Committee Reports > List of Committees > Joint > 1984 > Committee on the Secondary Legislation of the European Communities (4th Committee) > Report No. 02 - Adaptation of the Common Agricultural Policy

REPORT

A. INTRODUCTION

Proposals Examined

1. The Joint Committee has examined the following Commission documents and proposals in relation to the proposed reform of the Common Agricultural Policy:—

(1)Further guidelines for the development of the Common Agricultural Policy — COM(83) 380 final

(2)Commission Communication to the Council

—Report and proposals on ways of increasing the effectiveness of the Community’s structural funds

—Common Agricultural Policy: Commission proposals COM(83) 500 final

(3)Council Regulations (EEC)

—amending Regulation (EEC) No. 804/68 on the common organisation of the market in milk and milk products

—laying down general rules applying to the milk sector levy specified in Article 5c of Regulation (EEC) No. 804/68

—laying down general rules applying to the milk sector levy specified in Article 5d of Regulation (EEC) No. 804/68 COM(83) 548 final

(4)Council Regulation introducing a tax on certain oils and fats, COM(83) 562 final

(5)Council Regulation (EEC) on the continuation of New Zealand butter imports into the United Kingdom under special conditions, COM(83) 574 final

(6)Council Regulations

—amending Regulation (EEC) No. 1723/83 as regards the possibility of granting aids for the use of butter in the manufacture of certain foodstuffs;

—amending Regulation (EEC) No. 1411/71 as regards the fat content of drinking milk;

—laying down general rules on the granting of aid for concentrated skimmed milk and concentrated milk for use as animal feed;

—amending Regulation (EEC) No. 1269/79 with regard to the terms for the disposal of butter at a reduced price for direct consumption COM(83) 611 final

(7)Report from the Commission to the Council on the functioning of the arrangements relating to the import of New Zealand butter into the United Kingdom on special terms during the years 1973 to 1983, COM(83) 616 final.

(8)Council Regulation (EEC) amending Regulation (EEC) No. 1078/77 introducing a system of premiums for the non-marketing of milk and milk products and for the conversion of dairy herds, COM(83) 644 final.

2. The proposals have been examined for the Joint Committee by its Sub-Committee on Agricultural and Fishery Matters under the Chairmanship of Deputy Joe Walsh. The Joint Committee is indebted to Deputy Walsh and his Sub-Committee for their work. The Minister for Agriculture, Mr. Austin Deasy, T.D., appeared before the Joint Committee in November last and gave Members a detailed account of the Commission proposals and the implications for the future of Irish agriculture. The Joint Committee is particularly appreciative of the Minister’s appearance before it and hopes that a practice can be established whereby Ministers concerned with important Community proposals will be prepared to appear before the Joint Committee to assist Members with their deliberations.

The Sub-Committee also had discussions on the subject with the Irish Farmers’ Association, the Council for Development in Agriculture (ACOT) and representatives from the Department of Agriculture. It also considered written memoranda received from the Irish Farmers’ Association, the Irish Creamery Milk Suppliers Association, the National Dairy Council and Córas Beostoic agus Feola (Irish Livestock and Meat Board). The Joint Committee wishes to express its sincere thanks to these bodies for making their views known to it.

3. In recent times, most notably the last twelve months, the European Community has been moving ever deeper into a major financial, budgetary and policy development crisis. While the various aspects of this problem are closely inter-linked the root cause of the problem is budgetary instability. The Community is no longer in a position to fund its existing programmes, not to mention new more comprehensive ones which the social and economic condition of Member States urgently requires.

4. The Community, at present, is very close to exceeding its existing legal funding limit, known as own resources. At present, Community finances comprise the following:

(i)duties from the common customs tariff;

(ii)certain agricultural levies; and

(iii)up to one per cent VAT collected in each Member State.

As the potential for revenue from (i) and (ii) is obviously limited, the raising of the existing one per cent VAT ceiling is generally seen as the most satisfactory and appropriate method of providing the Community with additional own resources.

5. In response to the impending financial crisis the Commission, in May, 1983, published the text of its proposals for new own resources. The Commission, in these proposals, envisaged the abolition of the existing one per cent ceiling on VAT and its replacement, not by a new ceiling but, rather, by a system of increases of 0.4 per cent every five to seven years. However, on 5th March, 1984, in document COM (84) 140 final, the Commission has proposed the raising, by one point, of the maximum rate determining the revenue from value-added tax which may be assigned to the Community — i.e. an increase of the ceiling from one per cent to two per cent.

To put new funding in place, as envisaged by the Commission, a unanimous decision by the Ten Member Governments would be required, together with national parliamentary ratification.

6. In its May, 1983 proposals the Commission also suggested that, for as long as agricultural (specifically FEOGA Guarantee) expenditure exceeded 33 per cent of the budget, the share of VAT that Member States would normally pay to the Community’s budget would be adjusted, according to specific criteria, based on their share of agricultural production and their relative prosperity.

7. The Stuttgart European Council in June, 1983 considered in detail the range of issues confronting the Community, including the own resources and budgetary questions. With a view to ensuring “the relaunch of the Community” it established an emergency procedure to accommodate the major negotiation on the Community’s problems. These problems were divided into four chapters:

(i)future financing and budgetary imbalances;

(ii)adaptation of the CAP;

(iii)review of the structural funds (i.e. the Regional, Social and FEOGA Guidance Funds); and

(iv)the development of new policies.

8. Following the failure of the December, 1983 European Council to reach agreement on these questions, the negotiations have resumed under the French Presidency. The focus of these negotiations, in practice, is concentrated upon the two central issues — financial questions and the adaptation of the CAP.

9. The Joint Committee understands that there is considerable resistance among certain Member States to putting new own resources funding in place until the CAP is reformed (especially the achievement of savings in the dairy sector) and Spain and Portugal become members of the Community. As stated above, agreement on new own resources must be unanimous.

B. REFORM OF THE CAP

10. The main elements of the proposal to reform the Common Agricultural Policy are as follows:-

Commodities

Dairy Products

(a)Imposition of a Supplementary Levy (Super-levy) on all deliveries of milk in excess of the guarantee threshold based on deliveries in 1981 plus one per cent.

(b)Imposition of a special levy on milk from intensive farms e.g. those which deliver more than 15,000 kg per hectare of forage (1,300 gallons per acre).

(c)Suspension of intervention for skimmed milk powder from 1 October to 31 March of each year.

(d)Elimination in two steps of the special subsidy for butter consumption.

(e)A five-year agreement providing for the import of 83,000 tonnes of New Zealand butter in 1984 decreasing by 2,000 tonnes per year to 75,000 tonnes in 1988.

Beef

(a)Alteration of the intervention system in the following ways:-

(i)Restricting purchase of whole and half-carcasses to two Autumn months (peak slaughtering period); limiting purchase of forequarters to five summer months and hindquarters to five winter months.

(ii)Application of the beef grid to intervention purchases from 1 January, 1984.

(iii)Termination of the special “stop/go” derogation on intervention for Ireland.

(b)Termination of calf premium from the start of the 1984/85 marketing year.

(c)Import commitment for young calves for fattening to be implemented each year in a more flexible manner.

(d)Termination of UK variable premium from beginning of 1984/85 marketing year.

(e)Continuation of suckler cow premium at its current level for the encouragement of specialist beef production.

(f)Possible reduction of imports of frozen beef on the “balance sheet” below 60,000 tonnes and cutting back on imports of Alpine breeding cattle from Austria.

Sheepmeat

(a)Limitation of UK variable premium to be a fixed proportion of reference price to bring up UK market price.

(b)Application of ewe premium according to strict criteria.

(c)No advance payment of ewe premium in 1984.

(d)Examination of the possibility of negotiating a reduction in the quantities of sheepmeat imported under voluntary restraint arrangements with third countries and at the same time the introduction of a minimum import price.

Cereals

(a)Introduction of measures to ensure a rapid and effective limitation of imports of cereal substitutes.

(b)Accelerated narrowing of the gap between Community cereals prices and those of third country competitors.

Oils and Fats

Introduction of non-discriminatory internal tax on consumption of oils and fats other than butter, irrespective of their origin.

Monetary Compensatory Amounts

It is proposed to amend the relevant regulations to provide for the dismantlement of MCAs in a more stringent and automatic manner as follows:—

(a)Any MCAs introduced after entry into force of the new regulations would be eliminated in three stages by altering the green rate — ⅓ reduction on introduction of new MCAs, ⅓ at the beginning of the following marketing year and the remaining ⅓ at the beginning of the second marketing year;

(b)MCAs existing at the time of entry into force of the new regulations would be dismantled by altering the green rate in two identical stages at the beginning of the two following marketing years;

(c)The Commission could propose to the Council the more speedy dismantling of negative MCAs;

(d)To avoid harmful effects on incomes of farmers in Member States with positive MCAs, aids on a degressive basis could be introduced as a transitional measure;

(e)The Commission will examine and propose at a later date certain amendments to the rules for calculating MCAs.

11. Before examining in greater detail the Commission proposals set out above, reference may be made to another document — the Commission’s Eighth Communication to the Council concerning the programmes for the utilisation of co-responsibility levy funds in the milk sector for the 1984/85 milk year [COM(83) 687 final]. At the end of January, 1984 proposals on research within and without the Community and on measures for the improvement of milk quality were agreed while measures relating to promotion of milk products remain blocked. The Joint Committee is unable to understand the logic behind this development.

C. VIEWS AND RECOMMENDATIONS OF THE JOINT COMMITTEE ON COMMISSION PROPOSALS

(a) Dairy Products

EEC Commission’s “Super-levy” Proposals for the Milk Sector

12. The Commission are concerned that depressed international markets, rising stocks and increasing production of dairy produce [particularly the intervention products butter and skimmed milk powder (S.M.P.)] are causing enormous problems in the Community’s milk sector. Expenditure in this area has risen sharply and the cost of disposal of additional supplies (through intervention and the payment of various subsidies) is now at an unacceptable level in the Commission’s view.

13. The Commission are, therefore, making a number of proposals with a view towards achieving greater balance as between the supply of and demand for dairy products within the Community. At present, consumption of milk products worldwide is static or even showing a slight decline and the build up of stocks within the EEC is paralleled in other major dairying countries, notably the USA. With gigantic stocks overhanging the world markets, prices are inevitably severely depressed.

14. The following are the most important of the Commission’s “milk-proposals”:—

(i)Prices policy will be restrictive and will operate on a two-year basis rather than annually as heretofore.

(ii)Production which is more than one per cent in excess of that achieved by creameries and dairies during 1981 will be severely penalised through the imposition of a “super-levy” or tax on the excess. This levy will be applied at the rate of 75 per cent of the Community’s target price for milk i.e. at approximately £0.70 per gallon. Ultimately the cost would be passed back to individual producers by their creameries and dairies. The intention is that levy proceeds will pay the disposal cost of deliveries in excess of the permitted quota and more importantly, that application of the super-levy will more or less eliminate production in excess of the threshold level (1981 plus one per cent), thereby stabilising Community milk deliveries.

(iii)In addition, there is a proposal that a special levy of four per cent be applied to “milk from intensive farms”. This would hit those with deliveries in excess of 13,000 gallons who produce at an intensity greater than 1,300 gallons per acre. Such a special levy would be aimed at curbing the development of “milk factories” whose production is based not on grass but imported concentrated animal feed.

15. The Joint Committee accepts that action must be taken to limit the growth of milk supplied in the Community and to contain the growth in expenditure but must, however, insist that expenditure in other sectors which is, in fact, growing more rapidly than in the milk sector, is also dealt with in regard to the milk sector. It must insist that whatever action is eventually taken is fair, that it takes account of the level of development of the dairy industry in the different regions of the Community and that it takes account of the special importance of milk to the Irish economy. In the Joint Committee’s view, the proposed “super-levy” meets none of these aims and consequently is unacceptable. It draws specific attention to the following considerations:

(a)A “super-levy” proposal cannot be fair while there exists the present wide divergence in levels of development as between the various Member States. It cannot take due account of the degree to which different regions and different groups of producers contribute to the current surplus. The three Member States with the most developed dairying (the Netherlands, the UK and Denmark) and which have only nine per cent of Community holdings, have 27 per cent of Community dairy cows and account for almost one-third of Community milk production. Other Member States, including Ireland contribute to total milk production roughly in proportion to their holdings, with the Greek and Italian contributions being less than proportionate. It is no coincidence that the disproportionately high contributions come from those Member States with the highest proportion of larger scale holdings.

(b)While milk production is of far greater relative economic importance to Ireland (where directly and indirectly it accounts for almost nine per cent of GNP) than the other Member States, our dairy industry is still comparatively underdeveloped. Average yields in Ireland are only 80 per cent of the Community average and only about 65 per cent of average yields in the most developed dairying regions. To freeze production levels at this time would clearly be unfair. For instance, a typical 30 cow unit in Ireland would have its annual production frozen at 21,000 gallons or else face a penal levy on the excess. A similar sized unit in the more developed dairy regions could maintain production at 32,000 gallons without any penalty.

(c)From a low base, milk deliveries in Ireland have increased more rapidly since 1981 than elsewhere in the Community. Therefore, in addition to preventing our industry developing toward the level achieved elsewhere, the super-levy would impose the greatest relative burden on our industry in respect of current levels of production. Our increase over 1981 could result in levies totalling close to £100 million on the industry or more likely a loss of output of a similar amount. This would represent at least 10 per cent of the overall Community “take” from the levy, whereas Ireland accounts for less than five per cent of Community deliveries.

Special Levy on Milk from Intensive Farms

16. This proposal would in practice only apply to a relatively small proportion of Community milk production. The Joint Committee supports the principle of this levy but would like to see a more restrictive levy covering large scale intensive producers.

Suspension of Skimmed Milk Powder During Certain Periods

17. This proposal, apart from a cost-cutting exercise makes little sense in the view of the Joint Committee and accordingly it is opposed to it. The proposal would lead to increased offers to intervention in the summer months and to a weaker market in winter months. (Only about 10 per cent of our intervention purchases in 1982 took place in the winter months).

Elimination of Special Subsidy for Butter

18. This proposal would result in a loss to Ireland of over £15 million and would lead to an increase in the retail price of butter of 17p/lb and about 4,000 tonnes lost consumption. It would also lead to reduced consumption in the UK.

New Zealand Butter

19. In relation to New Zealand butter imports the Joint Committee feels that they undermine one of the cornerstones of the CAP inasmuch as they offer an overt challenge to the principle of Community preference. New Zealand imports to the UK (Ireland’s traditional market) amount to 34 per cent of this market. The Joint Committee feels that, since the Commission proposals on milk involve major sacrifices by Community producers, it is imperative that these be matched by sacrifices from third countries. For this reason it would like to see a significant reduction in the New Zealand butter import quota into the Community over and above that likely to be imposed in the normal review. The Commission proposals for a five-year agreement providing for the import of 83,000 tonnes of New Zealand butter in 1984 reducing by 2,000 tonnes a year to 75,000 tonnes in 1988 is totally inadequate. The Joint Committee also wishes to draw attention to the fact that butter imported from New Zealand on to the British market is sweet cream butter of which Ireland is the only other major supplier. As Britain is still our main export outlet for Irish butter this country is put in a very adverse trading position compared with Denmark and the Netherlands who export ripened or lactic cream butter to the British market and are accordingly not affected by New Zealand imports. Imports of New Zealand cheddar cheese to the British market cause a similar problem for Ireland as cheddar cheese is our main variety of cheese on the British market. In the Joint Committee’s view this position constitutes a serious discrimination against Irish dairy products and urges that the Commission proposals for the import of New Zealand butter and cheese on to the British market take a realistic and sympathetic view of Ireland’s special problems in this area.

(b) Beef

Alteration of Beef Intervention System

20. The stated purpose of changing the intervention system is “to conform more to market realities”. Under the present arrangements purchases of carcases, sides and hinds vary with market demand i.e. there is flexibility and the periods during which each category is brought into intervention is decided by the Commission after consultation with the Beef Management Committee. These flexible arrangements have worked reasonably well in the past. The Joint Committee opposes what is now proposed since it is too rigid and takes little account of the needs of the market at any given time. Intervention must remain an effective support for the prices fixed by the Council and therefore must respond to the market situation rather than attempting to impose a rigid pattern on the market. The Commission proposal could also worsen our already acute seasonality problem in finished cattle.

Application of Beef Grid to Intervention Purchases

21. In other Member States intervention is suspended when the market price of an intervention category exceeds its intervention price but under a special derogation for Ireland this must be accompanied by a further condition that our reference price for all cattle must at the same time exceed 85 per cent of the guide price. The reason for this is that the general level of our cattle prices has always been well below Community levels and also as a country we export over 80 per cent of our beef. The Commission feel the beef grid could go a long way to remedy this and that therefore the derogation should be dropped.

The Joint Committee feels that the beef grid should be operated on the basis that uniform prices are applied throughout the Community and that most categories of our cattle at present eligible for intervention should continue to be eligible.

Termination of Calf Premium

22. The calf premium was given to Ireland primarily as a farm income measure to supplement the general price increases in the past two years which fall considerably below our inflation and costs. It has been extended only to the end of the 1983/84 beef year. It is worth about £40 million a year to us. The only other beneficiaries are Italy, Greece and Northern Ireland. The original purpose of it in Italy was to stop the decline of cattle breeding herds there. Our beef breeding herd is still declining and our real farm income has only begun to recover again after three bad years.

The Joint Committee urges that every effort be made in negotiations to retain this premium.

Import Commitment for Young Calves

23. This was originally introduced to arrest the decline of cattle herds in Italy. The quota should, in the Joint Committee’s view, be phased out over a period of six years at least.

Termination of UK Variable Premium

24. The Variable Premium is in effect a deficiency payment system for beef in the UK which is funded as to 60 per cent by the UK Exchequer and 40 per cent by FEOGA. Payment is limited to 10p/lb carcase weight. Irish cattle exported to the UK qualify for the premium if slaughtered there. Our exports of eligible beef (but not those of other Member States) also qualify for the premium which is paid by the UK Government to the Irish Government for onward payment to Irish exporters. The premium is clawed back on beef sold into intervention and on cattle exported live from the UK. No such clawback applies in the case of beef exports from the UK. This has been creating very serious difficulties and distortions for Irish exports of beef to foreign markets and Ireland has been complaining vehemently to the EEC about it, but without success. The Joint Committee feels that if the premium is to be maintained it will be necessary to have a clawback on third country trade.

Suckler Cow Premium

25. The suckler cow premium is currently 15 ECU per cow with an option by Member States to pay another 25 ECU from their own funds. In the case of Ireland and Northern Ireland FEOGA pay 20 ECU of the national element bringing the total premium paid here to 35 ECU or £25.40.

Under the Commission’s proposals this premium would be the only premium payable and accordingly the Joint Committee feels that a case exists to have it increased to a realistic level.

Reduction of Imports of Frozen Beef

26. Imports of frozen beef depress the price of all beef on an oversupplied Community market. The Joint Committee would support the Commission’s proposals on grounds of adequate Community supplies and the need for third countries to be seen to share burdens.

(c) Sheepmeat

Limitation of UK Variable Premium

27. An increase in UK market prices is needed to move towards uniform Community prices (as was the original aim of the sheepmeat regime) and to protect the Community market against UK imports in periods when UK currency is weak. The Variable Premium, in the Joint Committee’s view, is costly and tends to depress UK market price and accordingly it supports the Commission’s proposals to limit the Variable Premium to a fixed proportion of the reference price.

Ewe Premium

28. The Joint Committee is anxious that any proposals in this area should not be such as to discourage expansion in a sector where Community production is still considerably below consumption. It opposes the proposal not to grant advance payments of the ewe premium in 1984 as this would tend to discourage sheep producers and affect their returns.

Reduction of Sheepmeat Imports from Third Countries

29. A reduction in imports of sheepmeat from third countries is necessary if the Community is to get anywhere near to price convergence and achieve a workable common policy for sheepmeat.

(d) Cereals

Limitation of Imports of Cereal Substitutes

30. Increased production of milk surplus has been aggravated by the use in countries such as the Netherlands and Germany of imported cereal substitutes. Imports of cereal substitutes into the Community have increased significantly in recent years and give an unfair advantage over producers using grass as their basic feed stock.

Cereal substitutes are imported into the Community at low rates of duty or in some cases duty free. Community imports represent over 85 per cent of world trade in cereal substitutes and clearly action is necessary to curtail the extent of these imports. Imported cereal substitutes displace Community-grown cereals and it appears illogical to the Joint Committee that while virtually free access is allowed to the imported cereals, the Community products have to be sold on third country markets at great cost to Community funds. The Joint Committee for these reasons fully supports the Commission’s proposals to invoke its rights under GATT to curb the importation of these substitute products. Again it feels that this is an area where Community preference should be invoked. It feels that action under the aegis of GATT would be preferable to attempting, as suggested by the Commission, to curtail Community production with the consequence of reducing producers’ income.

Price of Community Cereals

31. The Joint Committee feels that the Community should operate its internal policies independently and not make them depend on variations in what third countries do for their farmers. Regard must also be had to trends in production costs in the Community and incomes of producers.

(e) Oils and Fats

32. The Community is only 60 per cent self-sufficient in oils and fats for human consumption. This includes butter fat, olive oil and seed oils. Butter fat constitutes only 27 per cent of total oils and fats for human consumption in the Community and oils and fats other than butter and olive oil come in at low or zero rates of customs duties.

The Commission’s proposal would help increase consumption of butter and also alleviate somewhat the budgetary problem and accordingly the Joint Committee fully supports it.

(f) Monetary Compensatory Amounts

33. In relation to Monetary Compensatory Amounts (MCAs) the Joint Committee urges strongly that they be abolished at the earliest opportunity. MCAs have, in the Joint Committee’s opinion, serious long-term effects inasmuch as persistent differences between central and green rates of exchanges distort competition, impede structural change in agriculture and prevent the optimum utilisation of Community resources. For many years now the price unity of the Community has been seriously upset by the operation of the MCA system. Monetary compensation appropriates an unacceptably high proportion of total agricultural expenditure and as long as the difference between the central and green rates persists the Common Agricultural Policy is open to serious challenge. For this reason the Joint Committee would like to see a firm commitment to approximating the green and central exchange rates and accordingly welcomes the Commission’s proposals to phase out MCAs. It would like, however, to see the timescale for the dismantling of MCAs abridged particularly in view of their retarding effect on the development of Irish agriculture. The political will of the Community appears to be galvanising towards the phasing out of monetary compensation and the Joint Committee urges that every effort be made at the forthcoming European Council later this month to press for their total abolition.

D. CONCLUSION

34. The ceiling of Community expenditure with existing own resources will be reached in the course of this year. In the absence of the development of other equally effective policies within the Community, the bulk of spending in the Community Budget has gone on agriculture. For that reason, when the pressure comes on the Community Budget the impact must, inevitably, be felt in agriculture. And because of the percentage of, agricultural spending which goes on supporting the dairy market, where milk is heavily in surplus, it is inevitable that much of the pressure for curtailment of expenditure should fall in this area. This is why the Community is faced with a milk super-levy, which would penalise any farmer who tried to increase his production.

35. The Joint Committee readily acknowledges the critical problem facing the Community due to surplus dairy production and favours the introduction of remedial measures to redress this situation. However, the Joint Committee must oppose to the full extent the proposed super-levy under which the Irish producer would be penalised to the extent that he would receive 70p per gallon less than the market price for every gallon in excess of that which he produced in 1981 plus one per cent. (If he produced 10,000 gallons in 1981, the penalty would start to apply to each gallon in excess of 10,100 gallons on the application of the super-levy). The interdependence of the dairy and beef industries in Ireland is almost total. Milk production accounts for 33 per cent of gross agricultural output. Milk output is six-and-a-half times more important to Ireland than overall milk production is to the European Communities as a whole. Milk in Ireland is four times more important to the Irish economy than Danish milk is to the Danish economy, and three-and-a-half times more important than Greek milk is to the Greek economy. The importance of milk production in Greece and Denmark is next to Ireland in the Community. Milk and beef output in Ireland is five-and-a-half times more important than it is in Denmark and four-and-a-half times more important than in Greece. Cattle, beef and dairy exports from Ireland amount to over 80 per cent of our agricultural exports, the import content of which is minimal compared with the import content of other industrial exports.

36. One-half of all farm families depend almost solely on milk production for their incomes and the other half almost in its entirety depends on cattle and beef production. Apart from the farm family community, the dairy and cattle industries create and maintain more than 20,000 jobs. This does not include the indirect employment guaranteed in the input and processing sectors. The introduction of a super-levy would provide a shield of protection for producers who would be squeezed out if true market forces and the laws of economics were allowed to operate. The levy would also destroy forever the chances of naturally advantaged areas of the Community of realising their full potential.

37. Eighty-five per cent of dairy herds in Ireland are composed of less than 30 cows (46 per cent in Holland and 35 per cent in the UK). The cheap food market which we supplied and the almost obligatory dual purpose breeding system operated, has resulted in the average yield of the Irish dairy cow being 700 gallons per lactation compared with 1,081 gallons in Holland and 1,040 gallons in Germany. In production per forage acre, the discrimination is much wider. In these circumstances, the Joint Committee feels than an incontrovertible case exists for a derogation from the super-levy for Ireland and trusts that this will be strenuously pressed for at the Brussels Summit. The Joint Committee notes with dissatisfaction the emphasis in the Commission proposals on reduction of output of dairy products to the virtual exclusion of incentives to encourage consumption such as the development of substitute products. Ireland has some noticeable success in this area such as the manufacture of cream liqueurs. These products have the added advantage that they are exported to third countries, such as the United States, thus curtailing supply on the Community market. The Joint Committee urges that this area of activity be thoroughly exploited to seek a solution to the Community’s dairying problems. Adequate research and development investment aid may well be handsomely rewarded through finding new uses for dairy products and their derivatives. In this connection the pharmaceutical industry, which is well established in this country, might provide some positive outlets.

38. The response of the Irish electorate in 1972 was decidedly in favour of Community membership. Ireland accepted as inevitable the challenge to its established industrial base in the belief that it would be counterbalanced with unrestricted access to the Community agriculture market and the organic development of Irish agriculture. The Joint Committee views the proposed measures in the milk sector to remedy the budgetary difficulties of the Community, and in particular their application to Ireland, as an attack on the whole concept of the Common Agricultural Policy which is the cornerstone of the Community.

39. The importation into the Community of New Zealand butter, particularly when the market is over-supplied, is hard to justify and the importation of cereal substitutes when Community cereals have to be off-loaded on third country markets at great expense is equally difficult to stand over. The principle of Community preference which is at the heart of the Treaties of Rome and Paris would appear to be ignored or successfully circumvented by the Commission proposals if adopted. In view of the serious implications which the adoption of these measures would have for Irish Agriculture the Joint Committee requests that a debate take place in Dáil Éireann and Seanad Éireann as soon as possible.

40. In conclusion the Joint Committee urges our negotiators to take a firm stand in the overall interest of Irish agriculture so that the crisis that is looming on the horizon for Irish farmers and the Irish economy generally can be averted.

(Signed) GERARD COLLINS,

Chairman of the Joint Committee.

7 March, 1984.