad nobody mentioned this. Lip service is paid to the family farm. The Roscommon rights group and other small groups were mentioned but unless we are prepared to direct the aid available to us, it will not be justice.

With regard to modulation and financing, the national envelope must be rejected. I am glad the Minister and every Government and Opposition spokesperson is saying no to it. I am also glad co-financing is so emphatically ruled out. Co-financing cannot be sustained, we cannot have it as part of the final package. The Minister's and the Government's commitment on that is absolute. We should support and congratulate them for that.

I wish to speak on a matter about which I know little, namely, the cereal package – and I ask the Minister of State to forgive me if I comment on something about which I know nothing. Grain growers provide a superior quality grain to anything imported as animal feed, but the commit[402] ment from farming organisations and political parties is limited. I am disappointed. It is part of our agricultural production. The Minister's rejection of the maize subsidy being coupled with cereal is quite correct; he is right to separate them. He must continue to do that and achieve it. We could challenge why maize subsidies should be in the agreement at all. I know it satisfied the French farmers and I suppose something has to be done for them. However, something must also be done for Irish farmers. If we are competing with maize silage and feed for part of the programme for feeding animals in Europe, particularly France, then we should have a set number here for the grass base.

The lack of understanding by Commissioner Fischler is dazzling. I do not say that lightly. When he talks about voluntary set-aside and savage reductions of support and controls, he does not understand the régime which applies to cereal growing. I hope when the Minister and his support team are negotiating – and I hope that includes the Minister of State, Deputy Davern, because he knows this game well – voluntary set-aside will be taken out of the agreement and we will continue with the programme of set-aside we had in the past.

We are back to supply management. It is false economy and wrong for the industry to introduce a form of voluntary set-aside, cuts and aids and claim it can continue to survive. Do we want animal feed imported from other parts of the world? If this happens, we will be going down the same road as Commissioner Fischler. We should have a proper system. Let us keep the set-aside. I am contradicting myself because I spoke about food production and starvation, but this aspect in the package of reforms is wrong. I ask the Minister of State, Deputy Davern, to convey this to the Minister and hope they both agree with me.

Milk production, a substantial part of our farming industry, is doing reasonably well. If there are to be changes, for example, in the quota régime, we would be entitled to return to the written commitment given in 1984 when the then Commissioner gave guaranteed assurances that if quotas were increased Ireland would get preferential consideration. The proposals being introduced by Commissioner Fischler are contrary to that. At a joint Committee on Agriculture, Food and Marine I stated that a number of things were contrary to the Treaty of Rome and that CAP, an essential part of it, has been undermined.

The removal of aid for sheep and putting it into extensification clauses, without compensation or recognition, will kill the industry. I agree with what the Minister said earlier in this regard. Price reductions are expected, but they should be reflected back to consumers. There were great difficulties in farming last year. Producers got bad prices, while consumers continued to pay high prices. That is unacceptable. It is a matter for the relevant Minister to examine this. We must ensure good quality continues.

[403] I am disappointed there was no mention of the early retirement scheme. The changes suggested last year, which the Minister assured us would come about, have not taken place. Something must be done to encourage young people into farming. There has been an exodus of young people from farming, and this is not due to financial reasons. The installation aid is only chicken feed. It is for the well off farmer who has already put his package of land together for his son and who can then spend his money doing other things. The Minister, Deputy Walsh and the Ministers of State, Deputies Davern and O'Keeffe, gave commitments last year that the additionality clause would be removed. It is a major impediment to the small and medium sized farmer. It has led to fragmentation of land and farming, and it is not a successful scheme. Equally, a young man returning to a small or medium sized farm – which may be poorly developed – must acquire more than 50 per cent of farm income. If those two clauses were removed more young people would be interested in farming. Installation aid is worth £5,700 and if the additionality clause were removed, a person would save between £40,000 and £50,000 which would allow him or her to buy land or to lease long term.

The early retirement pension has increased by almost £10,000. Due to inflation and changes in the cost of living, minor though they may be, it is essential that the pension is index linked.

I wish the Government well and I acknowledge its commitment. We should all give our support to it and cut out the nonsense that has taken place in debates in the Lower House which does nothing for the country. Let us do something positive and work together. There is a vital national interest at stake. I wish the Taoiseach, the Minister for Agriculture and Food, Deputy Walsh, the Ministers of State, Deputies Davern and O'Keeffe and departmental officials well. They have done good work in the past and I expect them to deliver on this.

Ms O'Meara: I thank the Minister of State for his contribution and for listening to ours. I also thank the Minister, Deputy Walsh, for his contribution.

I echo the final words of my colleague; we wish the Government the best in the very difficult negotiations in the weeks ahead. Our full support goes to the team who will undertake them. We know the implications for agriculture and the communities it supports are serious. The negotiations will take place at a difficult time for the industry and I am sure the Minister recognises the mood in rural Ireland is one of concern, anxiety and worry for the future.

The agenda 2000 proposals cannot be taken in isolation. The effects of the outcome of the negotiations will be felt throughout the country. If they are negative for any sector, it will add to the feeling of anxiety in rural Ireland and accelerate the very worrying matter of depopulation and [404] departure from agriculture. These issues should not be addressed in the short term or hurriedly, they must be addressed in the wider context of rural development and rural renewal.

Last week the Minister spoke in the House about Government proposals on this issue which will be advanced in the coming months. Like others, I look forward to seeing them. Proposals to tackle the crisis in rural communities, generated by the major changes in our agricultural economy, are urgently required. This crisis is being fed into and influenced by changes in urban lifestyle. Every week I hear people talking about purchasing houses in the country. Two weeks ago a friend of mine told me he had decided not to buy a house in Dublin. He will continue to rent his apartment in Dublin and buy a house in the country – a second residence where he can go at weekends. He may buy a house in south Tipperary near the scenic lakeside district of Dromineer or Portroe.

Mr. Davern: Is he on the register? That is more important.

Ms O'Meara: The Minister of State will be aware that one can register as often as one likes, but can vote only once. I do not mind where he votes so long as he observes the law.

An increasing number of people on average incomes are opting to colocate in the country because of the housing crisis in Dublin, the bottlenecks created by the failure to deal with that crisis and the resulting deterioration in the quality of life here. That has major implications for life in rural Ireland. Not only are such people creating problems for the native population who wish to buy those houses, but they are affecting the quality of life and structure of society in rural Ireland.

I do not believe the construction of holiday home developments constitutes rural development. Rural development is about retaining the best of what we have and encouraging the best of what is to come. It is not about replacing the existing population with a transient or weekend one. A horrendous example was given on the radio recently of a village in rural Britain which comes only alive on Friday afternoons and buzzes for the weekend. That may appear funny, but I think it is tragic. It is a horrendous prospect and not an incredible one in our context. Villages are disappearing before our eyes because not only are people relocating to the city because that is where the jobs are, but the cost of buying a site and building a house in the country is becoming prohibitive to those who grew up in those areas. That issue can and must be addressed, whether in the context of taxation on second homes or supports for families who have lived for a long time in an area. Other disincentives could also be used.

Our primary focus should be on retaining the best of what we have in rural Ireland. We have a long tradition, supported at its central by agriculture. I was glad to hear the president of the IFA say on television last week that any notion [405] of rural development or renewal which is not located centrally in a vibrant agricultural economy is flawed. I agree with him. Central to this debate is a vibrant well working agricultural economy. The current negotiations are vital to that discussion.

Senators on both sides stated that we must face up to the core issue. Everyone engaged in agriculture, including policymakers and decision makers, must deal with the distribution of resources. It is likely that there will be a reduction in the amount of support we get from the European taxpayer – German, French, British or Irish. How those resources are distributed will be critical. The capping of payments to larger, more economically viable farmers must be addressed. That is a thorny issue, which the IFA have major difficulty facing up to, but farmers have raised this with me frequently in recent times.

Can we avoid dealing with the question of how the agriculture budget is distributed? If we want to retain small farmers, in particular, on the land, we must face up to this question. The small farmers of today would have been considered large farmers in the past. The amount of acreage one needs to be viable is increasing. A 100 acre farm used to be considered a good sized farm which would provide good income to a farmer and his family. That is not the case at present. Are we going to allow a situation develop, such as in Australia or the US, where one farmer can farm a huge acreage of land in a commercial sense and decide not to harvest if the price is not right? That would be an outrageous way to proceed in the context of Irish agriculture.

Irish rural life, centred around farming, is about more than the cheque or the bank balance; it is about the fabric of rural Ireland and the backbone of this country. That cliché has been used often in the past, but it is a reality. I do not wish to do down people who have lived their entire lives in urban settings. I applaud that tradition also. However, I am here to make a case for the rural tradition which is under severe threat because there is no sign of an active Irish Government policy on rural protection and development. I am prepared to give the Government the benefit of the doubt and wait for the White Paper on Rural Development. There is no sign of creative thinking, genuinely new proposals or a legitimately Irish way of thinking on this issue. It is almost as if the Department of Agriculture and Food is an outreach office in Brussels. I hope that is not the case. I hope original thoughts, creative ideas and solid new proposals will be forthcoming from that Department to cope with what can only be described as a genuine crisis in rural Ireland.

I do not think the much talked about urban-rural divide exists. In towns like Nenagh there is no divide between those who live in the town and their neighbours in the country. The close relationship between town and country is such that our interests depend on each other. I am not the only one who gets annoyed and angry about [406] this subject. A farmer told me this morning that in a discussion on the Consumer Price Index he heard on radio reference was made to a slight increase in inflation due to an increase in food prices. Farmers are not getting an increase in price for their produce. The price the farmer is getting has been depressed for over a year. The price to the consumer is increasing, but that increase is not reaching the farm household. There is obviously something wrong.

I appeal to the Minister, who will be closely engaged in these negotiations over the next couple of weeks, to look creatively at rural development, to put forward genuine proposals for Ireland, to address the changes which are taking place in rural Ireland, to hang on to the best of what we have and ensure the worst does not happen.

Mr. Gibbons: I propose to share my time with Senator Moylan. I welcome the Minister to the House. I also welcome this debate which is very relevant at this time, given that the Minister must bat for us next week. At the outset, I wish him well. He has our full support and should have the support of everyone in the country in what is a very onerous job. I support the Taoiseach at the Heads of Government meeting and the officials of the Department.

On the Agenda 2000 proposals, what comes to mind is the deserted village and Sliabh Mór on Achill Island. Recently we commemorated the Great Famine. That is the vision that comes to mind when I think of the famine. If the current proposals are accepted there will be more deserted villages. Senator O'Meara alluded to weekend villages in Europe, but the position will get worse if these proposals are accepted. I do not want the population of this country living in four or five epicentres and the remainder of the country to be a deserted holiday resort. We need a good tourism industry, but unless we have a vibrant rural community, we have nothing. Agriculture has been the backbone of this country for many years and many very gifted people have been born and reared on small farms. These people contributed to the society of this and many other countries. The quality of life, about which everyone talks, can benefit only from the retention of a vibrant rural community.

It is vitally important that we retain our milk quota. A number of people have suggested that milk quotas should be abolished. That would not be in the interest of the country or of rural Ireland. It would play into the hands of the large and highly efficient producers. One of the main planks of the establishment of the common agricultural policy was to maintain as many people as possible in rural areas throughout the Community. The suggestion that quotas should be reviewed with a view to abolishing them over a number of years must be categorically denied; we must retain quotas. When milk quotas were introduced in 1984, Ireland was promised it would be looked upon favourably for additional quotas [407] that would become available. I do not think Ireland has been looked upon favourably. The present proposals do not favour the Irish; they favour the mountainous regions. It is illogical that we are to be denied this because we do not have high mountains. We produce milk based on grass and there can be no more natural product than that. That is the direction the common agricultural policy should be going. Ireland was supposed to have fared very well in the 1984 milk quota distribution negotiations. However, at that time the Dutch got approximately nine times what the Irish got in terms of their area and quota. It is time to call in that promise to ensure any extra quota is made available to Ireland.

On the beef proposals and the suggestion of a price cut of 30 per cent, I cannot understand the rationale behind this. If one considers what is included in these price reductions, it seems to favour the factory producers of beef. The Commission is suggesting that they want to produce product that is much more environmentally friendly because this is what consumers are demanding. Consumers are right to voice their views. If that is what consumers want, that is what they will buy and, therefore, that is what we must produce. This country is grass-based and has a distinct advantage in that area. The maize subsidy should be abolished because it militates against production based on grass in favour of the large producers in Europe. It is proposed that this subsidy be retained, but I suggest that the Minister vigorously fight this proposal.

On the cereal question, there is a suggestion that the payment of area aid should be delayed until March. This will cause great problems for Irish producers. It will force producers to accept a lower price for their product to get area aid. The payment is currently made at an earlier stage. We are not in a position to store grain because there is not the capacity on farms to do so. I hope the Minister keeps a close eye on this issue.

There is over-production in the pig industry and we need to consider the question of supply and management in all our production. It is interesting that imports are branded as Irish when being sold, even though the brine level of imports from the Continent is much higher than is allowed in this country. Because of this a subsidy is being paid to put water into pigmeat. This needs to be equalised so that we can have a level playing pitch, which does not exist at present.

There are two important issues in relation to the sheep industry, the first of which relates to the extensification calculation. The Commission cannot have it both ways. If sheep are to be included in the extensification calculations, it must be paid for. This is not the case at present. If this is not paid for, it must be taken out of the calculation. The 7 per cent stabiliser was originally introduced to try to curtail the increase in sheepmeat and the increase in the population of the flock. At this stage it has levelled off and has [408] started to drop and there is a justification for arguing that it should be removed. If it were removed it would help sheep farmers enormously, particularly low land sheep farmers.

As regards co-financing, we must object to this suggestion. One of the reasons we entered Europe was to get away from that system. That has been the backbone of the Common Agricultural Policy. If we are to start renationalising the supports for agriculture we will not have an agricultural policy within the European Community. That must be forgotten, and not just put off until next year.

It is vitally important to have full compensation for price reductions. I know that this will be a difficult issue. The suggestion from the Commission is that it will give a percentage compensation and that it will be up to national governments to top it up, but that simply cannot work. We must fight it tooth and nail and I know the Minister is firmly committed to doing so.

While these discussions are geared towards the Agenda 2000 proposal, there is a greater issue facing agriculture at present; that is the necessity for a national agricultural plan based on projecting where we see agriculture going, not just for two or three years but for the next ten to 15 years. It is now time to get people around the table to devise a proper policy and approach for the development of the industry with a view to keeping as many people as we can in rural areas. We can argue over what form that may take, but we must discuss it and come up with a plan so that we are not putting a bush in the gap from year to year. We must have total commitment from every interested party. The farmers obviously play a very big part in it, as does the processing industry. Consumers also play an extremely big part in it, as does tourism. We have to develop our rural economy around what it can do for us and vice versa. We must involve everybody in that process.

When these discussions are over, the Minister should initiate the development of this policy over the coming months. He will receive much support for it. In the past, we missed the opportunity when agriculture was doing particularly well, when we were receiving the benefits of green pound devaluations on an annual basis and prices rose following our entry into the EU. We should have done this before, but we must do it now. It is imperative that everybody decides upon the direction in which we are to go, whatever happens with regard to EU proposals in future. I have my own views on that matter, and I am willing to make submissions to the Minister about it.

I was going to refer to genetically modified organisms and food, but I will wait until next week when we are scheduled to have a debate on that subject.

The Minister has our full support in the forthcoming negotiations and I have no doubt that he will give it everything he has. Being a Corkman, I am sure that when he has a stick in his hand he will use it very well. I wish him the best of luck.

[409] Mrs. A. Doyle: I take issue with one point in the Minister's earlier contribution, not in a combative way but because I feel it is incomplete. He said

. . . one way or another, we are coming closer to the stage when farreaching decisions which will be vital for the future of Irish agriculture will be taken.

Yes, we know the Germans want decisions to be taken and the whole package to be completed by the end of next month. However, the farreaching decisions will not be vital just for the future of Irish agriculture but for the entire community, including both rural and urban areas. I emphasise the need to include urban areas, in particular, when we are talking about the far reaching decisions on the Commission's package for reform of the Common Agricultural Policy that is about to be concluded.

If we do not keep reminding people that it is as important for urban as for rural areas, we will not be singing off the one hymn sheet when it comes to the results we require from these negotiations. There is a huge responsibility on the Minister's head and on the Government concerning the discussions that will take place in the next few weeks.

Ironically, it will not only be our agriculture based community and agri-food industry that will suffer if we do not get it right, if the flight from the land continues and if we cannot get another bright, young and educated generation to farm the land. Our cities and towns will bend under the pressure such a situation would create. The flight from the land by our educated and bright young people today has as much to do with the uncertain future of agriculture as it has with the greater opportunities that are available in nine to five, Monday to Friday, jobs which are well paid and, thankfully, now plentiful. Such young people will not accept the uncertainty and hardship of a 365 days a year job because of the attraction of job opportunities in towns and cities. Urban areas, however, are creaking under the pressure such numbers of people place on their infrastructure. One only has to look at our transport infrastructure, the demand for housing and the increase in school class numbers which are all putting pressure on urban infrastructures, particularly in Dublin and Cork. Such urban areas are trying to cope with the extra numbers who have come to those cities to take up well paid jobs. We cannot cope. Urban Ireland needs the Minister to be successful, as much for its sake as for the future of food production and the whole agri-business which contributes so much to our GNP.

It is not just vital for the future of agriculture that the Minister should be successful in defending Irish interests. We do not differ on any side of this House as to what we think is in Ireland's interests regarding the outcome of next week's discussions. The Minister should present his case so that the issue is not urban versus rural. It is not a question of the Minister, Deputy [410] Walsh, looking for more for the farmers, whatever that might mean in terms of these discussions. It is as much in the interests of urban Ireland that the Minister and the Government should get it right over the next few weeks when negotiating the Commission's package at the Council of Ministers meeting. I am impressing that point upon the Minister because I feel very strongly about it.

The point was made earlier about the lack of proper planning for rural development generally. For many years I have been critical of the reactive role that successive Ministers for Agriculture have taken. I am not quite sure whether they have to take it, and my view on that varies. However, they seem to have spent all their energy and time, and that of their senior officials, responding to crises generated at home or through the Common Agricultural Policy in different ways, in terms of its impact on our agricultural industry. Far too little time has been spent on actually having a medium to long-term plan for how the country and the Government wants to see Irish agriculture develop.

It is impossible to encourage young people to be properly educated and then return to the land because we really cannot tell, from one CAP reform to another, what the future holds. We entered the EEC, as it then was, in 1973 enthusiastically, primarily because of the benefit to Irish agriculture as a net exporting country whose GNP and employment were heavily dependent on agriculture. The main selling point to the Irish electorate was that we could not but join the EEC because of the importance to our main industry which at the time, was agriculture and the developing agri-food business. We sold the fact, even to a doubting portion of our population, that on balance, this was the right thing for us to do because of the importance of Irish agriculture. We won that argument with the electorate, although only just.

We sold Irish fishermen down the river and what should have been a far greater slice of the common fisheries policy cake because of the benefits which would accrue to Irish agriculture on becoming a member of the EEC. I and many other Oireachtas Members who were around at the time feel passionately that another major natural resource, our fishing industry, was sold short because of the emphasis on the benefit to our farmers of joining the EEC.

What has happened since? The CAP was revised with the MacSharry proposals in 1993; we are revising the revised CAP now; the GATT, or the WTO as it is now known, revisions have been introduced on top of this. We are now looking at what were termed the Santer proposals – I presume they are now the Fischler proposals or the amended Santer proposals – which will be negotiated at the Council of Ministers next month and are a revision of a revision of a revision. We cannot tell the future generation of farmers and the young people we need to farm our land and manage the environment of rural Ireland for gen[411] erations to come what future it holds or in what direction we are going. All we can assure them is that the present Minister for Agriculture and Food and future Ministers will continue to negotiate the best possible euro cheque package as each revision comes around every five or six years. What kind of future is that?

We have created a dependency culture in our primary industry which is based on a major natural resource. We are telling our young people to get an education, to come back to the land, that we need them but that they should not use their brains or their education, that they cannot do what they want to do because it is not a free market; they cannot develop, they will do what Europe says and we will give them a cheque; we will pay them not to farm land; we will pay them compensation for reduced market prices; we will now pay them a direct income support, not market support; we will pay them on a per hectare rather than a per head basis. It does not matter that they are educated or have spent years abroad to come back to a fine farm, fully developed with modern technology; we tell them not to use their heads but they should do effectively what their agricultural adviser tells them, based on the cheques in the post from Europe. A complete dependency mentality has been created in our primary industry. What we have done with an industry which has served this country so well is morally questionable.

Generations of farmers have had a difficult life. However, it is a way of life as well as a business and has, in its own way, been very successful. However, we have turned farmers into dependants on handouts from Europe. I wonder whether this Government has any medium to long-term plan as to where Irish agriculture is going.

In 1973 when we discussed the CAP and the concept of a common market, there was a philosophy that we would concentrate production on our natural resources, which meant that at least grass based agricultural production would be protected in any renegotiation of the Common Agricultural Policy over the years. If we cannot protect our grass-based agricultural production – the dairy, beef and sheep industries – we have no chance of protecting the arable, cereal and food industries. We cannot claim natural advantage on cereal production; we do not have the economies of scale or the weather, even though we have a very successful cereal and grain industry and arable production. However, these have been successful against the odds and it is despite the Common Agricultural Policy's best efforts not because of them that our better tillage and arable farmers have survived over the years.

What chance have we in protecting their interests if we cannot protect grass-based farming interests, an area of natural production? The Germans protected their steel industry, the French protected their wine growing and the Spanish their olives and oranges. Each member state should have been able to protect their natural [412] resources. The primary natural resource we brought to the Common Agricultural Policy – with the emphasis on common – was our grass-based agriculture industry. This was at the top of the list, even though there are excellent farmers involved in other areas. The Minister has failed to protect our grass based producers, so how can he begin to defend the rest where we have no natural advantage?

I worry about the outcome of these negotiations. Like other speakers, I totally reject the concept of a national envelope; this means that the stronger the country and the bigger the nation the more national aid which can be pumped into their farming industry and agri-food businesses generally while the smaller nations like Ireland will be less competitive. On a per capita and GNP basis we cannot compete with the bigger countries.

I welcome the eastwards expansion of Europe. However, we need only look at the development of the farming industry and agri-food business, the environmental scene and the mess which has to be cleaned up in Eastern Europe to know that the concentration of effort and resources will not be on Ireland and other countries which were Objective One regions up to now; nor can we expect it to be. The increase in the CAP budget is not sufficient for us to maintain the cheque in the post standard upon which farmers have come to depend because they cannot use their own initiative in farming any longer.

I do not know what the Minister's answers are; I do not know how he will defend our grass based production and our cereal farmers. I would like to know his hand of cards when it comes to protecting Irish agriculture and agri-food interests. I hope it will not be too long before we know. Agriculture is our primary industry because without our farmers looking after our rural environment, our tourism industry would not be thriving and developing as it is. It is a hand and glove scenario between urban and rural Ireland. If the Minister can salvage from these negotiations a package which will allow Irish agriculture and the agri-food industry flourish in the years to come, he will also protect our rural environment and the tourism industry on which it is based.

I ask him in the negotiations to look to further incentives to ensure that young people stay on our land, that older farmers will continue to take up the farm retirement package and that REPS is expanded in a practical and relevant way and its various idiosyncrasies dealt with. For example, there is nothing environmentally protective about using barbed wire for fencing in rural Ireland yet it is acceptable under REPS. The time of the year when slurry can be spread does not take weather conditions into account; slurry and effluent are spread between certain months and bear no relation to the protection of watercourses and the relevant soil conditions. There has to be more discretion, either through Teagasc or through some form of advisory direction.

[413] There are anomalies and aspects of REPS which need to be revised. However, REPS has a huge future, even for intensive and dairy farmers. It has been a huge success and more than 50,000 farmers are taking part in the scheme. Perhaps the spirit of REPS is not being followed through by many of the REPS applicants at the moment; however, it is only a matter of time. The younger generation accept the spirit of the scheme. They know what it is about and can see a future in agriculture through environmentally sustainable farming. However, unless they can see more than five years into the future and beyond the next revision of CAP, nobody will invest in either their education or lifestyle by returning to the land to farm. No son or daughter will take over from a parent on the land unless they can see medium to long-term planning and a future in primary agricultural production. The lure of better paid, cleaner jobs from 9 a.m. to 5 p.m. in urban areas will attract the best and brightest from rural Ireland.

It is an unequal battle. Rural areas will be left with the elderly and those who did not succeed through the education system; in other words, not the people we would primarily like to stay on our land. We must be able to pick the best and the brightest to ensure our primary industry is in the hands of those who will manage it best.

I wish the Minister well. I have been critical of his performance to date, which I interpreted as a lack of interest. He is invisible when major problems arise. However, everybody is on the same side when facing the European table for negotiations. The Minister has our support in negotiating a package that will ensure the future of an industry that is important for rural and urban Ireland.

Mr. Moylan: I wish the Minister, Deputy Walsh, every success in the forthcoming negotiations. It is a difficult time for agriculture, but the negotiations are in good hands.

The interests of Irish agriculture should be taken into account in a balanced way. Above all, the Minister must ensure that farmers' incomes and the viability of rural communities are protected. These must be his main concerns.

The most significant proposed changes have been outlined by previous speakers. These include reductions in beef premia, the male beef premia ceiling and the suckler cow premium rates and the abolition of beef intervention and its replacement by a scheme of aids for private storage. These changes involve a loss for Irish agriculture.

In addition, the Commission has proposed other changes from which Ireland will not gain. The allocation of milk quotas to mountainous regions will not benefit Ireland nor will the restoration of the maize subsidy and changes in the beef extensification measures. The balance of the proposals, therefore, changed significantly between 1997 and March 1998.

Everybody accepts that European agriculture must be positioned to cope with the rapid changes [414] taking place in agriculture and in society. We agree that it must be ready to meet the challenges which will inevitably arise from the enlargement of the Union. We have heard a great deal about the suitable agricultural land in the countries which intend to join the EU in the medium term. We must be prepared for that. There is little use dealing with it blindfolded only to find everything collapsing around us.

We must commend not only the Minister but the Taoiseach, Deputy Bertie Ahern, for putting forward a strong case for Ireland in the context of the Agenda 2000 discussions. They have put down firm markers on many occasions, which is most commendable. It is significant that there has been acknowledgement of the importance of the beef and milk sectors to Ireland. The Council included in its conclusions a statement that the dependence of certain member states on specific sectors would be taken into account in the final agreement.

The beef and milk sectors together account for 70 per cent of Irish agriculture output. In no other member state is this the case. Those two sectors are as important to the Irish economy as the entire agriculture sector is to the nine other member states. The Council recognised that major Irish economic interests are at stake in the CAP reform negotiations. That recognition is due to the excellent work of the Minister, Deputy Walsh, in previous negotiations. We must ensure this recognition is honoured in the forthcoming talks.

The proposed price reduction of 30 per cent in the beef sector and the proposed supply control measures go far beyond what is necessary to restore a market balance and will fall disproportionately on extensive producers. It is possible to achieve market balance through a lower price reduction and a different approach to supply controls. We must put forward proposals of this nature to the Commission and the Council.

Another issue of major importance is the level of compensation in the beef sector. The Commission proposals aim to shift the balance of compensation in favour of intensive producers. That cannot be permitted. The Minister has spoken on many occasions about the differences between extensive and intensive production. We must insist on changes in favour of extensive production. A satisfactory outcome on this crucial issue is essential for Ireland if Irish farmers are to stay in beef production.

We must also aim to have an effective intervention system to ensure that, in the event of temporary problems in the market, it will be possible to provide a floor price for produce. Even with the best planning in the world, disruptions of the market are inevitable and it is only right that intervention should provide a floor price to ensure that the farmer's product is marketable at a realistic price or, at least, at a price that will not bankrupt him.

A further difficulty for the beef negotiations is the perception in some member states that [415] Ireland fared well in previous negotiations. While we did hail those negotiations as a victory, we were never entirely happy with the results. We always wanted a better deal although it must be accepted that in the last negotiations we got the best deal available.

We should also point out in the negotiations that extensive production is a low cost system and that our beef prices are up to 25 per cent lower than those of most other member states. It is difficult to explain that to farmers who, having been hard pressed to feed cattle this winter, find they are getting about 25 per cent less than what is available in the European markets. That is difficult to take and they wonder why they should be the ones to suffer.

The Department and the Minister did an excellent job in ensuring the main problem of BSE was taken in hand. The spread of the disease has stopped and is no longer a problem for this country. It occurred in England and other countries but we, not the main culprits, suffered.

We must examine the Commission's proposals on the milk sector. The milk sector did better than most and we should recognise the excellent work of the Department in that area. The proposals involve increasing the milk quota by 2 per cent, but the proposed allocation of the increase between member states is uneven and that causes concern. It is estimated that in some member states quotas will increase by between 1.5 and 8 per cent. Dairy farmers in this State are wondering why there are proposals to give other countries an increase of up to 8 per cent.

There is concern about the impact of the proposals on the sheep sector. I am concerned about the flaws in the proposals. The consequences of the proposals for the beef sector could make the situation in the sheep meat sector even worse.

The report on the EU financing arrangements published by the EU Commission last year complicates the future funding of CAP. The report addressed the complaint of some member states that the burden of their net contribution is excessive. That is the impression given when the Germans and others talk about the contributions they have made. Their contributions in relation to this country ensures there is a quality product in the market, that our rural population is maintained and that agriculture is kept alive in the rural community, not forced into a move to factory farms. Help from enterprise leader companies, through the Minister's Department and other Departments, has assisted farmers in securing alternative incomes for farm families, thus ensuring they can stay in place.

In the proposals, the supply and control measures are targeted exclusively at beef or suckler farmers. Mr. Fischler should be told to look elsewhere. Beef subsidies should be paid for beef animals. Subsidies have been paid for poor quality animals which could not be called beef animals.

[416] We support the Minister in his work. It will be difficult and he will try to make the best possible decisions in the interests of Irish agriculture. All fair-minded people will recognise that he is working in the interests of the farmers of this State to ensure people in rural areas remain in agriculture and can look forward to younger people coming into agriculture.

The Minister has done an excellent job in ensuring any young person who wants to enter into agriculture will be trained to the highest standards. Teagasc and the training colleges should also be complimented. That is what we want; young people on the land should consider getting trained and returning to agriculture. We need young people in agriculture and, although farmers in the past and at present have had difficult times, better days will come. We look forward to the Minister ensuring the better days are not too far away.

Mr. Dardis: We are discussing one of the most significant events which has taken place since Ireland joined the European Community in 1973. It is of profound national importance. It marks a fundamental shift in the manner in which agriculture has been managed in this State since 1973. That is the scale of what confronts us. It is significant because of the dominance of the agricultural industry here. It is important economically and socially and vital for the viability of rural communities and the rural way of life.

We are entering a critical phase in the negotiations and the Minister has our support and good wishes in the difficult task which confronts him. We should also acknowledge the important work of the Taoiseach, who is visiting the European capitals to impress upon them the significance of these events from an Irish point of view. We are dealing with something which will have far reaching consequences for farming and rural communities and for the entire State.

A critical factor is the need for the European Union and the Commission to recognise the dominance of agriculture within our economy to an extent which is unique within the European Union. If we consider proposals to reduce beef prices by 30 per cent, cereal prices by 20 per cent and milk prices by 15 per cent, the consequences are obvious. No other member state stands to lose to the extent we will if the proposals go through unaltered and without proper compensation.

Aspects of the recent history of farming which apply to all enterprises are worth discussing. The Minister is right when he says European agriculture must be positioned to cope with the rapid changes taking place within agriculture and society in general. It will require a national effort to ensure that positioning is done to our advantage. I commend the Irish Farmers' Association, and farming organisations in general, on the responsible way they have approached this matter. I attended the briefing session of the IFA in the Shelbourne Hotel last week. I was very [417] impressed by the tone of the meeting and by the way the president of the IFA made his case. He said we would have to unite in a national effort to ensure that we came out of these talks at the right end.

The Minister stated that his objectives are to secure an agreement that contains lower price reductions and higher compensation for the three sectors – beef, milk and crops – and a non-discriminatory allocation of any increases in milk quotas together with other changes that would be favourable to the development of Irish agriculture. That is worth highlighting and is an objective I endorse. It is well defined and should be pursued.

The Institute of European Affairs recently produced a very valuable report on Agenda 2000, and a large section of that report deals with agriculture. It states concisely and accurately that Ireland's negotiating stance on this package of proposals will be influenced by the need to minimise the impact of the proposals on farm incomes, secure the maximum contribution of agriculture to the national economy, maintain and exploit the competitiveness of the agricultural sector and thus increase exports, promote farming and quality food production in harmony with the environment, and secure a vibrant rural economy. That is a very accurate description of what is required in these negotiations.

The requirement is to put the EU in a position where it can compete in the world market and in the environment of the World Trade Organisation negotiations. We know that what is happening now is related to those negotiations. Our goal must be to position Ireland to derive maximum benefit and to promote a system in Ireland's case that would provide an opportunity for our advantages in production. We have many advantages in competitiveness and production that should be allowed to flourish and should be exploited to national advantage. That is a critical element and I ask the Minister to bear it in mind as it requires considerable emphasis. We have natural advantages in our lack of intensiveness, in the farming environment and in the grass base for production on which our milk, sheep and beef industries are built. Those natural advantages should be allowed to express themselves. If we are to go down the road to market liberalisation, then that liberalisation must be such that it allows those natural advantages to express themselves. To date, those advantages have not been allowed to express themselves, even in cereals.

I should have expressed my vested interest at the outset; I am a cereal grower and a farmer. However, even in cereals we are highly competitive by international standards. Our yields bear favourable comparison with some of the best yields in the world, and our tillage farmers are among the best. This should be borne in mind, and Senator Callanan referred to it earlier.

We must also consider our response when the talks finish. However, an immediate concern is compensation and the budget. It has been stated [418] that it should be possible to stay within the 1.2 per cent of GNP in budget costs, but it is highly questionable that that figure can be met when one puts it in the context of enlargement. If the figure has to be breached, so be it. It has been suggested that if one assumes a 2 per cent growth rate in the amount of revenue coming into the budget per annum, that that would pay for enlargement. That is highly questionable, and more and more of the bodies commenting on this matter agree with the view I hold, that is, that it will be extremely difficult to live within 1.2 per cent of GNP other than by very large cuts in compensation.

Another consideration is the amount of income deriving to farming from direct payments. In general it is approximately 60 per cent but we all know that many enterprises have had more than 100 per cent of their income in direct payments. Historically, if one looks at the sheep or beef sectors, there have been several years when 100 per cent of income or more has come from direct payments. The significance of that is that looking at the degressivity proposals, there would be huge national consequences in this context. The IEA has mentioned a 10 per cent loss of aggregate farm income, which would mean £250 million a year in compensation. That would be hugely significant, and I can think of no other sector that would tolerate a 10 per cent decrease in income without a major national commotion. There are consumer benefits that have been estimated at approximately £80 million by the expert group that looked at this matter for the IEA.

An area where major advances could be made is the environment and linking our agricultural industry to an environmentally friendly system of production. That also has tourism implications. What has happened to some of the hills in the west is a disgrace. I spent my holidays last year in Newport in County Mayo, and some of the hills in that area are bare. There is no vegetation on them. I blame the EU for putting a scheme in place whereby any sheep that one could stand up and pass through a pen would get one a certain amount of money. That is what has led to that destruction of the environment; a European scheme devised by the people who tell us that our agricultural policies will be vetted from an environmental point of view. It is a disgrace. There are advantages for us in extensification. I agree with cross-compliance, though I might be in minority, but it is important that the environment be protected to the advantage of Irish food. We will have a debate next week on genetically modified crops, but there are huge market opportunities for us if we keep the environment in its proper state.

Nationalisation is my other big worry. There seems to be a trend of pushing the policy in the direction where Exchequer funding is discretionary. I know the Minister will resist co-financing – he has stated that he will – but there is the worry that wealthier countries could devote resources to their farming industries. The idea of [419] a national envelope, where money is allocated and there is flexibility and subsidiarity for the Government in deciding how to spend those funds, is a good one. I also agree with Senator Callanan that there is a case to be made for modulation.

The Minister said intervention should not be kept as an outlet in itself but as a support for disruptions that occur from time to time. He is correct. The intervention culture has been hugely damaging to our national effort to market good produce. For too long it was convenient for us to push material into a cold store. We did not have to consider its quality, as it was just taken off the market and we did not have to worry about it. There must of course be a safety net for the system if something like the Russian crisis arises, but intervention should never be a market in itself. It has been hugely damaging to our efforts to sell our produce abroad, though it should be a safety net. Many lessons could be learnt from horticulture in this respect. It does not have those protections but has responded very well.

The IFA has included the retention of quotas as one of the four central elements of its argument. There is a difference between supply management and the quota, which is one way of achieving supply management. I know there must be a quota system in the short term, and the easy way to control management is to control the numbers of cows. It is questionable whether the long-term future of quotas is to Ireland's advantage. If a trade union adopted similar practices we in farming would be highly critical – we could call it restrictive and non-competitive, and we would be right. A quota acquires a capital value of its own, which indicates that something is wrong; it also means young people entering the industry are disadvantaged. If we are to have a future, we must have systems which encourage young people to take over land which older people are vacating.

People in this country can produce competitively at international level, and this may provide an example for the A, B, and C quotas in beef – if some people are prepared to produce milk at world market prices, that is what we should do. There would be an advantage for the Irish dairy industry in unit costs, and the co-operative movement might not have to look as often for opportunities abroad because if the international market grows we can meet its requirements.

Another critical element of our response is advice and research. I am worried about the trend in this area. Teagasc seems to be increasingly devoting its attentions to schemes which draw down European funds, often for training and education programmes. That is correct because those programmes are beneficial in themselves, but production is what drives the agriculture industry. I recall the energy, enthusiasm and work put into agricultural research in the 1960s and 1970s, from which the country derived huge benefit. At the launch of the IEA report, Mr. Brendan Kearney [420] said that the aspiration for research was not matched by resources, and I agree.

I am sure the Minister will seriously examine the money devoted to basic production research because production is going to change fundamentally, particularly in terms of cost. In cereals, for example, will it be possible, purely in economic terms, to continue to use current inputs, and what should replace them? In the past the Agricultural Institute and Teagasc answered questions like that extremely well, and we need them to be answered again.

I spoke about modulation and that relates to rural development, which the proposals regard as the second pillar working within a single framework – I do not like the European jargon of pillars and frameworks. Production remains the basis but there are opportunities to develop rural communities which have been good at identifying what needs to be done in their areas. Leader I was a great example of this – it gave expression to and directed funding towards what they regarded as important. It was beneficial and I would like to see more happening in that area. I am giving the Minister a large menu and I apologise to him for that—

Mr. Ryan: He is well able for it.

Mr. Dardis: —but these arguments are relevant. Alternative crops have a role to play but they will not replace conventional agriculture.

I am sure the Minister will remind the EU of this question – are these proposals compatible with the Treaty? The Treaty speaks of market unity, community preference, and common financial solidarity, and these measures would be illegal if they contravened those founding principles of the EU and the CAP. Rural communities must be maintained and I hope we do not reach the point of regarding small farmers in the west as purely a social welfare problem to be solved by an annual payment totally unrelated to the activity on their land. I am sure the Minister and the Government will resist that and I hope we do not wind up, as is being suggested, with corporate farming, where multinational companies own the land and those who farm it are mere tenants with no control over their destiny. That would be the doomsday scenario but I am confident that with energy at European level, research back up, and a national effort we will not go down that road and Irish agriculture will have a confident future.

Mr. Ryan: Caithfidh mé a bheith níos cúramaí mar is gnáth – tá mé faoi sriantí nach bhfuil morán taithí agam orthu. Ní hé nach bhfuil mé ábalta pé rud a theastaíonn liom a rá, ach b'fhéidir go bhfuil orm a bheith beagánín níos deaslámhaí. To follow what Senator Dardis said, one great motivation behind the EU from its beginnings was a driving force which was common to Christian democracy and social democracy, namely, an intensely strong sense of social soli[421] darity not only in principle but in terms of the obligation to display and operate such solidarity. In the heat of the ideological nonsense which masqueraded as something new in the 1980s, people forgot that European Christian democracy in its general operation would have fitted into the liberal left of the US Democratic Party of the 1950s and 1960s because Europe had, and still has, a model of society which is fundamentally different from that which dominates the US. The European model is based on concepts of social solidarity, reinforced and supplemented by the state, which are not part of the experience of people growing up in the US. In that context, the commitment to minimum rights for workers, rural living and family farming were always part of the EU, however ham-fisted the efforts to achieve the objectives subsequently turned out to be.

I take Senator Dardis's point that we must address the conflict between the way the EU is now going and what is in the Treaty of Rome. I was never the greatest enthusiast for many aspects of the EU but I have always recognised that the European social model is so much more civilised than the American one that we should be careful to defend it. I worry about the GATT negotiations and the WTO because no one disputes that they are driven by the US.

I am not on an anti-American rant, but the conversion of the US to a belief in untrammelled free trade is relatively recent. For a long time the US did not worry about trade – it was a huge economy, entirely self-sufficient in virtually everything. Before the arrival of Japanese competition in a number of areas, Americans did not think that anyone outside the US could produce something which could appeal to US consumers.

The arrival of the Japanese provoked considerable study in eminent US academic centres on the nature of world trade, from which came a revision of the understanding of the nature of trade – Paul Krugman of the Massachusetts Institute of Technology is one person prominent in this field. There is a good analysis of this development by the economist Rory O'Donnell in the NESC report, which preceded the Maastricht Treaty, on the nature of economic and monetary union and the assumptions underlying it.

Essentially, the new model of trade considers the failure of the old model to do what it was designed to do. The theory of trade traditionally held that advantages would balance out under free trade and that if there was excessive development in one area, wages and rents would increase and development would naturally move to other areas. In the conventional model of trade, advantages should, based on the natural advantages of different areas, ultimately be distributed evenly. Economists are not great at considering evidence and are far happier contemplating theory. Evidence from the United States clearly shows that development did not take place on an even basis, that there was an enormous concentration of development in certain areas on the western and eastern coasts and that huge areas were effec[422] tively depopulated. There was a trend in that direction which seemed irreversible.

Studies carried out in the United States in the late 1970s and early 1980s indicated that the old theory of trade was wrong. They indicated that people who entered the market first and established a pre-eminence, for reasons involving the scale of production and the capacity to invest and carry out research, developed an irreversible advantage in the marketplace. The conventional theory of trade would have held that no advantage is irreversible and that competitors and competition would end any kind of quasi monopoly. If we consider that the United States Government was fully aware of a new understanding of trade, that that country had enormous economies of scale in every area of activity and that, therefore, its advantage would almost certainly remain in a world of free trade, one can understand the huge motivation behind the US's demand for free trade worldwide. Free trade did not pose a threat to the United States and studies had shown that those who were ahead would remain ahead. The United States is not seeking free, even competition where those who do best will benefit; it is seeking the institutionalisation of a system which is loaded against those who are behind. In the name of free trade and free competition, the United States is seeking to institutionalise advantage.

It must be remembered that the countries which have developed most successfully in the post-war period are those whose economies developed behind tariff barriers, such as Japan and other Asian countries. The theory of trade we are being fed is complete nonsense. What we are faced with by pressure from the new WTO negotiations and from the previous GATT Agreement, is to involve ourselves in a situation where the scale of agriculture in the United States, in particular, will provide that country with a permanent advantage.

We must add to this the less than critical attitude the US displays to the use of growth hormones and genetically modified food. It is worthwhile to read some of the critical reviews in the United States regarding the attitude of the USEPA to the industries that are most involved advocating the use of genetically modified organisms. There is a considerable body of evidence which shows that the USEPA has been less than vigilant in this area and has, to a degree, accepted that the national interest of the United States suggests that it should give the benefit of doubt to industry and has accepted the assurances of industry in respect of research tests. In a number of cases – details of which I do not have in my possession – it has been shown that selective evidence was presented to the USEPA and that that organisation should have sought more comprehensive evidence but did not do so.

Separate entirely from problems within the EU, we are faced with a world situation which is in danger of being loaded in favour of large scale agricultural production and, because it is loaded [423] in that direction, the United States will have a natural advantage. Based on the modern understanding of trade, the US can expect, with any luck, to retain that advantage. Why else would the country with the largest economy in the world be so keen on total free trade unless it believed that it had inherent advantages from which it would benefit?

In my opinion there is a conflict between our WTO commitments and the objectives of the Treaty of Rome. In the case of Agenda 2000 and agriculture, it is too easy to demand that the Minister turn the world around. There are extraordinary contradictions in many of the demands currently being made in Ireland. For example, there is a demand that levels of expenditure on agriculture should be maintained. This demand originated with parties which believe that levels of taxation should be reduced. Obviously, those who demand that levels of expenditure on agriculture should be maintained are not suggesting that we should pay for it. Presumably, they believe someone else should pay. They actually believe that we should have high expenditure on agriculture which should be funded by increasing the taxes paid by taxpayers throughout Europe. That demand has no future and it is less than honest on the part of our political representatives to continue stating that we want ever lower taxes and that we want ever increasing or at least stable expenditure on agriculture, which should be paid for by people who will not benefit from the ever lower taxes we are seeking for ourselves.

Following the financial crises in the 1970s and 1980s, I thought we had come to realise that public expenditure originates from one source, namely, taxpayers. In this country it originates either from Irish taxpayers or European taxpayers, most significantly German taxpayers. While I have no dispute with the argument that the size of the EU budget should be increased for a number of reasons, the proposal to increase it is actually a suggestion that taxes should be increased in those countries which are net contributors to the EU. Ireland will remain a net beneficiary for a number of years so it is easy for us to sit back and state that these countries should increase their taxes.

Far be it from me to try to teach my grandmother to suck eggs, but it is clear that the agriculture industry requires a system to produce food which consumers will buy and which provides people with an income that makes it worthwhile to continue to produce that food to the maximum extent.

Mr. T. Hayes: Everyone wants that.

Mr. Ryan: I agree, but the problem is that most parties in the Oireacthas no longer believe in State intervention and have wedded themselves to a market model of society. As Lionel Jospin, the Prime Minister of France, said ‘Yes', to a market economy, ‘no' to a market society. We must [424] address the difficulties this presents, which means that there is no single correct solution. The myth of the marketplace is that there is such a solution, namely, to let the market loose. Everyone knows what would happen if we let the market loose – we will turn large areas of our country into a playground for rich Europeans.

We must move away from nonsense about markets and market economics into a consumer based, interventionist model of agriculture which would rely on intervention to do two things. First, to achieve the maximum quality of both raw material and food production and to achieve the maximum competitive advantage in terms of price for those products and, second, to achieve a distribution of income within agriculture which will sustain people who would otherwise be excluded from agriculture.

The fundamental issue affecting agriculture involves the distribution of income within it. Unfortunately, this is an issue which successive Governments have ignored. It is an issue which the farming organisations also appear to have ignored. This is the fundamental issue and it is a scandal which will turn the public against the idea of intervention in agriculture. That individual farmers can receive multiples of between £10,000 and £50,000 in supports for agricultural production is as much a scandal as any of the others we have seen, not because anybody is corrupt but because we have refused to confront it and we are providing ammunition to those who wish to end income support in agriculture.

This is where the fashionable word “modulation” is relevant. It is just another word for saying that people should be supported according to their needs. We need to sustain those who can sustain families in rural society, working as farmers, producing goods of a saleable quality and with a system of income support, either based on production or on income replacement or a combination of both, which is biased towards those who need it.

Not everybody in farming needs the State and some people only use the State to guarantee the replacement of their four wheel drives annually rather than every four years. It is not the function of the State to buy four wheel drives for people with social aspirations, nor has this been its function in areas such as welfare and education. If people are buying that kind of lifestyle on State support, it is time we said the party is over. Such people can manage to live from commercially run agriculture and they should work on such a basis.

It is a fundamental issue as to whether we will try to sustain the maximum amount of expenditure funded by Brussels, evenly distributed, or whether we will accept some cutback in that expenditure and take on the much more demanding, difficult task, based on trial and error, which would have the fundamental objective of redistributing income support within agriculture towards those who need it, not in a dependent sense but because society needs to maintain as many people as possible living outside the [425] urban sprawl. One way of doing that is by ensuring that the maximum number of people have a decent income in agriculture. That may mean that a certain number of people in agriculture will have to get used to the fact that at their scale of agricultural activity they are deemed to be commercial and can live in the commercial world. If so, we should proceed on that basis.

This is not just an issue of agriculture. Rural Ireland will not be sustained simply be a readjusted Common Agricultural Policy because Agenda 2000 could leave us as the playground for the rest of Europe. We want people to live in the rural part of our society for many reasons, not because we want a pleasant place to visit on weekends but because it is a better way to organise society and because urbanisation, especially in Dublin, will ultimately be counterproductive. Large cities are not pleasant places in which to live and very few people profess a great attachment to living there. However, they accept the necessity and make the best of it, but it is not necessarily good for society.

We must move beyond the question of income support. I do not want to lecture on diversification. We have not used the last ten years well. It must have been obvious to anybody who took a step back that things were going to change fundamentally and that it was necessary to look at alternatives in terms of ways of supporting income. This is because the farming organisations are dominated by those who have an interest in sustaining the maximum possible loading of income in favour of those who are most articulate, voluble and well off and who had done best out of the system. It is a huge inhibition.

There is a corporatist aspect in the way agriculture operates which would have been a wonderful model in the 1930s. There are two groups of people whose interests are not the same – those who need State support to make a living and those who presume on State support to live well. Their interests are in conflict. It is a regret that the same farming organisations attempt to represent people who do not have the same interests or needs and who cannot be served best by the same policies.

It is not enough to deal with agriculture. Part of the resources previously spent on the Common Agricultural Policy will have to be used to make rural Ireland family friendly. This is a phrase I have often used about politics. If young people are to be persuaded to marry and bring up children in a rural environment you must guarantee schools, doctors, the ordinary services of the gardaí, a decent transport infrastructure – the transport infrastructure in rural Ireland is falling apart – a proper post office service, shops and recreational facilities. Unless we are prepared to recognise that the market will devastate these activities and find ways of sustaining them, by tax breaks, grants or whatever, we will end up with whatever is implemented under Agenda 2000 and with devastated rural areas.

[426] Every area with a decent quality of amenity is now saturated with holiday homes. These appeal to people, indeed I have one myself.

Mr. T. Hayes: How many farmers own them?

Mr. Ryan: They would not declare them. Holiday homes squeeze young people out of many parts of the country. We should impose a tax of £500 per year on these homes to sustain the environment where they are built. I would also charge their users for local authority supplies, such as water, sewerage, etc. Holiday homes should not be subsidised by the State.

This is not a trivial issue. In any part of the country with a tourism industry it is very difficult for young people to buy a site, never mind a house. There are stories that stone cottages on an acre with primitive services in scenic areas are selling for £120,000. If we do not make these houses available to young people we will have empty villages. Senator O'Meara told me of a village in England which closes from Monday to Friday. On Friday evening it opens up when the four wheel drives arrive from London. It looks like a quaint little English village until approximately 4 p.m. on Sunday when it closes down. I do not believe we want that.

However, we will not get what we want simply by playing around with the CAP nor will we get it if the CAP is reduced in scale but operates on a similar, undifferentiated distribution of income. The bottom line is that those whom we adjudicate can compete in the marketplace should compete and should make their living commercially like everyone else in business. Others deserve our support for both social and economic reasons.

Ms Leonard: The negotiations over Agenda 2000 are probably the most crucial in terms of how they affect the future of Ireland. I compliment the Minister on his accomplishments since he took office almost two years ago. I wish to place on record the commitment he has made to the on-farm investment schemes, including the control of farmyard pollution grants, the dairy hygiene grants, the early retirement scheme and the modifications to the young farmers installation aid scheme. These will be of great assistance to retain the smaller farmholdings, especially in my Counties Cavan and Monaghan.

The purpose of this debate is to consider how CAP reform and Agenda 2000 will affect agriculture. The Minister has rightly said that the current proposals are unacceptable to the farmers of this country. Before outlining what should be altered in these proposals, it is important to look objectively at farming and where it will be in the near future. If a person had 40 acres of land 40 or 50 years ago, he or she would be considered a well-off person in the community. However, 40 acres of land is not viable today. It is estimated that 150 to 200 acres will not be viable in ten years time.

[427] I am not concerned about large beef, dairy and pig producers as they will be the last to be affected by changes in CAP reform. However, I am concerned about whether 80 per cent of the farmers in my constituency, who are farming less than 40 acres of land, have a future. It is unfair to blame the agriculture problems of the past year alone for the difficulties facing these smaller farmers. The CAP proposals were the best we could negotiate at the time, but they have created problems in our agricultural sector. It is important that we do not become a dependent agricultural community where farmers face extinction.

The proposals relating to the beef sector, particularly the one to cut premia by 30 per cent, which is totally unacceptable, will affect a large number of farmers in my area. While it will boost Exchequer finances or the national envelope, as it is called, Irish farmers face a grave future compared to their European counterparts. We may be experiencing an economic boom, but we cannot subsidise the agricultural sector.

It has been suggested that 80 per cent of farmers receive only 20 per cent of the subsidies from Europe. That is incorrect. There is no doubt large landowners in our society gain the most from Europe. If we achieve nothing else at these negotiations, we should ensure a ceiling is placed on the amount each farmer can receive and that money is distributed to those most in need.

There are more than 7.5 million animals in this country, but they are the wrong type and are not suitable for beef production. During the CAP negotiations, farmers throughout Europe were assured they would get an income if they had a large number of animals. As a result, farmers tended to increase their stock rather than acquire quality stock. However, bigger is not necessarily better and quality is better than quantity.

We need to change our views on what we can get out of farming compared to what we put into it, particularly in the beef sector. We must initiate a programme to promote beef at national level to improve its consumption and the demand for it from abroad. There is no doubt beef consumption has been reduced throughout the world, but this is not related only to the problems of the past number of years, particularly BSE. People have stopped consuming meat for many reasons, including health ones.

We should change the way our beef premia are paid if we want to improve the quality of the beef we export. Beef premia are currently paid at ten and 22 months. The 22 months should be reduced to 18 or 20 months so that animals can be disposed of or exported at an earlier age. Meat is imported into this country from animals which are younger than those for which we are looking for markets. We should claim the subsidy at 20 months if it means we can improve our markets abroad.

Suckler cow farmers in my area believe grant aid should be available to slaughter animals of [428] poor quality. If they rear suckler cows and calves to get subsidies, a grant would help to reduce poor quality stock.

I am disappointed the CAP reform proposals do not include pig production. The pig industry is important in my constituency. In the past every farm had a couple of sows which were the bread and butter of the homestead. Unfortunately, pig producers have not been included in any type of aid from Europe. There were 1,000 pig producers in my area at one time, but there are now fewer than 100, a minority of whom are large producers. I am disappointed there are no proposals to assist small farmers with small pig units.

Objective One status is of major significance to farming communities, particularly in the Border region. This is related to the Structural Funds which we were fortunate to receive over the past few years and which I hope we will continue to receive. If we are serious about rural development and regeneration, it is essential that Objective One status is maintained for counties such as Cavan and Monaghan. When we talk about rural decline, we are talking about every small town and village in rural Ireland, particularly in the Border counties. I complimented the Minister on restoring the on-farm investment scheme which is funded from the Structural Funds. If we are serious about maintaining the existence of smaller holdings in rural Ireland, schemes such as the dairy hygiene and the control of farmyard pollution schemes are an integral part of keeping people there and allowing them to develop their smallholdings.

Another problem arises from major intensive farming practices. We have engaged in them for the past twenty years in my area and have been extremely successful. However, there is now over-fertilisation of the soil and high levels of phosphorus. This is causing pollution and problems in our roads and waterways. It is essential we maintain our Objective One status so extra funding from Europe will be available to improve the infrastructure in counties such as my own which are totally dependant on intensive farming industries. Intensive farming industries lead to much heavyweight traffic on the roads. As I have often stated in this House, these industries are the hallmark of my area and I hope we will be able to continue in this field.

A sector of farming which appears to have an increasing market is that of chicken and turkey producers. This type of farming is pursued in my area. It is important that the infrastructure is maintained for all these enterprises. For that reason I hope Objective One status is maintained for our area.

We have reached a crossroads in farming and we now need to decide on the better option for agri-business. Farming was always seen as a tradition passed from father to son. It was seen as a vocation. Unfortunately it is no longer a vocation. It is an extremely competitive business. Agriculture and agricultural produce have been extremely important to this country. However, we [429] must recognise that in 1997, for the first time ever, the export of computer equipment and software was at the same level – worth more than £6 billion – as agricultural exports. In 1998, the computer software industry exports surpassed agricultural exports. As a nation we need to redirect our energies and decide whether we want to export higher quality agricultural produce. That is part of the key to success as an agricultural nation.

We talk about encouraging young people to become involved in agriculture. As some other speakers stated, it is difficult to encourage young people when urban areas have a greater attraction – nine to five jobs with an assured pay cheque at the end of the week. Agricultural colleges should receive separate funding. Unfortunately they receive their funding from Teagasc so that when Teagasc is finished paying its bills and other expenses the agricultural colleges receive the scrapings of the barrel.

In rural Ireland we depend on agriculture. If we are serious about it we must ensure there is adequate funding so we can train young people and make it profitable for them to remain on farms particularly on smaller holdings. We have got to the stage where training in agricultural colleges needs to include training in off-farm trades such as metal work or carpentry in addition to training for the agricultural side so we can maintain young people on farms. I appeal for greater emphasis on the education and training of our young people. I also appeal for agricultural colleges to receive a separate allocation so they can carry out the work they want to do. Unfortunately it is not within their power at present.

The beauty of our country is the small villages and towns. Unfortunately beauty alone will not maintain the agricultural community. I appeal to the Minister to keep uppermost in his mind in upcoming discussions the value of the farmer to rural communities and to small urban areas which they supply. We must keep people in rural Ireland and put a greater emphasis on supporting the smallholder. If there are to be fatalities in agriculture, the small farmer will go first. It is important to remember that traditionally the small farmer has nurtured the agriculture industry and brought it to the stage it is at today.

Mr. Finneran: I welcome the Minister of State to the House. I am pleased to have the opportunity to speak on this matter today. Three weeks ago I asked the Leader to have a debate on agriculture and given its importance we have a full day debate. This House has a valuable contribution to make. The contributions by Senators today have been very constructive and will help the Minister in his forthcoming negotiations. He has a daunting task ahead of him and I wish him well.

The national interest was never more at stake than it is now in the farming negotiations in Europe. Agenda 2000 has very serious implications for us. It is estimated that a farm income [430] loss of approximately £250 million will result, if the Agenda 2000 proposals in their current form are put in place and that possibly £500 million will be lost to the economy. In that context we must address the issue. The Agenda 2000 proposals in their present form are totally unacceptable. I am sure the Minister has the full backing of all Senators from both sides of the House in his attempt to redress the imbalances and get a better deal for the farmer and the economy.

This is not only about farmers. It is about the national interest and the economy. Farming is the backbone of the economy and has been since the State was founded. Its contribution in the past 40 years has been enormous. We must be extremely careful that any measures we introduce or allow the European Commission to introduce do not seriously damage the industry and the 50,000 people on the land. In that context, dealing with Agenda 2000 and the changes to be brought about are onerous tasks for the Minister. He has the full support of the Government and the two Houses of the Oireachtas in his negotiations.

The Commission document talks of a 30 per cent cut in beef prices to 60 pence per pound. However it only proposes 60 per cent compensation. Sheepmeat is not mentioned at all in the Agenda 2000 proposals but the hidden factor is there. If beef prices fall, sheep prices will fall too. It is estimated they will fall by 20 per cent, that is a loss of 20 pence in the pound. This is not mentioned in Agenda 2000. I will be addressing the sheep industry in my contribution because it has not been properly addressed in recent years. I found it disturbing that, from Commissioner Fischler's briefing in Dublin, he was not aware of the intensive lowland sheep industry here.

There have been cuts of 15 per cent in the price of milk and 20 per cent in cereal. This has contributed to a loss of £250 million to farmers and £500 million to the economy and up to 50,000 farmers leaving the land, a daunting picture for the nation. It is best we face the facts. The Minister for Agriculture and Food will be in no doubt he has a difficult task. He and the Taoiseach have a serious job to do. We must bring on side friendly nations who are opposed to the Agenda 2000 proposals and find common ground with them on important issues.

I agree with the Minister that beef and milk are of vital importance to us but I do not think it is confined to that. The sheep industry is important to this country and, particularly, to Roscommon as it is the main outlet of farming. There are intensive and productive sheep farmers in Roscommon, Longford and east Galway, prominent sheep areas.

The most dangerous aspect of the proposals would be to change the system of Common Agricultural Policy financing. The cornerstone of CAP was 100 per cent financing. That was put before us in the seventies and has existed up to now. My worry is that Governments throughout Europe are being replaced by those with ideals [431] and thinking which do not conform with the original principles of the CAP. The socialist Governments in Europe, particularly Austria who now holds the Presidency, are attempting to undermine and dilute the principle of full financing of the CAP and this should be resisted at all costs. This is not in our best interests. As a small nation, we cannot afford to be involved in that area to the extent proposed and, indeed, in what might happen down the road on full extension. The Minister should firmly resist any proposal to change the funding principle of the CAP. It is of vital interest to us and we must ensure it is maintained.

I was astounded at the approach of Commissioner Fischler at his recent briefing in Dublin. He had to refer to his officials on numerous occasions to establish that we had an intensive sheep industry here. I assure Commissioner Fischler and his officials that many of my constituents in Roscommon, our neighbours in east Galway, Longford and Westmeath are totally dependent on the sheep industry for their livelihood. They are intensive farmers who have invested heavily and are making a reasonable living from sheep farming, considering the recent problems. If the proposals to drop the price of beef by 30 per cent are implemented, as sure as night follows day, there will be an end line drop in sheepmeat which will result in farmers' income being cut. A 20 per cent cut to a farmer with 100 sheep will result in his income being cut by £8 per sheep, £1,036 per year. A farmer with 300 to 500 sheep will have his income cut by more than £3,000 to £5,000. If that is the case, I do not see how any sheep farmer in Roscommon can survive.

There has not been much debate on the sheep industry but a major debate is taking place in the midlands and Roscommon. I am somewhat disappointed that there is not a greater emphasis and debate in that regard. I wish to bring home to the Minister and his departmental officials that there will be an approaching disaster for the sheep industry in Roscommon if this matter is not addressed at the forthcoming negotiations. I implore the Minister to recognise the need to deal with this industry and to have a safety net if sheep prices fall.

The extensification premium should be immediately extended to sheep. There has been blatant discrimination against the sheep industry and sheep farmers. I agree 100 per cent with the IFA proposals that an extensification premium rate of £60 per livestock unit be paid. That would be equivalent to approximately £9 per ewe. Sheep farmers are entitled to the same benefits from the CAP as any other sector. To put a round figure on it, the total cost of dealing with that on a national basis would be only £28 million. That money should be made available to the sheep farmers through the extensification premium and a strong case should be made in that regard. [432] There are proposals to change extensification on heifers.

Imports from New Zealand, under the voluntary restraint agreement, impinge significantly on the sheep industry. Any increase in imports would have serious implications for the industry and I suggest when negotiations are taking place this area should be tightened. This should be done through a licence. Under no circumstances should imports be increased. I hope we do not end up with a package which illustrates a greater opportunity for imports of live, carcass or prime goods from New Zealand. There should be resistance to that to protect the industry.

The sheep industry in Roscommon is not confined to sheep farmers but includes major processing outlets and, in particular, the Kepak operation which exports all its sheepmeat to France. Employment in the sheep industry in Roscommon is significant. If the proposals from the European Commission are implemented we will lose 1,000 sheep farmers in Roscommon. What opportunities are available to them if they give up sheep farming? How do they get into other sectors? Where will they get the money to buy quotas? They are not capable of getting involved in other sectors nor would they have the resources to do so. They will leave the land and it will be used for forestry or something else. Not alone will we lose sheep farmers but we will lose the sheepmeat processing industry also. The interests of Roscommon are at stake. A greater emphasis must be placed on the sheep industry.

Senators have mentioned Objective One status which is of vital importance if we are to put in place schemes which address environmental issues. Europe is very conscious of environmental issues today. The control of farmyard pollution and other hygiene schemes are funded under Objective One status and I hope that will continue.

The imbalance in the payment of grants was also mentioned. This imbalance is always impressed upon me when I attend briefing sessions by the farm organisations – I seldom miss one whether held locally or at hotels in Dublin. The general impression is that 80 per cent of the grants are paid to 20 per cent of the farmers. The civil servants in the Department of Agriculture and Food should be able to tell us if it is true. If it is, it is a disgrace and should be rebalanced.

I spent three years in the Consultative Council of the European Commission where it was famously stated at every meeting that we must maintain the population in the regions. If we are to do that, we must address these imbalances and ensure a proper ratio of grants to those who need them most. We have a responsibility in that area. It may not be the most popular thing to say but if we put a ceiling on all grants at a certain livestock level at least we will have created fair play. I ran into major difficulties with the IFA in the mid-eighties when I made that suggestion. People attacked me vigorously because they felt it would [433] block the payment of grants to Irish farmers. I made the point then and still make it that professional people took up farming at that time because grants were available. They have, to some extent, created the problems we have today. They have overloaded and over-populated farming under every heading. They can walk away and return to their professional businesses but the person whose tradition has been farming does not have that opportunity. They have to lease their farms and go to the city to get jobs.

There is a national debate about whether we should support a headage or acreage compensation system. I do not know which to support nor do the farm organisations. No one seems to be able to give a definitive answer. If we remove headage payments in favour of acreage payments we will be voting against production. Young people will not take up farming if there is no production system. I favour payments for production. One must compensate people for work. If people are not paid they will not get involved in the industry. I ask the Minister to come down on the side of headage payments. The professionals will still get enough; they can leave their land idle or sell it off for forestry. If they receive money for acreage irrespective of whether they produce, that will be another nail in the coffin of Irish farming.

Minister of State at the Department of Agriculture and Food (Mr. N. O'Keeffe): I thank all Senators who made a contribution to this very important debate on the Agenda 2000 proposals. We are now at the stage where far reaching decisions vital for the future of agriculture will be taken. I also thank Senators for their support for my approach to the negotiations.

There is only one line which can be taken with proposals which threaten the viability of our agriculture industry and which could seriously damage the economy. This is not to lose sight of the underlying need for reform of the CAP. Senator Kiely outlined the alternative, a return to massive surplus stocks in all sectors if we are not prepared to face the challenges of EU enlargement and the World Trade Organisation negotiations. We must achieve an outcome which will preserve the principles of the CAP, take the interests of all member states into account in a balanced fashion and which will protect the incomes of farmers and the viability of rural communities.

Senator Hayes and others expressed concern about the problems facing all sectors of agriculture at this time. I share his concerns and assure him the Government is doing everything possible to assist farmers in difficulty.

A sum of £20 million is being made available for fodder assistance. This, in addition to the £21 million in fodder-related aid provided before Christmas brings the total to £41 million. I do not accept Senator Hayes' description of this as a “lucky bag”. I was present when he made that remark and was surprised and taken aback by it. The Government has invested £41 million and [434] come to the rescue of many farmers in very serious difficulty. It is a massive contribution to the agriculture industry. Senator Hayes is an excellent spokesperson on agriculture and I am surprised at his calling this investment a “lucky bag”.

In further recognition of the difficulties faced by farmers, my Department has in recent weeks made an all-out effort to bring forward payments which are not normally due until March. I am also engaged in consultations with the banks with a view to achieving greater flexibility for those farmers worst affected. The banks are aware of the problem and are dealing with this on the basis that each farmer is an individual business with an individual problem. They are well aware of the position of the accounts and are co-operating.

Senators Hayes, Kiely and Doyle stressed that the future of Irish beef lies in quality production and intensive promotion of quality products and referred to the problems being caused by market renationalisation. I share that view. Markets are out of our control as a result of the BSE crisis. We are trying to identify markets on the continent. Beef is in over-supply – the volume consumed in the European Community is approximately seven million tonnes and there is approximately a 5 per cent over-supply and a one million tonne over-hang. Some 500,000 tonnes of the beef comes from South America and other parts of the world and another 500,000 tonnes from within the Community. If consumer figures were 5 per cent, there would be a marginal shortfall and if production dropped by 5 per cent, we would be going in the right direction. I identify with the speakers who said that quality is important. The quality markets of Europe are France, the UK and Italy. We are targeting the Italian market which has a requirement of 400,000 tonnes and to which we are supplying only 16,000 tonnes of beef at present. We will ensure we get an increasing share of that quality market which requires prime beef.

Since the 1996 BSE scare there has been a major change in the European beef market. Prior to the BSE crisis much had been achieved by the Irish beef industry in building a strong retail presence in European markets, which accounted for 60 per cent of Irish beef exports in 1995. During that period the industry consistently achieved close to 90 per cent of the EU price, rising to as high as 94 per cent by 1995.

Following the 1996 BSE scares, beef consumption fell considerably within the EU. While there has been a major recovery in consumption, it remains 5 per cent below 1995 levels. The decline in consumption has been accompanied by the development among EU consumers in many member states of a preference for their own domestically produced product. This market renationalisation has been reinforced by country of origin labelling. The impact of these developments on the Irish beef industry has been considerable. Since 1995, Irish exports to EU markets have declined by 17 per cent to just over [435] 215,000 tonnes, with most of that volume concentrated in the lower margin wholesale end of the market.

The aim of the Department is to regain a foothold in those markets through the involvement of Bord Bia, which is a national State promoting agency. It does an excellent job on behalf of Irish producers and processors. I have no doubt there will be a successful outcome to these negotiations because beef consumption is on the increase. Every effort is being made to provide adequate market supports at this time and to provide access to every available outlet in order that beef producers' incomes are underpinned at reasonable levels. Up to 10,000 live cattle per week are leaving the country at present. This is an expanding market. I know Senators are concerned about the success of the live trade. Major progress is being made in that area.

The Minister said earlier that reform of the milk sector is not necessary as the changes proposed are both expensive, costing two billion euros, and of limited benefit in terms of trade liberalisation. Senator Kiely referred to the discriminatory allocation of milk quotas proposed by the Commission. However, I can assure the Senator, and everyone in this House, that if an allocation of milk quotas is part of the final agreement, I will ensure that Ireland will receive an equitable share. Many farmers are looking forward to a milk quota increase which would be important for Ireland. We hear much from the Opposition about our vital national interests. Our national interests were most at stake in 1984 when we accepted the milk quota. We should have used our veto at that time. I remind Senator Hayes that his party was in the driving seat on that occasion. I will be insisting on the Council honouring its 1984 commitment that Ireland obtain priority in the event of an increase in quota. This commitment is of vital importance.

I am aware of the crucial importance of enlisting the support of like-minded member states. I have already referred to the wide range of bilateral meetings I have had throughout the past year. Ireland is not alone in rejecting the Agenda 2000 proposals as they stand at present, and we are not without allies on certain important issues. One of my tasks will be to maximise the value of these alliances to bring about a balanced and equitable agreement. I assure Senators that I will do my utmost in the negotiations to bring about a final outcome that will provide a favourable framework within which the Irish agriculture and food industries can continue to develop for the benefit of all those engaged in those industries and for the economy as a whole.

Another successful achievement of the Government is the farm assistance scheme which is now being introduced. This scheme will increase Government support to the rural community by approximately £43 million per annum. The Government is demonstrating a keen awareness of the problems of rural Ireland by introdu[436] cing schemes to address this crisis. Approximately 150,000 farmers are involved in livestock production. However, some farmers are not making a meaningful income from their holdings. The farm assist scheme will go a long way towards meeting the demands of these farmers.

A number of Senators spoke about the large proportion of direct payments to bigger farmers. I do not have the figures available to me but I think they were quoted in reply to a Dail question some time ago. My concern, and that of the Government, is to protect the incomes of small producers. This is part of the Government's programme. I assure Senators that where the discretion is available to me, I will be making decisions that will benefit small scale producers. In the case of digressivity, while I am totally opposed to it, in the event of it being applied I will ensure that a ceiling is imposed so that as many as possible of our small scale producers will be exempt. This is a replacement for the national envelope.

I would like this august and important forum to wish the Minister, Deputy Walsh, every success in his endeavours. It will be a long and tough haul next week and I have no doubt the Minister and his officials will deliver the goods, as we have always done on this side of the House. I fully support the Government and the Taoiseach and I have no doubt they have the goodwill of Senators in their endeavours. There will be another debate in this House on the outcome of the negotiations which I am sure will be favourable to Ireland.

An Cathaoirleach: When is it proposed to sit again?

Mr. Callanan: Next Wednesday at 2.30 p.m.