Committee Reports > List of Committees > Joint > 1998 > Committee on Agriculture, Food and Marine > Minutes of Evidence 28 Jan 98 to 27 May 98

TITHE AN OIREACHTAIS

An Comhchoiste um Thalmhaíocht, Bia agus an Mhuir

HOUSES OF THE OIREACHTAS

Joint Committee on Agriculture, Food and the Marine

Minutes of Evidence

of meetings from

28 January 1998 to 27 May 1998

CONTENTS

Introduction by the Chairman of the Joint Committee Mr John Ellis, T.D., Chairman of the Joint Committee

At its meeting of 16 December 1997, shortly after its establishment, the Joint Committee decided to pursue a policy of meeting representative organisations and companies in the agricultural and marine sectors in order to hear at first hand from them what they considered to be the five important issues facing them and to discuss these and other matters with them. The Committee felt that this process of consultation was necessary if it was to properly inform itself and fulfill the mandate given to it by both Houses of the Oireachtas.

The minutes of evidence contained in this document record the meetings that have taken place up to the end of May 1998 during which the Committee met a total of fourteen representative organisations and companies. It is the intention of the Committee to continue to meet bodies of this nature as and when required particularly as it commences the task of examining the implications of Agenda 2000 and other changes facing the agricultural and marine sectors.

I would like to take the opportunity, on behalf of my colleagues in the Joint Committee, to extend a sincere thanks to all the organisations and bodies who took the time to meet the Committee over the last six months or so and assist it in the formation of its views. I hope that we will have the opportunity to have many more interesting exchanges during the course of the Committee's examination of Agenda 2000 and related areas.

John Ellis, T.D.

Chairman

16 July 1998

An Comhchoiste um Thalmhaíocht, Bia agus an Mhuir

Joint Committee on Agriculture, Food and the Marine

Dé Céadaoin, 28 Eanáir 1998.

Wednesday, 28 January 1998.

The Joint Committee met at 2.05 p.m.

MEMBERS PRESENT

Deputy John Ellis (in the Chair)

Apologies received from Deputy John Browne (Wexford) and Senators Francis O'Brien and Feargal Quinn

Presentation by Coillte Teo.

Chairman: I welcome Mr. Lowery, Mr. Byrne and Mr. Dwyer to our meeting and appreciate the fact they have come at such short notice to appear before the committee.

At last week's meeting and at a meeting before Christmas there was concern expressed regarding the proposed acquisition by Coillte of a major shareholding in Balcas. At that stage the members expressed a wish to hear the views of Coillte and to express their own views. It has been suggested that you would make a presentation to the committee of approximately five minutes and after that we will go to a question and answer session. We will concentrate on singular questions rather than a long list. We would appreciate if you could answer the specific questions, if possible, rather than have people put a number of questions before you which may lead to long delays, particularly in view of our shortage of time. May I also say at this stage that hopefully we will be able to take you into a full meeting of the committee to deal with the overall projections you see for Coillte in the future.

Mr. Lowery: Thank you, Chairman, for the introduction. We were pleased to accept the invitation of the committee to come and explain the implications of the proposed acquisition of Balcas. We have tried to anticipate some of the concerns the committee might have and we have set them down in short form in a document which I will take you through quickly. You can interrupt me as I go along to deal with the issues I am bringing up or I can go through it fully and then answer questions, whichever you prefer.

Chairman: If some of the members feel there is some specific question which may arise as they go along they can do that, but I would prefer we stay with the system of making the presentation and members asking their questions afterwards.

Mr. Lowery: On page 2 of the document we outline the legislative basis for the proposed acquisition. It says that under the Forestry Act, 1988, Coillte is a company mandated to carry on the business of forestry and related activities on a commercial basis. That is the primary object of the company as set down in the legislation.

On the next page we outline the policy background to this proposal. It is not something that came at short notice. It has been considered over a long period and has been incorporated into the Government strategy for forestry, Growing for the Future, which was published in mid-1996. It was a very comprehensive document. The point relevant to the Balcas acquisition is that the plan envisaged and endorsed the full corporate development of Coillte. It envisaged the advancement of proposals by Coillte for further integration of processing, including the making of equity investments in sawmilling. Related to that it endorsed radical changes to Coillte's log sales system. I will return to that later as it is pertinent to the concerns the committee might have about this proposal.

Coillte sees itself as having the potential to become a major Irish-owned internationally trading forestry and forest products company. We believe that this is in line with national industrial policy. Our immediate objectives are to underpin the value of the asset base worth more than £1 billion by securing a key outlet onto the British market. The British market is critical from the point of view of Irish timber sales after the development of the Irish forest industry.

The second strategic objective is to broaden the capability and operating base of Coillte to allow us to grow further. The proposed acquisition of Balcas helps to give effect to that policy.

The next page, page 4, sets down precisely the current status of the Balcas proposal. It was considered by the Coillte board in July 1997 and they decided to seek the permission of the Minister for the Marine and Natural Resources and the Minister for Finance for the acquisition of a majority stake in Balcas. Non-binding heads of agreement were signed in August 1997 following which an extensive due diligence process took place. In October 1997 after the due diligence process was completed the board considered it again and, acting under the Forestry Act, 1988, sought the permission of the Ministers for Marine and Natural Resources and Finance to proceed with the purchase of the majority shareholding in Balcas. The Government considered it and approval was given on December 19, 1997. The share purchase agreement was signed on December 31 for the purchase of 80 per cent of the shares in Balcas. Those 80 per cent shares are currently owned by the Duke of Abercorn. The remaining 20 per cent are owned by the management of the company. The agreement is conditional on the transaction getting the approval, under the Mergers and Monopolies Act, of the Minister for Enterprise, Trade and Employment. The acquisition was notified to the Minister under the Mergers and Monopolies Act on January 2, 1998 and we heard yesterday that the Minister had referred it to the Competition Authority. The present position is that a shareholders' agreement has been signed and it has been referred to the Competition Authority. Pending completion of the deal we have obtained much information from Balcas which, of necessity, has to be confidential.

To put the matter in a slightly wider context, the next page, page 5 shows, on a very rough map of Ireland, the shape of the existing industry. I want to draw the three pieces to your attention. There are approximately 100 saw mills in the country. The bigger ones, which account for more than 80 per cent of log sales, are shown in blue. The Balcas mills are shown in red. Centres of the pulp processing industry are shown in orange. These use residues from saw mills and pulpwood from Coillte. They are in general big, heavy processing plants. The OSB mill in Waterford which is a joint venture between Coillte and Louisiana Pacific, the Medite plant in Clonmel, the Finsa plant in Scariff which makes chip board and the Masonite plant in Leitrim which has just come into production.

Balcas has five operations in Ireland in total, two in the South and three in the North. Their main base and their main saw mill is in Enniskillen. They have a saw mill in Magherafelt and one in Newtowngore in County Leitrim. They also own a pallet manufacturing plant outside Belfast and a value added plant in Kill, County Kildare. That is the industry.

On the next page we give you an up to date picture of the bigger players in the industry. This graph shows log purchases from Coillte in 1997. This changes somewhat from year to year. In 1996, for example, Balcas was the biggest buyer, In 1997, Glennon was the biggest buyer followed by Woodfab, Murray's in Ballygar and ECC in Cornamona in County Galway. Balcas was number five in 1997. Members may well be familiar with these companies. SFE is in Enniskeen in County Cork, Woodfab have two plants, one in Fermoy, County Cork and one in Aughrim, County Wicklow. Glennon's are in Longford, Murray's are in Ballygar, County Galway, Palfab is in Macroom, County Cork, IFP, (Irish Forest Products) is in Mountrath, County Laois, Coolrain is in Coolrain, County Laois, Deacon's in Ballon, County Carlow and Wood Industries have a plant in Rathdrum, County Wicklow. There are about 90 other smaller mills scattered around the country. It might be useful, later, to explain a little more about the structure of the industry if Members wish.

They key issues for sawmilling are that our saw log supplies are increasing quite rapidly. In 1998 we will have 250,000 cubic metres, which is about 250,000 tons, more of saw logs for sale than in 1997. This figure will grow further in 1999. This means that exports are critical. The industry must be internationally competitive and at the moment it is not. Individual mills are excellent but overall the industry does not have the ability to deal with increasing log supplies in a very difficult export market. The industry is not well structured. This is a critical issue. There is absolute consensus in the industry about the need for re-structuring and we have an absolutely vital interest in ensuring that it happens. This has been talked about for at least seven years.

Chairman: We have serious time constraints and perhaps Mr. Lowery could deal quickly with the remainder of the proposal.

Mr. Lowery: Page 8 is a critical page. It is totally relevant to the issue of how Balcas will operate on the same basis as everyone else. The log sales system has been totally changed at the behest of the sawmillers. The new system has been developed in full agreement with them and in conjunction with the sawmillers and with the Forestry Service. The main elements of the new system are first, that the mills get a great deal of information in advance. Second, there are fortnightly electronic auctions. This is exceptional because it gives an opportunity to buy very often. Third, buyers can bid from their own premises by using modern technology. Fourth, the reserve prices are set automatically by reference to market prices using a model provided by international consultants, McKinsey's. This model is very well thought out and was developed at enormous cost. Lots are sold automatically once they reach or exceed the reserve price and they are sold in random order so that no mill has an advantage. Mills have real time information on their computer screens about the price being paid for each individual lot and they are sold to the highest bidder. Unsold material is re-offered for sale twice. Most importantly that system, which has been agreed by the industry and which is fully documented, is subject to independent audit. KPMG have been appointed as auditors in agreement with the industry and KPMG attend every auction. In other words the sales system is completely competitive and completely transparent. The allocation of timber and the pricing of timber is objective and can be seen to be so. This is a cornerstone of our participation in the industry without affecting competitiveness.

The table on page 9 is also worth looking at. It is a record of the new sales system since it started. We now have a year's experience of the system. We have sold £45 million worth of timber. We have been surprised at the extent to which we have been able to sell timber at the first time of offer. The graph shows the percentages sold at each sale in the 80s and 90s in virtually all cases. There are two exceptions at the year end when markets were weak and when mills were closing for Christmas. Overall 86 per cent of material was sold at the first time of offer. This shows that the system which we have put in place is working in setting market prices and in letting the mills decide what they want to pay. It is important that we look at the broader issue of why Coillte should get involved in the industry.

The new sales system is summarised on page 10. It is fully competitive and fully transparent. It is working successfully. It has been designed to facilitate sawmill investment by Coillte. It was notified to the Competition Authority in September 1997. Coillte will comply with any requirements of the Competition Authority in relation to the system and its operation. Most importantly, Balcas will operate within the sales system on equal terms with all other mills.

Page 11 is definitional on what is involved in Balcas. They are the largest sawmilling company in the island of Ireland. We have a unique opportunity, through circumstances, to acquire 80 per cent of it and thereby to become involved in adding value to our logs and to participate in processing Northern Ireland logs. Turnover is approximately £50 million and they employ 520 people of whom 135 are in the Republic directly and another 175 are involved in harvesting and haulage in the Republic.

They are the predominant exporter of Irish timber. They account for approximately half of all sawn timber which is exported. They are very well positioned within the key British market. They have four saw mills, three in Ireland and one in Estonia, and they have two added value plants. Most importantly, they are the key supplier to Masonite in County Leitrim. They account for about half of Masonite's supplies, which uses both Northern Ireland and Southern residues. The Estonian mill is profitable and is a base for future development. From our point of view, it ties down a key export market for sawn timber and it broadens the operating base of Coillte. It gives us scope for further development in Ireland and outside.

Our mandate is commercial. We are pursuing a strategy of full corporate development which was endorsed in the Government's strategy, growing for the future. We have agreed to purchase 80 per cent of Balcas. That is in the process of being approved by the Government. It has been submitted to the Minister for Enterprise, Trade and Employment for approval under the mergers and monopolies legislation. The involvement in Balcas would support the development of an internationally competitive sawmilling sector in Ireland. It will trade on exactly the same basis as other mills with regard to log purchases, using the transparent and auditable log sales system which was developed in conjunction with the ITC. Its market is the UK and it will tie down a key export channel. We believe it is a very good acquisition for the company.

Chairman: I doubt the committee will have time to deal with all the matters today. Hopefully, the delegation can come back at an early date to deal further with them. What is the estimated cost of the acquisition of the 80 per cent share of Balcas?

Mr. Lowery: Unfortunately, the vendor will not allow us to disclose that.

Chairman: Who carried out the due diligence?

Mr. Lowery: KPMG.

Chairman: Is Mr. Lowery happy with the results?

Mr. Lowery: It is a very positive due diligence with which the board is happy.

Chairman: I take it that means if any unforeseen liabilities occurred, Coillte will be covered by the insurance of KPMG.

Mr. Lowery: We are extensively covered by the share purchase agreement.

Chairman: It is a straight question. Is Coillte covered by KPMG's insurance if anything arises at a later stage? Yes or no?

Mr. Dwyer: Yes, up to a certain figure.

Chairman: What is the figure?

Mr. Dwyer: It is approaching £1 million.

Chairman: What is the cost of the purchase if it is a £50 million turnover business and Coillte is taking a £1 million bond from the people carrying out due diligence? Has Coillte settled on that bond?

Mr. Dwyer: Yes.

Chairman: It is a £1 million bond for a £50 million deal where nobody knows anything. Coillte is acquiring a private company. We are aware of what happened with regard to Powerscreen. It was a public company in which everybody had the height of confidence, but it was caught in a take over. That amount is not sufficient to safeguard the public. Coillte, although operating in its current manner, is still responsible to the Government. A bond of £1 million is not sufficient. Perhaps other members of the committee wish to deal with this aspect.

Regarding the log sale system, does Coillte have any intention of removing that from its realm and using systems similar to those operated by the milk marketing board in Northern Ireland and other groups? Will the area of log sales be given to, for example, KPMG, which currently audits the system, or a totally independent body?

Mr. Lowery: They already audit it.

Chairman: Does Coillte have any intention of giving it to a public operation or group which will operate it in the same way as milk marketing board auctions are run regarding milk in Northern Ireland?

Mr. Lowery: No decision has been made to do that.

Chairman: It would give confidence to private sawmillers. They have a major worry because Coillte is the biggest supplier of logs and it will now be a processor. They feel the two aspects should be totally separate. Does Coillte have any plans to separate them?

Mr. Lowery: I was not aware there was a demand to do it. However, there would not be any difficulty in having somebody independently operate the sales system.

Deputy Finucane: I thank Mr. Lowery for appearing at short notice. The committee only decided last Thursday to hold this discussion. When I proposed it, I was concerned because the decision was taken at Cabinet level on 19 December last, matters had moved on and the committee had not had a chance to discuss the issue. Members were lobbied extensively by the sawmilling industry which was extremely concerned about Coillte diversifying directly into sawmilling.

Does Mr. Lowery think the decision will lead to rationalisation within the sawmilling industry? What is Mr. Lowery's view of the fact that the Joint Committee on State-sponsored Bodies stated relatively recently that Coillte should not diversify into another area until after at least three years of new log pricing activity. What does Mr. Lowery say to the ITC which stated that the new system for log sales which Coillte introduced in terms of logs being withdrawn from the market is not successful? Surely this decision will have profound implications for the sawmilling industry in the South?

Mr. Lowery: The Deputy's first point relates to restructuring. There was no restructuring in the industry up to mid-1996. Following our announcement about Balcas, the people who own Irish Forest Products in Mountrath have agreed to acquire the Woodfab Aughrim plant. Murray's in Ballygar have bought Deacon's plant in Carlow and we understand that Glennon's are in the process of acquiring the Woodfab plant in Fermoy. Since the announcement of Balcas, there has been a radical change in the industry in the South. That change is very welcome and we support it. We want restructuring. There is the emergence of a number of strong competitive mills among private sawmillers which will do the job for our timber. The fact that Coillte took an interest in Balcas has stimulated the rest of the industry to move to restructuring. Far from closing in, the industry has expanded and begun to look positively at restructuring which is long overdue.

The Deputy's second point related to the Joint Committee on State-sponsored Bodies. The Balcas opportunity was unique over which we had no control in terms of timing. It emerged; Coillte is a commercial company and we had a responsibility to follow it up. Regarding the specific recommendation, the Government considered the proposal. We forwarded it to the Minister and Government, as we are obliged to do, and they approved the project.

The Deputy's third point related to the withdrawal of log sales from the market. The table I showed the committee that the amount sold at the first time of offer over the last 12 months was exceptionally high - 86 per cent in total. It was at only two auctions coming up to Christmas that, due to special circumstances, there were unsold logs. We have agreed with the sawmillers that we will offer unsold lots at least twice, which means they will be offered three times. We will also offer any lots remaining unsold in a special sale later in the year, probably on a quarterly basis. We have agreed a process with the sawmillers for dealing with unsold logs.

Deputy Finucane: Is the fact that 64 per cent of the material was withdrawn on 18 December regarded as a unique situation?

Mr. Lowery: Yes.

Deputy M. Kitt: I welcome the representatives from Coillte. I raised this matter at the first meeting of the committee and I am disappointed we did not have an opportunity to discuss it with the Minister before the Cabinet took a decision on it on 19 December, the day after the Dáil adjourned for the recess.

Regarding employment in the industry, Mr. Lowery is aware that there are two major mills in County Galway, which has a higher proportion of employment in the sector than other counties. I met people in Ballygar recently and there is great concern that the proposal to invest in Balcas will lead to job losses in mills. A serious conflict of interest arises for Coillte if it is in competition with its customers.

There is a serious conflict of interest if Coillte is in competition with its own customers. I would be grateful if Mr. Lowery would address the question of job losses in the saw mills.

There must be something unsuccessful about the new log sales system because when the Cabinet gave its approval to Coillte to invest in Balcas it sought the inclusion of certain safeguards in relation to the independence of the log pricing system. The Minister may have other concerns and according to the press release the new system is not working successfully. I would like to hear Mr. Lowery's views on that.

Deputy Finucane mentioned the issue of the Oireachtas Joint Committee on Commerical State Sponsored Bodies having recommended against an involvement such as this for three years. I noticed the committee concluded in January 1997 that it had difficulty with the general principle of an exclusive supplier of raw material setting up in competition with companies in the industry which it supplies. This brings us back to my point about Coillte competing with its own customers, a situation which will not result in a level playing field.

Mr. Lowery: There are no grounds for concern about job losses. If anything, there will be job gains because our timber volumes are increasing. We will be harvesting an extra 350,000 cubic metres of logs this year given that the harvest will increase from 2.06 million cubic metres last year to 2.4 million cubic metres this year. That aspect alone, comprising the harvesting and transport, is highly job intensive. That material must be processed in mills and that will underpin the employment in saw mills. I see no reason for the two mills in Galway to be concerned by the Balcas proposal. They operate in a different catchment area - although there is some overlap it is not great. There is a problem in the midlands in that three major new mills were set up in Longford, Ballygar and Cornamona without any reference to the log supply. Individually they are fine mills which are well managed and they do a good job. However, they were put in place without proper planning. The capacity across the midlands is more than any foreseeable increase in the log supply. That is the problem, not Balcas.

With regard to the new sales system not working properly, I do not think anybody, even the most extremist of sawmill operators, will question the way in which the sales system works. The one aspect they will object to is the price they pay, but they are the prices they are setting themselves. Excess capacity has led to fairly strong prices during 1997. However, that is not a fault of the system. There has never been a question about the integrity, competitiveness or transparency of the system.

I have already addressed the Joint Committee question.

Deputy M. Kitt: Everything Mr. Lowery says cannot replace what the Minister tells us anyway, whatever the reference to that is.

Mr. Lowery: We do not know. Presumably the competition authority will consider it and if it has any requirements we will comply with them.

Deputy Connaughtan: I welcome Mr. Lowery to the committee. I have had contact with him over many years on many forestry matters. If I owned a private sawmilling business I would be worried. I would have a big problem with the arrangements when times are tight. Mr. Lowery makes a good case and I have heard the case made many times over the last 12 months. We had many rows in the past about the log system because it was not as transparent in the past as is the new system. I do not get as many complaints now as I did before the new system was introduced. However, if an unforeseen pressure is put on supply does Mr. Lowery seriously expect us to accept that priority will not be given to Balcas when Coillte owns 80 per cent of it?

Mr. Lowery: Absolutely.

Deputy Connaughtan: In the world of business a way can always be found to ensure that Coillte's 80 per cent holding, for example, is protected against the rights of competitors. Mr. Lowery is entitled to his say. From a personal perspective I think Mr. Lowery has done an excellent job with Coillte and everybody accepts that.

Mr. Lowery: I thank the Deputy.

Deputy Connaughtan: However, I foresee this arrangement being greatly problematic for the Irish privately owned saw mills. Irrespective of how many of them decide to amalgamate we will end up with five or six very large mills and I think that is Coillte's hope. Whatever happens, the timber growers are in Coillte forests. The amount of private forestry would not keep Murray's mill in Ballygar going for a week. Therefore, they have to go into the lion's den, so to speak, to look for timber. Coillte owns it and it is a major shareholder. I understand how Mr. Lowery can give a guarantee given current market conditions but I hope we do not have to meet again in five years time if there is a great problem in the market.

Most of the private mills are very professional. However, I cannot see what Coillte can do with Balcas that its current operators could not do. In most industries it is those who are at the production or processing end who are best at getting markets abroad. The injection of capital for Balcas is not available to the other private mills. They do not have access to funds other than on the commercial market, funds for which they pay dearly. Coillte has set up a business for itself and it will take many emerging companies a long time to obtain the same degree of funding at the same low cost as Coillte's funding of Balcas.

Mr. Lowery: We are funding Balcas on the same basis as any private company. It is arranged on commercial terms and we must raise the money on commercial terms. We do not get anything from the Government. In fact we pay money to the Government.

Chairman: Is the Government guaranteeing the funds?

Mr. Lowery: No.

Deputy Connaughtan: Surely when Mr. Lowery goes to the banks his standing with them is far better than any of the private companies.

Mr. Lowery: Yes that is true. With regard to the issue of competition, the Oireachtas has put in place stringent competition legislation to which we must adhere. We will adhere to it and that will require us to ensure that Balcas is run in the same way as any other mill. It will stand or fall commercially in the same way as any other mill.

Deputy Connaughtan: It is the other mills that will pay for it.

Deputy Sheehan: I welcome the Coillte officials. The documentation gives figures for volumes sold at auction “first time offer only”.

In December 1996 there were 79,769 tonnes of logs offered and 100 per cent was sold. Then there was a reoffer of 41,923 tonnes of logs, 64 per cent of which was sold. That amounted to approximately 120,000 tonnes of logs for December 1996. In the corresponding month last year, December 1997, there was 58,158 tonnes of logs offered at 71 per cent clearance and 23,137 tonnes at 35 per cent clearance afterwards. That shows a dramatic reduction in the amount of logs which had been put on sale, a reduction of 33 per cent in 12 months.

What is the situation with regard to Coillte's existing sawmills, considering Coillte currently enjoys protection from the competitive bidding process when purchasing its own logs as no outside bidders can bid against Coillte for them? Is that not tantamount to admitting that Coillte cannot compete with its own customers even on a small scale?

It seems that 20 per cent of Coillte's logs are shipped unprocessed outside the State, causing a shortage of logs for southern Irish sawmills. I am speaking about Graingers in Enniskeen, County Cork, an effective and efficient outfit with which I am familiar as it is in my constituency. Coillte seems to have set its own reserve prices on logs. Does that not create a monopoly in the forestry industry? If Coillte is to monopolise the log industry, then it can do what it likes with the independent sawmills. What alternative has the independent sawmills? Can they import logs from other countries, such as Sweden and Finland? What is Coillte's view on guaranteeing the independent sawmills and the taxpayer that a monopoly will not be created? Mr. Lowery must explain that thoroughly because the information at my disposal would lead me to believe that it is a monopoly.

Mr. Lowery: First, on the volumes offered in December, we have agreed with the sawmillers that we will spread the supply over the year and we are probably doing a better job of that in 1998 than we did in 1997. They know exactly what will be offered. They have been told that there will be an extra 230,000 cubic meters of logs in 1998 over 1997 and they know the flow of supply. There is nothing significant in the difference between December 1996 and December 1997. Incidentally, the December 1997 sales would be the first of the 1998 material. It is sold then and drawn down in 1998.

Deputy Sheehan: One third less was offered for sale last December than what was offered 12 months ago.

Mr. Lowery: That is not significant. That is really to suit the flow to the sawmills.

Deputy Sheehan: There was 120,000 tonnes offered in December 1996 and 80,000 tonnes offered in December 1997.

Mr. Lowery: I think we were also moving from monthly sales to fortnightly sales. There is nothing significant in that, Chairman.

Chairman: I think Deputy Sheehan has a point here, Mr. Lowery, because if you look at December 1996, 79,769 tonnes and 41,923 tonnes were sold, 100 per cent sold of the first lot and 64 per cent of the second. In December 1997, approximately 80,000 tonnes were sold. That is only two thirds of what was sold in December 1996. Two thirds of the amount was offered, of which 35 per cent was sold on one occasion and 71 per cent on the other. Was there a reason for reducing the amount which was put on offer in December? Who decides what is put on offer for each month because that is getting back to our original question about Coillte controlling the supply? By controlling the supply, Coillte also controls the amount that is put on the market. Who decides the amount that goes on the market? That is the question we want answered.

Mr. Lowery: We tell the industry what will be the annual supply.

Chairman: We accept that, but who decides the amount which will go on sale for each month or fortnightly option?

Mr. Lowery: We commit the overall volume for the year. We have an agreement with the sawmillers that we will spread that throughout the year as evenly as possible by region and species type so that there is not a feast and a famine. The whole effort is to try to have fortnightly sales with a mix of material by region and species type.

Chairman: Is the idea of having fortnightly sales to keep log prices high in comparison with log prices in the UK or Scandinavia?

Mr. Lowery: No. It is the exact opposite. It is designed to give the sawmillers an opportunity to buy frequently. It is entirely for the sawmillers' benefit.

Chairman: Does the fact that they must buy frequently prevent them from entering into long-term contracts, knowing that the material will be priced on a long-term basis?

Mr. Lowery: They can buy what they like on the sale system.

Chairman: They can, provided they go into an auction where there is a limited amount being supplied and they want to buy out the auction. They must pay a premium, which will tie them in and which may affect their pricing structure vis-à-vis people who come into a lower tender price.

Mr. Lowery: We have seen different patterns of bidding during the year. We have seen some mills which have built up stocks and which have problems with that because prices have come down-----

Chairman: This is what worries many of us.

Mr. Lowery: -----but that was their decision.

Chairman: Because Coillte, as a processor, at a later stage will be able to control its supply of logs to its processing operations, it will be affecting the ordinary smaller processors, such as Glennons, Murrays and the smaller people to whom Deputy Sheehan referred - I can mention some in my part of the country - who find that the present tender system puts them at a major disadvantage with regard to entering into long-term contracts with end users.

Mr. Lowery: That raises a number of points, Chairman. I would be delighted to spend more time at a future date on the sales system.

Chairman: We hope to talk to you again, Mr. Lowery.

Mr. Lowery: The new sales system provides for forward contracts. It is not fully operational yet, but it provides for them. It has been agreed with the industry that we will have forward contracts.

Chairman: When will that be in place?

Mr. Lowery: We are preparing some sales which involve the year ahead already. That is already agreed as part of the sales system.

The fortnightly sales system is entirely in the interest of the sawmillers. It is not in Coillte's interests. Coillte would do much better to have infrequent sales and cause uncertainty if we wanted to manipulate it. Fortnightly sales, where sawmillers can buy often, is by far to their best advantage. It gives them power to buy or not to buy, to suit themselves. In Coillte's view, the mills which have worked it best are those which bought short. They know, because they have three catalogues in advance, what is coming up not only in the sale in which they are buying but in the next two sales. They can plan their purchases to be able to buy what they need in the short-term in the knowledge that there is more coming on stream in the next fortnight and the following fortnight. Those are the mills which manage it best because then the price reflects what is actually happening.

I wanted to pick up on a couple more of Deputy Sheehan's questions. The second relates to Coillte's mill and, wherever it came from, it is very disingenuous. Coillte has a very small mill in Cong, County Mayo, which we have kept going for reasons of employment as much as anything else. We took account of that mill in the new sales system initially and the sawmillers asked us to remove it so we withdrew it to accommodate the sawmillers because it is not significant. It buys about 8,000 tonnes of the 1.4 million tonnes of logs sold. It does not really count in the overall system and it was quite disingenuous for anybody to put that forward.

Chairman: Does it require protection?

Mr. Lowery: No. It pays the same price as anybody else. It buys tiny quantities of material. It is a small mill.

Chairman: As we are running out of time, we should let Mr. Lowery continue.

Mr. Lowery: The Deputy's next point related to the fact that 20 per cent of Coillte's logs are shipped unprocessed outside the State. That relates to logs sold to Balcas. What is not said is that Balcas is the key supplier to the Masonite plant in County Leitrim, which is one of the major industrial developments to have taken place in the north-west. Without 50 per cent of Balcas's residues Masonite could not exist so, while there are some logs going north and residues coming south, County Leitrim is getting the better part of it.

The final question concerned setting reserve prices. Part of the new sales system is an automatic setting of the reserve price with reference to market forces. That was what the McKinsey economic model was about. We do not set the reserve prices, they are set by market forces and they go on the system. It is set automatically, there are rules by which the reserve price is set and those rules are audited so it can be seen and approved.

Deputy Sheehan: Who makes the rules?

Mr. Lowery: The rules were agreed with the sawmillers and were based on rules set by McKinsey international consultants, whom we employed for an enormous sum.

Chairman: Perhaps you could send us a detailed submission on the tender system, because Members' biggest worry is how this operates. What are the trigger mechanisms which set the price of logs? Who sets it? Is it based on a worldwide price, or could the price be raised to gain more revenue in a particular month and be lowered to clear a backlog?

Mr. Lowery: I would be pleased to do that, Chairman.

Mr. Connaughton: Perhaps Mr. Lowery could do something else for us. Some sawmillers use the trigger mechanism depending on the market to which they are selling. They have different markets but the product they buy from Coillte may be overpriced as against the price at which they sell it to the consumer. There will always be an interchange in such a business but many of them have told me the only thing which worries Coillte is how much it receives. As Mr. Lowery rightly said, Coillte is a commercial organisation which is supposed to make money and irrespective of how those people deal with markets at home and abroad, Coillte will be paid for its logs.

Mr. Lowery: It is important that the prices they pay should be based on what they bid, and what they bid is based on what they think other people will pay, the value they put on the logs. We do not put a value on them and the reserve prices scarcely come into play.

Deputy Connaughton: For as long as the product can only come from one place and many bidders must keep their mills going, Coillte is in what I would call a fancy position.

Mr. Lowery: That is what they are doing.

Deputy Connaughton: No. That is why I return to the Balcas business. Mr. Lowery and his officials must know that every sawmill owner is experiencing a tremor of anxiety.

Mr. Lowery: We heard from them, yes.

Chairman: That was signalled by their representative on the Coillte board who threatened to resign at one point although I do not think he has done so. When were the last accounts for Balcas made available to Coillte and what was its profit for the last year for which accounts are available?

Mr. Lowery: We have them up to date.

Chairman: I know that but I want the last accounts in the public arena.

Mr. Dwyer: The company does its accounts up to the end of January and those up to January 1996 are in the public arena. A profit approaching £1 million was made in that year.

Deputy Connaughton: On what turnover?

Chairman: Approximately £50 million?

Mr. Dwyer: No, the turnover for that year would have been much lower, about £30 million. It was a sound profit. We have the later figures but they are confidential at present.

Chairman: I take it the only place we will get them is the British Inland Revenue, which would already have them.

Mr. Dwyer: They would have been lodged in the equivalent of our Companies Office. Up to January 1996 is available in the public arena.

Chairman: Yes, but the figures up to January 1997 would have been lodged.

Mr. Dwyer: I am not aware that they are at present.

Chairman: I think they should be. Even with that we are working a year behind, so it is imperative those figures are brought into the public arena in order that people, especially those in the timber industry, can know what is happening. We called this meeting at such short notice because the timber processing industry is extremely worried that in becoming a processor Coillte will distort the market for the future. People realise that will not happen in the short term but other processors are worried about what will happen when the gale starts to blow.

As Chairman of this committee, I would appreciate it if Coillte would supply us with the details of its new proposals for selling logs, so that we can give them to those who are worried. Coillte should also ensure it is safeguarded if it gets permission to acquire any commitments which are not apparent at this stage. Apart from the processors' concerns, there is a public concern that because of Coillte's strength in meeting the financial needs of Balcas, it will create unfair competition as against the revenue needs of private sawmillers. Coillte has Government backing whereas ordinary sawmillers do not. We would appreciate it if you would send us that information and we also appreciate your coming here at short notice. We look forward to you coming in the not too distant future when we can discuss other items, including the maintenance of plantations, which is becoming a major environmental worry, especially in the west, and the future of the timber industry between now and 2020.

Mr. Lowery: I will do that.

Deputy Finucane: Let us assume that the Competition Authority approves, with reservations, Coillte's purchase of an 80 per cent shareholding in the plant. The company then has a toehold in sawmilling activity, which is a move away from its market niche up to now - if one looks at marketing projections for timber, the niche would progressively increase over the years in any case, and Coillte was good at this work. Surely, therefore, the door is open for the company to become further involved in sawmilling activities in the South. The rationalisation which is emerging in the industry may be good, as Mr. Lowery said, but once Coillte gets a taste for sawmilling in the North it will start doing it in the South.

Chairman: I think that is for another day.

Deputy Finucane: It is a concern and that is the reason we are here.

Chairman: I will allow Deputy Kitt to ask a question and the two can be answered together.

Deputy M. Kitt: Mr. Lowery said Balcas supplies 50 per cent of Masonite's requirements for residue. Does Balcas supply residue to any other Coillte plants? What opportunity would private sawmills have to supply residue to Masonite or Medite? If a mill has problems obtaining adequate log supplies if, for instance, it wants to run a second shift, has it an opportunity to make that case to Coillte and what response would it receive?

Mr. Lowery: Glennons, ECC and Murrays all have contracts with Masonite but their volumes are lower than the Balcas contracts. I would say Masonite would use whatever they could produce. On the other issue, in putting forward the Balcas proposal we made clear that this is the extent of our ambitions in Irish sawmilling. Coillte is a marvellous development opportunity for Ireland. We are one of the few business entities with the potential to be another company along the lines of Avonmore or Kerry. We will be focusing on developing the company on a much broader basis than just Irish sawmilling. We will be happy if the Irish sawmillers restructure properly but we want the ability to do much bigger industrial development work with Coillte.

Chairman: I express our appreciation to Mr. Lowery for coming here. For the information of Members, the next meeting is proposed for Wednesday 4 February at 4 p.m., when it is hoped to meet representatives of the IFA and Macra na Feirme.

Deputy Finucane: I propose that the Minister for the Marine and Natural Resources come before us, because although the Cabinet has made the decision it would be worthwhile if he know our concerns and to hear how he will allay them.

Deputy Connaughton: I second that.

Chairman: We will deal with that next week.

The Committee adjourned at 3 p.m.

An Comhchoiste um Thalmhaíocht, Bia agus an Mhuir

Joint Committee on Agriculture, Food and the Marine

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Dé Céadaoin, 4 Feabhra 1998.

Wednesday, 4 February 1998.

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The Committee met at 4.10 p.m.

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Members Present

Clerk to the Committee in the Chair.

Apologies received from Deputies Harry Blaney and John Ellis and Senator Francis O'Brien.

Clerk to the Committee: As the Chairman, Deputy Ellis, and the vice-chairman, Deputy Blaney, are unable to attend, I ask for nominations for the Chair.

Deputy Brady: I propose Deputy John Browne.

Clerk to the Committee: As there are no other nominations, I call on Deputy John Browne to take the Chair.

Deputy John Browne (Wexford) took the Chair.

Presentation by the Irish Farmers' Association

Acting Chairman (Deputy Browne, Wexford): First, I apologise on behalf of the Chairman, Deputy Ellis, and the vice-chairman, Deputy Blaney, on their absence.

I welcome the members of the Irish Farmers' Association, particularly Mr. Tom Parlon, who I congratulate on his election as President of the IFA. I wish him well and hope he has a fruitful period in office. We will follow Mr. Parlon's submission with a question and answer session.

Mr. Parlon: I am delighted at the opportunity to come before the committee. Thank you, Acting Chairman, for your words of congratulations. I have learned a little about politics while campaigning over the past couple of months. I have traipsed most of the constituencies and it was a tremendous experience. It brought home to me the size and breadth of the IFA organisation. We have a strong presence in all of our 29 constituencies, which are much in line with those which relate to the Oireachtas. There are 925 branches and 85,000 voters throughout the country, so the IFA has a substantial support.

It is a great privilege for me to lead the organisation. I am the tenth President of the IFA and I have a strong mandate, having won almost 80 per cent of the vote. I am sure the committee will appreciate that I am coming in at a difficult time. We organisation provides strong back up and I look forward to taking on the challenge.

I welcome the establishment of this committee. It is very important because agriculture is still the backbone of the economy in 1998. It is the major industry. It has a very low import content and very high export earnings, which makes it unique among most of the other industries. The agri-food sector accounts for £5 billion, one quarter of Ireland's total exports. It is very substantial and it is the corner stone of industry in rural Ireland.

One of the big features and expenses for farmers in recent years has been their major role in protecting the environment. In the past decade we spent over £1 billion on pollution control facilities, the bulk of which came from the earnings of farm families throughout the country. Irish farmers are highly aware of the environmental side of the industry at this stage. We see the environment as very important from the point of view of a major international agriculture⁄food export.

The committee has asked us to make a submission on five main issues. We all appreciate that the decision to joining EMU is one of the most profound decisions this country has had to take since joining the EU, and it may be a bigger decision than joining the EU. We see it as profound from a farmer's point of view.

The entry rate, the rate at which the Irish pound joins the Euro, will be a significant factor in our competitiveness in Europe. As an exportin nation, that is important. The IFA's position is that the case in favour of fixing our exchange rate at our current EMS central rate of 2.41 Deutsche Marks is clear cut and compelling. All of the other countries are likely to join at the central rate. The reason Ireland is out of line is we have been tracking Sterling, which is, according to the general consensus, about 15 per cent overvalued with regard to the other EU currencies. The financial experts indicate that as soon as the Euro is up and running Sterling will be forced to devalue. If we do not take that on board in our decision, we will find ourselves very exposed.

So far we would be quite happy with the Government's handling of the situation, but in my inauguration speech at our AGM I strongly urged the Government to give a signal to the money markets by cutting interest rates immediately by 1 per cent. This would signal to the markets that we intend joining at the central rate because it is generally accepted that as soon as we join - it seems inevitable that we will join - interest rates will fall by up to 2 per cent. We do not see why we need to put off such a positive decision. I know there may be other factors affecting it, but it is important from the point of view of agriculture and giving a signal to the marketplace. It will have a positive impact on agri-food sector, manufacturing and industry in Ireland. Over two-thirds of those in employment would be involved in those sectors so it will be a major factor, and it should be implement.

The second issue I want to deal with is the Santer proposals, Agenda 2000. The broad outline of these proposals were issued last year and we understand that Commissioner Fischler will announce the detail shortly, in early March. Agenda 2000 covers a number of areas. It will take control of the EU budget from 2000 to 2006. It will deal with the seemingly inevitable enlargement of the EU - there are six new members states joining - and that decision has major implications for Ireland as an agricultural country.

On CAP reform, there have been savage proposals by Commission President Santer with regard to our main commodity prices, particularly with regard to beef. He is suggesting under CAP reform that we take a 30 per cent cut in the beef price, a 20 per cent cut in the cereal price and a 10 per cent cut in the milk price. Already we have received some indications that there may be further milk price cuts on the table even before we get the detail.

Likewise, with the next round of Structural Funds, there is a proposal on the table to phase out Ireland's Objective One status. We qualified when Structural Funds was introduced and we made very good use of them. To loose Objective One status at this early stage, when we have barely got up from our knees, would be a major setback in the development of infrastructure in Ireland.

Returning to the cuts and the 30 per cent cut in beef price, we have a serious situation with regard to the income from the dry stock sector. Our industry has experience great difficulty when the EU imposed a severe cut on beef prices, by 5p per pound to 80p. We reacted and responded strongly to that, and we have improved the situation. Today prices are around 85p, 86, or 87p. Certainly there is no bonanza. People are just breaking even at 86p. The suggestion of cutting beef prices by a further 30 per cent will wipe our the Irish beef industry as we know it and put many people out of business. That has gone way beyond the mark.

The price cut of 20 per cent and a proposal only to compensate for half of it will make a difficult cereal situation much worse. Likewise, while the proposals on milk do not look too bad at present, I think there is another agenda. Commission President Santer is anxious that dairymen should have a “cheque in the post” system but if that is introduced prices will definitely be further reduced. There is enough cynicism among farmers about the “cheque in the post” system as it is.

My main point about the Santer proposals is that we have a major difficulty with his attempt to put price cuts in place in the lead up to the next WTO or GATT agreement. We have learned from experience that when our negotiators sit down with those from the US, South America or elsewhere, they do not give any credit for cuts which were put in place before the negotiations begin. They are proposing severe cuts before the WTO negotiations and there is a danger these will not be taken on board when the negotiations start. The Commission's other reason for making those cuts is the enlargement of the EU and the massive number of small farmers who will join from Poland and other countries. This is a negative agenda from Ireland's viewpoint. As with Objective 1 status, the implications for Ireland are severe. The co-funding has been favourable and has been well used, particularly in agriculture, and we should look at this closely.

The third item is on-farm investment and structural reform. At present there are only three major farm investment schemes and all are suspended. The first is young farmer installation aid, which had funding restored to it in the last budget and we welcome that. However, it is only there to deal with the backlog of applications which exist already. We understand there may be moves to put in an alternative scheme but it will be restrictive. In my AGM speech I mentioned that the IDA investment in jobs averages £12,000 per job; this scheme would provide £5,600 on a restrictive basis to people who are fully qualified, have made a major investment of time in education and must farm for a full 12 months before qualifying for installation aid. I think this is a worthy but small encouragement to people to enter farming. Even substantial farmers with good milk quotas, etc., who are doing quite well have major problems encouraging their sons or daughters to take up farming because of the alternatives which exist. We have looked at the profile of our organisation - both the number of farmers under 35 and the number over 56 are frightening. A sum of £5,600 will not make young people madly enthusiastic about taking up farming but withdrawing the grant had a severe psychological impact.

The control of farmyard pollution scheme was well taken up but there is no funding for it at present. There is much pressure on farmers to comply with strict environmental controls. This money is invested in a hole in the ground and the specifications are tight. A Senator has arrived who has much knowledge of the tight specifications for concrete, etc. I would not say it was a waste of money but it is an investment which does not give any return. It is important for the future that we continue to have a control of farmyard pollution scheme.

The fourth item covers a number of urgent issues connected with improving farm incomes. There was a 5 per cent decline in farm incomes in 1997. Cattle prices are a major bone of contention. We have many difficulties with the way the meat industry has manipulated prices this year and immediately after Christmas it cut prices too severely. We sorted that matter out but it is an ongoing problem. The fact that all the big players changed prices on the same day and offer the same prices every day is too much of a coincidence, from my point of view.

We need competition and an alternative, which we have in the form of the live export trade but there are difficulties with that on a number of fronts. We are working hard on that issue but it needs a major political push in that there are diplomatic difficulties in some of the markets currently open to us. We need to keep a balance between foreign relations and our important trade. Many people outside farming do not appreciate the competitive impact which a live export trade has on cattle prices. We all understand the importance of added value and extra jobs but it does not rate as against the need for competition in the trade.

Our sheep sector is in major difficulty also. We had a good year until the serious collapse in prices near the end. Much of this related to the currency problem in the UK and our being pushed out of the main market. Anyone who lives near a lamb plant will notice the large build up of foreign registered trucks bringing in cheaper lamb. We do not know whether they are coming from inside or outside the island but that has had a negative impact on lamb prices here also. Rural Deputies will know that the support scheme for lamb has not been fair and has worked against Irish producers, so that needs to be sorted out.

I have a personal interest in the pig meat sector, which has serious problems. The Irish share is at least 10 to 12 per cent behind the EU average price at all times, which indicates a weak marketing position. Within our retail sector we get only 30 per cent of the retail price of the pig when all the pieces are put back together. That is unacceptable to producers and consumers must lose out there also. The price of a pig leaving a farm is 99 pence per kilo and one only has to go into a supermarket to discover the major mark up taking place there.

Grain growers have difficulties, especially with protection. That issue has been raised but has not concluded and I will continue to bring it to the committee's attention. The ceiling on headage has been contentious and there has been pressure. Headage is an important support mechanism for farmers in disadvantaged areas. There have been a number of attempts to cut headage and we appreciate the support given by rural Deputies to our attempts to oppose that. We are not happy with the recent attempt to put a ceiling on headage and we want to look at the system. We have commitments from parties since before the last Government. Headage payments must be restored to their full level. They are already limited to £4,900 and we cannot accept any further cuts. We are limited compared to our European colleagues.

I have probably gone over my ten minutes and I want to leave plenty of time for questions but first I will mention below cost selling, which is a particular problem in the fresh vegetable area. A number of large players are organising central distribution systems, which are causing much grief to people living in a particular county who find the central location is up to 80 miles away and they do not have access to their local shops. It also makes bargaining difficult.

If Members wish to ask questions, the general secretary, Mr. Michael Berkery, and our chief economist, Mr. Con Lucey and I will attempt to answer them.

Chairman: Thank you for your presentation. I welcome Mr. Berkery and Mr. Lucey. I throw the meeting open for questions and ask Members to be brief because Macra na Feirme are coming in at 5 p.m.

Deputy Connaughton: I welcome Mr. Parlon and the other guests. A number of points arising from his remarks are of absolute importance to the people he and we represent in rural Ireland. On the Santer proposals, neither he nor I know how much money will be coming because it is all to play for. Does he think there may be a better distribution of what is coming? I worry about the total amount and do not want to be drawn into a system of dividing something we have not got, but with the experience of years past, has the IFA a view on how it could be distributed?.

Do the IFA's sister organisations have the same route to travel when their cases are being argued or are we more unique because we must export so much produce? Huge negotiating skills are called for to make sure our uniqueness is responded to positively.

Mr. Parlon: With regard to the premia payments system a number of commentators suggested there is something very wrong with it. This week I replied in a letter to one of the Deputy's colleagues in The Farming Independent. It is very simplistic and no matter what story one tells, one can put a spin on it and that is what happened. If one takes out the top 20 or 30 people drawing down premia, one will have a very odd situation. When we looked at the real situation with over 100,000 farmers drawing down premia, a very reasonable average resulted.

The envelope is important. One has a bigger chance if one has a bigger envelope regardless of the system. We appear to be getting a bigger share of the premia per acre than many of our competitors while we probably have less milk quota per acre than them. Starting next week, the IFA is having an in depth look at the situation in livestock and cereals to look at all options regardless of who has put them forward. I want to see them on the table to see which is the most effective for us but early indications suggest that we would lose out overall by leaving the system we have for one that is area based, but modifications can help, of course. A small percentage of people may feel they are getting a more equitable return but overall we will lose very severely.

Livestock is a major industry in Ireland, involving over 100,000 farmers. Our exposure to third country markets, export refunds, etc., is unique as we export nine out of every ten cattle we produce. It is the biggest part of the agriculture industry which in turn is a bigger sector of the economy than is the case for our European neighbours. That leaves us exposed and we need very strong negotiation by politicians. We need a national position from the Government and the Taoiseach to defend a vital national interest. It is important that everybody takes that on board and realises that it is a serious threat to the economy.

Deputy Penrose: I welcome Mr. Parlon and congratulate him on his victory and also welcome Mr. Con Lucey, a colleague in my profession.

Westmeath is a beef producing county and beef farmers feel left out of the system. There are 120,000 dry stock farmers while 70 per cent of Westmeath is dry stock farming. Farmers tell me they want a change in the current system. While we can look at the average distribution of what was available from 1992, one of the focuses of the 1992 CAP reform was to maintain the maximum number of farm families in rural Ireland. A sum of £6 billion was spent, yet 5,000 farmers have been lost annually which totals 25,000 since 1992. It has been a signal failure. We must reform and I am delighted that Mr. Parlon says he will look at all options as this was not always the case. He has given the committee heart and the people I represent in the midlands will be delighted.

Under the current system farmers receive £2,500 to £3,000 each and that is why they are drifting away. We have a lop sided situation in farming with beef farmers leaving the industry. I am delighted the president has recognised the seriousness of the situation and that the national envelope will be protected. The Commission with the help of farming organisations is prepared to be flexible. The national envelope should be distributed according to need as many farmers feel they have been left out of the equation. The system needs to be simplified. For example, if a farmer with 12 cattle is claiming a beef premium and unfortunately he claims for a heifer instead of a bullock he loses everything under article 21 of the regulations. The penalty is disproportionate and needs to be changed. With our help and the IFA's it will happen.

When pressure comes on why do beef prices collapse despite five or six players in the market? It is not a coincidence and I asked a former Minister for Agriculture to investigate this. Is there evidence of concerted practice and should it be investigated? Why when pressure was applied did the price go up by 5p? Farmers lost £40 per head over a period of weeks recently which put them in a worse position.

I support the IFA's call for the reintroduction of installation aid. It will only cost £6 million annually and is the cheapest way to get young farmers into the industry. I note the other proposals and we will work with the organisation in a positive and constructive way to ensure our interest is protected.

Deputy M. Kitt: I wish to ask a question relating to the IFA agenda. I watched a programme last night dealing with areas of conservation - Ear to the Ground. The IFA is involved in negotiations and I met Gerry Gunning at a number of meetings in Galway dealing with the question of compensation for people who have to move. Another question which has been asked of us as politicians and of the IFA is why we agreed with the European directives and Government policy put before us some years ago. This is a big issue for people from Donegal to Kerry, particularly in the west and midlands, as they want to know what effect the areas of conservation will have on people who want to cut their turf as they have done throughout the years. What is the IFA's policy on this issue and is there ongoing consultation with the people?

Deputy Coveney: I welcome Mr. Tom Parlon to our meeting. This document is concise and focused. If I was making a speech on agriculture tonight, I would be able to use this document which discusses all the issues.

As regards EMU, the central rate of DM 2.41 is undoubtedly in the best interests of agriculture and many other industries. I support that strongly despite the fact that my leader made a passing reference to a slightly higher rate. I am concerned about the proposal to cut interest rates now because if we do so, sterling will appreciate even further against the Irish punt because people will change their money from punts to sterling if UK interest rates remain the same or rise. Although a high sterling rate would not unduly affect agriculture because of its dependence on the export market, if the sterling punt rate broadened even further we would have serious problems with inflation.

As regards the Santer proposals, I am surprised that all the EU Governments, with the exception of the Spanish Government as it had a different reason for opting out, seem to have accepted the principle of the Santer proposals and are confining their arguments to other issues. There seems to be a broad acceptance of these radically reduced prices and a compensatory cheque in the post. Even if the compensation is 100 per cent, which is unlikely, it will only be temporary according to Britain, other EU countries and those in the World Trade Organisation. Compensatory payments will be phased out over ten years. I heard the British Minister say they would be phased out even faster if he had his way and Britain is a big player in Europe. Even if the Government is extremely skilful in getting compensation to equal the cut in prices, which will probably not happen, we are still on a slippery slope. Can we sustain an argument against the principle which most countries now seem to accept? Perhaps Mr. Parlon could give me his views on that.

One of the most potentially divisive issues on the political agenda over the next couple of years will be the retention of our Objective 1 status. The next stage might be that certain areas will have it and others will not. I would not like to be trying to sort that out. What is the IFA's position on our Objective 1 status?

Deputy Sheehan: Remember the disadvantaged areas.

Deputy Coveney: What does Mr. Parlon think about reopening our live trade?

Mr. Parlon: I have been labelled as the first non-dairy farmer to be president of the IFA. A big feature of my campaign was my strong defence of drystock farmers. Dairy farmers gave me strong support because there is general acceptance that the drystock sector is losing out. That is not the fault of farm organisations or politicians but of the existing system which needs to be sorted out.

Yesterday we had our first national executive meeting. I asked our chief economist, Mr. Con Lucey, to prepare a paper on the structure of Irish agriculture, including farm sizes, ages, etc. The first thing we considered was the fallout from farming since 1971. There has been a fairly consistent fallout of approximately 3 per cent of the total population, which is in line with what is happening across Europe. Today I met the chairman and secretary of our dairy committee who are examining the quota situation, lack of flexibility and difficulties in the dairy industry. The number of farmers producing milk has halved since dairy quotas were introduced. There is a bigger fallout in dairy farming. We will still continue to produce our national quota, although there are problems with leases and so-called sofa farmers.

It was important for our people to carry out such studies when trying to formulate policy because people can throw out all types of figures, such as the fact that we are losing 5,000 dairy farmers a year. Many people who left dairy farming moved into livestock farming because suckler cows provided them with an investment cushion and, perhaps, an easier life. It also gave them an opportunity to have an off-farm income. A large number of farmers or their spouses now have alternative incomes. People have questioned our credibility in terms of our low income tax returns or the overall income from farming. People cannot and do not survive on farms. Some 63 per cent of all farmers earn less than £10,000 from farming. Farmers do not rear families in rural Ireland without an alternative job or their spouse taking up employment. There is probably a bigger fallout from dairy farming than from livestock farming.

The income situation for the full-time beef farmer or the beef finisher, in particular, is serious. This will be the third year in a row that they will lose money. When there is a low return on the price of beef, we must look at the cheapest options. Over wintering beef is an expensive way of producing beef. It is approximately three times more expensive than summer grazing but it is an essential part of the business. We cannot produce all our beef off grass.

We will look at all the options, including protecting the national envelope. Nobody has come up with a brilliant scheme. Different commentators will say a certain thing is wrong but no one has made any definite proposals. Equity must come into play in any proposal. It does not make much sense to talk about the big envelope in terms of the money coming in when one looks at the low incomes. That money has been spread widely; only a small section has gone to the big players.

We are taking the concerted practice of factories on board. There are serious difficulties in the meat processing industry which are being examined at present. Forbairt has commissioned consultants who are looking at the industry. Certainly, there is serious over capacity in the industry and it will be affected. Livestock farmers' only hope is in regaining the real markets. In 1994 two thirds of our beef exports went on to plates in Britain and the EU. Now less than one third of it is being eaten by consumers and the rest of it is going to third country markets where it is exposed to substantial refunds, etc.. We need to regain that market share and we are working on that. There is a meeting tomorrow at 8 a.m. with the Minister and CBF, for example.

In a difficult market one's competitors will point the finger and try to discredit you. As a result, we need a good tracability scheme. Unfortunately, we do not have a computerised identification system for the national herd which seems outrageous in this day and age when Ireland is to the forefront of information technology and is exporting it all over the world. Such a system has been worked on for years and there have been promises, but it should be a priority. There is no point in us spending money promoting our beef on the European or UK markets unless we can stand over it. We have a good product to sell but we must be able to prove it.

Installation aid must be a priority and we need all-party support on it.

Deputy Kitt spoke of the SACs. I was not involved in their negotiation. With regard to a major part of the deal negotiated by the IFA - an EU Directive stated that 5 per cent of the country had to be designated as special areas of conservation - the gun was put to our head and it was signed. Nothing is delivered on until the whole deal is delivered on. The Department responsible for the area has portrayed a fair level of arrogance by pressurising farmers into accepting strict controls at this stage before there is any compensation on the table. The deal was that there would be compensation for farmers for the losses of income or the losses attributed to the severe restrictions being suggested. I understand that is up for discussion today in Brussels. The decision has been awaited for a long time.

I did not see the programme to which the Deputy referred, but I know that in my county and in County Westmeath the issue of people not being allowed to cut turf on traditional bogs is a serious vexing one. It has been a traditional activity for generations. An offer has been made to encourage them to leave those bogs alone and to drive 20 miles to cut turf elsewhere. No agreement has been reached and the IFA will take a strong line to make sure that the detail of the initial agreement, which was signed when the package was introduced, will be put in place. The Deputy or any member may like to respond to that.

Deputy Coveney referred to EMU, interest rate cuts and the implications for Sterling. There was a major effort made early in the year by some of our main UK importers to create an inflation scare. That has settled down quite a bit at this stage. What I was looking for was a signal to the money markets that we intended to go in at the central rate. It is not an issue with any of the other countries. I am not an expert on high finance by any means and that is why I defer to my chief economist for those questions. However, many people, including ourselves, took on those, particularly the big British multiples, who created the pressure to cause an inflation scare, and that has receded quite a bit.

The decision will be taken by the Minister for Finance in early May, which is not that far away now. We have a good deal of adjustment to make before then. It is important that we give the signal to the money markets. The best signal to give them, according to the advice I received, is that we are heading for the central rate.

The Deputy referred to the fact that some other European countries would accept the board principle of the severe cuts in Agenda 2000. That would be the UK line always. The UK policy continues to be a preference for the availability of very cheap food. However, one of our biggest planks, on which we are trying to put some flesh at this stage, is the suggestion of a European model of agriculture. The reason we are being forced into those cuts is to fall into line with the next WTO.

Last week the general secretary and I had the opportunity to visit South America. We travelled through a very small part of Argentina, which involved a great deal of travel, and we saw the vast scale of their agriculture industry and their potential. We saw brand new milk plants being built which double capacity and they are not looking for extra customers; they were just asking their original customers to double their milk output. The scale is massive. The soothing part of it is that half the population of the continent, particularly that of Brazil which has 240 million people, have never tasted milk so there is certainly scope for them to market that produce without it coming to Europe. Nevertheless, the South Americans have substantial access to European markets at this stage.

There is no point in a typical Irish farmer, whether in the west, Cork or anywhere else, competing with the guys we saw in Argentina who have 7,000 acres, a massive set up and cheap labour. We need to put flesh on this European model because we are exposed to environment, food safety and other restrictions. In Argentina they do not have pollution problems because they do not have an over Wintering problem and they do not have to invest millions of pounds in pollution control because it is not a factor. Likewise, they do not have to contend with many of the animal health or other restrictions with which we are severely restricted. The same applies to the US or Australia. We must construct a European model which would receive exceptional treatment under the WTO. That will be our saviour.

With regard to Objective One status and the divisiveness, I know from where the line is being drawn at present that Cork is a bit below the line and Offaly still qualifies. I do not know whether it is comforting to find oneself inside or outside the line. If it becomes a case of regionalisation, it will be divisive and many genuine people will be affected. I was at a meeting in Clare the other night and one of the gentlemen said that half of his farm is in Galway and half of it is in Clare. The worst part of it is in Clare and under this new regionalisation his farm will straddle two regions.

There is talk of a soft landing, a cover-all which would edge everybody out. We have a good argument for maintaining Objective One status. The enlargement of the EU will not happen over the next four or five years and we should insist on making a case because we have made very good use of the investment. Everything is just beginning to happen. We have maybe reached 79 per cent of the EU average at this stage, but it is newly found wealth and it could deteriorate quickly if we lost our status.

The reopening of the live trade is an ongoing issue at present. We have made representations to all of the people in the industry and to the Department of Foreign Affairs and I hope the matter is being progressed.

Chairman: As there are seven members still offering to ask questions and there are about ten minutes remaining, I would ask them to be brief.

Deputy Kirk: I take the opportunity to congratulate Mr. Parlon on his election and to wish him well.

The BSE crisis devastated the beef industry. What are Mr. Parlon's thoughts on the possibility of the IFA setting the creation of an all Ireland veterinary régime as a policy objective?

A former Member of the Seanad, Professor Tom O'Raftery, prepared a paper at the end of 1997 in which he analysed the food industry. It stated that, according to CSO figures, in 1970 we were spending approximately 27 per cent of household income. Today that percentage has dropped to 14.5 per cent, which is nearly a 50 per cent drop. The analysis showed a significant reduction in the range of food products. Keeping an eye on what the central proposals have in mind, we are clearly going to get into below cost production, particularly in the beef sector. I agree with Mr. Parlon's paper which clearly states that there will be below cost production and we will be dependent on deficiency payments to stay in business. While there is a reduction in the number of people in part-time and full-time farming, is it conceivable that those engaged in primary food production will conclude that it is no longer profitable to be in the business and will get out?

Developments in Argentina and other parts of the globe have implications for the European market. The agreements reached in the context of the WTO negotiations will, therefore, be very important. However, when the CAP was established one of its objectives was food security within the EU. If 340 million people are to be fed, what will be the position regarding the self sufficiency of the industry within the EU in ten to 12 years?

Deputy Sheehan: I welcome Tom Parlon, President of the IFA, and the delegation to the committee. I have been a member of the IFA since its foundation, am an admirer of the organisation and am always proud to display my membership. I congratulate Tom on the way he has outlined how the IFA strongly disagrees with the EU strategy of forcing price cuts for beef, grain and milk before the next WTO negotiations commence. We should lobby our Members of the European Parliament on this. It is no good in being good Europeans if we do not get any thanks for it. We will not get any thanks from Americans when the next agreement will be negotiated.

Three major farm investment schemes remain suspended - the young farmers' installation aid scheme, the control of farmyard pollution scheme and the dairy hygiene scheme. Surely it is not beyond the bounds of possibility for the Minister for Agriculture and Food to reintroduce them. We should support the suggestion by the IFA in this regard because the Government was re-elected with a promise to reintroduce them.

Chairman: The former Minister for Agriculture, Food and Forestry, Deputy Yates, abolished them.

Deputy Sheehan: The Government's decision to introduce a ceiling on headage will have a negative impact on farmers in disadvantaged areas. The latest indications are that the limit will now be increased to £4,000. According to a recent report in a newspaper, Deputy Healy-Rae stated that he had a hard time trying to get an extra few hundred pounds from the Minister.

Will the IFA pursue the delivery of the third tier of headage payments promised by the previous Government to all of the severely disadvantaged areas in the west, from Mizen Head to Malin Head? Approval was obtained by the previous Minister for the introduction of this third tier.

Chairman: The Deputy is making a speech.

Deputy Sheehan: I am not making a speech. Will Tom Parlon endeavour to get this third tier for these beleaguered farmers? I congratulate the IFA for widening its ambit and taking the aquaculture business under its umbrella. It has a very bright future. I represent Cork South-West. Its coastline is ideally suited to the development of aquaculture. Fortunately, the area is affected by the Gulf Stream and the waters are susceptible to aquaculture development. We should support the IFA in this area and ensure that we reap maximum benefit from aquaculture development in this country in the next decade.

Deputy Coughlan: I wish to be associated with the congratulations to Tom and I wish him every success as president of the IFA. It will be no mean feat if he lives up to his promises. Most of the issues about which I am concerned, especially those regarding live export and the beef trade, have been raised.

In my time in politics I have seen abject disillusionment in agriculture, especially among small farmers. I have serious concerns about the prices given by the factories. Many questions need to be answered in this regard, especially when others are not as badly affected.

Along with many of my colleagues, I have been most vociferous in trying to have the young farmers' installation aid scheme and the control of farmyard pollution scheme introduced. Securing funding for these schemes is under consideration.

Deputy Sheehan: What about the Celtic tiger?

Deputy Coughlan: Headage has been the lifeline of most of the small farmers. Regardless of questions of morality, a cheque in the post is the reality of the situation. There will be discussions on how long headage will continue. In this regard, Objective I status will be paramount to what we will seek in County Donegal. There has been much discussion involving the IFA as one of the social partners on the question of dealing with the headage and many issues have been raised with which I disagree. I wish, therefore, to see clarification on the proposals made by the IFA to deal with this matter.

Deputy Finucane: On the question of the beef situation and the Santer proposals, what are your plans to counteract the negative image of farming among members of the non-farming community? They do not have a true appreciation of the crisis in farming and consider that farmers are doing very well.

Everybody agrees that the young farmers' installation aid scheme was excellent. After the budget the Minister announced that he would introduce an amended version of the scheme and would discuss matters with the appropriate interest groups. Has the IFA been approached on the Minister's intentions?

Given the quota regime through which the beef side operates, surely there is a huge restriction, especially with regard to young farmers? If these issues are not resolved the flight from the land will accelerate rather than decelerate. If one talks to those farmers who are educating members of their family, one will find that they have difficulty in getting a son to continue with the farm. Many of them are in third level education, go on to take up 9 to 5.30 jobs and do extremely well financially. By comparison, they do not see why they should accept the kind of work involved in farming.

I am a little despondent on the issues of young farmers. The problems regarding the profile of under 35 year olds will increase rather than decrease unless there is a dramatic improvement. In this regard, Agenda 2000 does not give me much comfort.

Deputy J. Brady: I also wish to be associated in wishing the new President of the IFA the best of luck in the years ahead. Rural Deputies have fought for the introduction of the young farmers' installation aid scheme and have succeeded to a certain extent. We will also fight for the farmyard pollution scheme. The young farmers' installation aid scheme is vital in keeping farmers' sons on the land. For example, an enormous number of young farmers are leaving my own area and going to building sites in Dublin. It is vital that young farmers continue the farming tradition. The farmyard pollution scheme is also vital because of its importance to people wishing to participate in the REP scheme and we will continue to fight for its reintroduction.

I fully agree with the comments of Deputies Penrose and Coughlan on the meat factory cartels and the manner in which farmers have been treated by them since the beginning of this year. Meat factories have no regard or respect for beef producers. Coming from County Meath, in which there are huge numbers of beef farmers, I am keenly aware of the problem. The more beef farmers who go out of business, the less competition there will be in the marts for store cattle and their producers. I know the Minister has worked very hard in this area and I am aware the Department is working tirelessly to open up the live trade.

Senator T. Hayes: I join with my colleagues in congratulating Tom Parlon on his victory in being elected President of the IFA and I wish him well. Any man who beats a Tipperary man must be good.

Has the IFA any policy in regard to the number of people leaving the land? Where does it see these people ending up or what role does it envisage them playing?

At his inauguration, Mr. Parlon spoke about the importance of the environment and environmental issues. The REP scheme has been a huge success in this regard. One can see its effect on rural areas throughout the country. Has the IFA any proposals to stamp food coming from farms in the REPS areas? We talk a great deal about green Ireland and one hears about consumer reactions to green produce. Has the IFA any proposals to develop a symbol which would identify this kind of produce?

On the issue of meat factories and cartels, the Egyptian live export trade, if opened up, would have a great impact on farming in this country. Perhaps a round table conference could be organised to seek to open up this market. At any mart one may choose to visit, cattle prices are fluctuating by £30 or £40 on a weekly basis. If live exporters were bidding for those cattle, we would have a more stable market and that would do a lot for Irish farming. That, in my opinion, is the most important issue facing us this year.

Deputy Ring: I, too, congratulate Tom Parlon on his election. I listened to his comments on the 700,000 acre farms in Argentina. The average farm size in Achill, County Mayo, is three and a half acres. Due to the introduction of regulations on cross-compliance, a holding must be 10 acres or more to be considered a farm. The people of Achill have turbary rights and commonage. The cross-compliance regulations will also have an effect on farmers in the Erris area of north Mayo. The cross-compliance regulation was an Irish one, not an EU one. I urge the immediate lifting of that regulation in order that people in Achill and north Mayo, who had been receiving headage payments over the years, will be allowed into the REP scheme so that they can collect their headage payments next year. I do not want the small farmers of the west of Ireland to be forgotten.

Hill and sheep farmers have experienced a cut of approximately 40 per cent in their incomes. If any other sector had their pay cut by 40 per cent, they would be marching on the Dáil. Hill and sheep farmers' incomes have been drastically reduced and there is not much sympathy for them. These farmers work under difficult circumstances on bad mountainous land and if lambs are born late in the season, they do not receive a good price for them.

I hope to see more people like Senator Quinn before the Committee and I hope that Tom Parlon and the IFA recognise what he has done to promote Irish beef. An Bord Bia, the Irish Government and the IFA have a part to play in beef promotion and if funding is needed from the IFA for this purpose it should be provided. An Bord Bia should be promoting Irish beef all over the world. Other countries are spreading bad news about Irish beef and we must tackle that. Irish beef is the best product in the world and we must sell it as such. Senator Quinn should be assisted by the IFA in his efforts to promote Irish beef. Many other major supermarkets coming into this country do not have much respect for the Irish consumer as long as they make money.

Mr. Parlon should not forget the small farmers in the west of Ireland and I urge Fianna Fáil TDs to ensure that the Minister for Agriculture and Food makes a further announcement next week to allow these people into the REP scheme. If the REP scheme continues in its current form, it will not be very successful. Since 1994, there have been 15 adjustments to the scheme. The Government is going to prevent farmers from entering the scheme and the scheme will be ruined as a result. Tom Parlon and the IFA must take on the Minister for Agriculture and Food, the departmental officials and the OPW, some of whom would not know a farm if they saw one.

Chairman: I remind Members that a delegation from Macra na Feirme is waiting to come before the Committee.

Senator Quinn: I congratulate Tom Parlon on his election and welcome him and his colleagues. I thank Deputy Ring for his kind words. I have a sense that, as a nation, we always expect others to do things for us. I suggest that the IFA is waiting for somebody else to do something about beef traceability. Often when things go wrong, we hold meetings and send deputations to Dublin to ask other people to solve our problems. Is there any possibility that the IFA could grasp the challenges facing it?

I recall our experiences in Superquinn when we discovered the need for a traceability scheme. Rather than wait until somebody else formulated such a scheme, we put one in place ourselves. When the BSE problem arose almost two years ago, we noticed an increase in beef sales solely because for some years we had been displaying the names and photographs of the farmers who supplied our beef.

I was delighted to hear Mr. Parlon speak about the traceability scheme and the need for a computerised identification system. Does the IFA expect the Government to do everything for it? Is there any possibility that Irish farmers could actually grasp the opportunity to do something themselves? If we continue to put off tackling this problem, we may find ourselves losing a market we have the possibility of gaining.

Senator Moylan: I welcome my fellow countyman, Tom Parlon, and wish him well as president of the IFA. Many of the points which I wish to raise have already been covered adequately by Tom and I will not go over them again.

The people who are in real trouble at the moment are those who are trying to make a profit from beef production. I am glad that when Tom was elected as president he threw down a challenge to the factories. They increased their prices somewhat but they are inclined to reduce them again, which I think they will get away with. However, many farmers have said to me the IFA will not take on the factories - although that perception might be wrong - because the factories stop substantial moneys from farmers for every animal they kill and post cheques to the IFA. The IFA must clarify that it is not afraid to take on the factory cartels.

I have known Tom since we both served on the county committee of agriculture a number of years ago. He is a man of his word and when one makes a deal with Tom Parlon it is honoured. I look forward to the Fianna Fáil Ministers working with Tom.

We all know the problems with SACs and NHAs. I compliment the IFA for expelling farmers who were convicted of breaking laws in the production of food. Those people must be weeded out of the farming organisation. We must all remember that the customers call the shots on the type of product they want. I wish Tom well during his term and hope to work with him.

Mr. Parlon: Deputy Kirk referred to an all-Ireland veterinary regime. It would make a great deal of common sense to have an all-Ireland veterinary regime. However, it would be difficult in regard to BSE at the moment.

It is a fact there has been a large decrease in the percentage spent by housewives on food between 1970 and today. Con Lucey produced a document examining where the profit on food goes, which showed a very worrying progression from a producer's point of view. Over the past 12 years supermarket food prices increased by 37 per cent while farm output prices increased by 12 per cent. There was always a gap but it is widening.

We are not too sure where the profit is going but farmers are not getting it. We see that as a challenge. The IFA must take on the responsibility, on behalf of all our members, for dealing with the big multiples and so on. Perhaps part of the profit is going on packaging and other areas, about which I am sure Senator Quinn could tell us. It is very worrying for farmers that the gap is widening and we want to address that challenge.

The pressure for below cost production is one of my major difficulties with the Santer proposals. All the main sectors are being forced to produce below cost and depend for our income on a cheque in the post. It might have been a short term solution in CAP Reform 1 but it is not sustainable. There is no future in that type of farming. This is part of the national package we must take on. Agriculture is a vital part of our national economy and there is no future for Irish farmers in that sort of system. Changes will have to be made.

The IFA is trying to come to terms with all the areas which have been raised by the committee. Yesterday one of our members raised the question of the buying power of what we sell; for example, the number of bullocks one would have to sell in order to buy a car 20 years ago and now. Our buying power is diminishing by the day. Food is getting cheaper and cheaper. We are probably becoming too successful in that while food security was a major issue in CAP reform, the tighter the margins get the more we are forced to produce. That is not doing farmers any good. Despite the fact the world's population is increasing, the people in the areas of most increase are not in a position to buy food.

It is a difficult situation for farmers which is causing a great deal of grief for us. I do not see a major downturn in food production, certainly in the short-term. A feature of the initial CAP reform was to retain supply control but, unfortunately, that has now been thrown out the window. GATT has also opened up the doors. They are saying farmers must be able to compete at a very low price instead of being more concerned about better quality production. That will all have to come into play when we get into the nitty-gritty negotiations on Agenda 2000.

Deputy Sheehan raised the issue of price cuts. I made the point about giving away one's hand before one gets into negotiations. He asked about the third tier. We had discussions on that before I left the house today. It is being negotiated at the STAR committee in Brussels. The whole SAC deal was holding up the third tier because it is all coming out of the same package. It would mean about £3 million a year for Ireland. It is agreed and I think the agreement is backdated to 1997. I hope there might be an announcement on it this evening - it is certainly long overdue and badly needed. It is only a few pounds which will not address the real difficulties.

Deputy Sheehan also referred to the IFA's involvement in aquaculture. That began at quite a small level but I am amazed to find aquaculture now accounts for almost one third of our total fish production, including shellfish. It is becoming a very big part of our organisation. It is also important to the cereal production industry. Thankfully, there have been no major rows between the fishermen and the grain men so far; it is working nicely.

Deputy Coughlan reminded me about the promises. We will compare them in 12 months time. There is a great deal of disillusionment among farmers, particularly young farmers. Headage payments have been a lifeline. They are closely linked to the Structural Funds which are only secure until 1999 and are becoming scarce. I know the Deputy has been a very strong supporter of headage payments and we believe it is vital to maintain those levels. Our proposal is that headage payments after 1999 should come out of the price support scheme in the CAP rather than the Structural Funds. We have made a good case for their transferral, given their vital importance for Ireland, particularly the disadvantaged areas, and that it should not be dependent on our Objective 1 status or that level of Structural Funds in the future. However, we will need a great deal of support for that.

Deputy Finucane raised the issue of counteracting the negative image of the industry. I am very conscious of that issue to which I referred a great deal during my election campaign. We must address the question but we must be careful in the language we use. Rather than appearing to be complaining about our situation, we must explain it very clearly. The figure of 63 per cent which I quoted was produced independently by Teagasc farm management. Some 38 per cent of our farmers earn less than £5,000 per year from farming and 63 per cent earn less than £10,000. A minute percentage earn big money. The figures stand up and we must tell the real story. I have written to all the editors of the national papers and to RTE inviting them to a meeting to discuss the situation. Most of the reporting is fair and accurate, but headlines are inclined to give a false impression and there are many instances of that. It will be a priority for me to address this problem, because it is important for the IFA as a lobby group to have credibility with the public. All committee members know the importance of public opinion. We are in a vulnerable industry at the moment in which we depend on politicians for our livelihood to a large extent and on a positive public opinion, so this must be addressed.

The quota situation is a factor for those under 35 and new people entering the industry and has restricted farming to a large extent. Some 76 per cent of our quota holders and 73 per cent of our milk producers are under 35,000 gallons. The bulk of the milk is still produced by small farmers. There is considerable debate about the scope for improving that. I understand the frustration of those people and that is why the flexibility of the quota regime is high on our agenda and we have been examining it. There are different interpretations of flexibility. Quotas can be thrown out altogether which would allow everyone to produce to their maximum, but the implications for the price would be very negative, although we have not put a figure on it. As regards the other opportunities for flexibility within the regime, the chances for bringing quota in from outside Ireland are negligible. Furthermore, only 7 per cent of quota is leased, although I understood it to be more. Even if all those quotas were pulled in, they are already leased to people and the bulk of those are leased to people under 35 because they are prepared to pay significant money. It is a difficult situation; we are in a bind. Jacques Santer suggested quotas will continue until 2006. It is something we will have to examine, because it is a serious problem which has caused stagnation, especially within dairying.

I have answered Deputy Johnny Brady's query on installation aid. As regards CFP, it is vital we obtain funding but it is dependent on Structural Funds, whether some of the major national projects are carried out and whether some money comes back into the Structural Funds. It is vital and funding must be found for CFP. With the tiger economy to which Deputy Sheehan referred, installation aid would be a very good investment by the Government in job creation in farming, and a minor one at that.

Senator Hayes spoke of people leaving the land and asked what policy we have to deal with that. Emigration in the past was the only outlet people had but that has changed. However, we now must face the reality. Many farms are under 40, 50, 60 or 70 acres. The average farm size is now about 72 acres and if one's farm smaller than that and one only has sucklers, one will not be able to earn a livelihood. One depends on an off-farm job. The national policy of job creation will have to be spread more evenly. For farmers to have an off-farm job, it must be within 15 to 20 miles of where they live. That must be examined because the bulk of the jobs created by IDA Ireland over the past number of years have been within the main Dublin area. People will naturally want to create jobs where an employment base exists, but creating employment in the areas of smaller industries and service industries should be examined closely.

I would be in favour of reopening the live trade. We can select different people or organisations for criticism but there is a problem in the cattle industry. Competition is needed but we do not want a strong group such as the meat factories coming together to dictate prices. I see the opening up of the European and UK markets as being more important than the live trade. I believe we will have a live trade if we keep progressing and get the political and industry support we pursue. The absolute priority for the beef industry is to regain its market share, be it in France or the UK. As Deputy Quinn said earlier, traceability will be vital. It will be the tool by which farmers will do it for themselves. The Department of Agriculture and Food is the independent body overseeing the industry and it must introduce the scheme. It will create considerable pain for farmers when it is introduced because every movement of the animal will have to be recorded. Our members will not thank us for the extra red tape which will be heaped on them, but I see it as the future and look forward to it being put in place. It is high time that was done.

I wish to inform Deputy Ring that I am going to Castlebar as soon as I get out of here. I thought he had all those problems sorted out.

Deputy Ring: Do not forget to tell them I raised them.

Mr. Parlon: I am familiar with the situation, especially as it applies to Achill in terms of cost compliance and the need to have at least ten acres on the lowlands. A scheme cannot be introduced if it discriminates against a specific sector, and especially if it has sufficient commonage. I understand this to be the case in Achill because I know the area reasonably well. A compromise must be found, and it is part of the ongoing negotiations under the STAR committee to try to find a way to include the maximum number of farmers in Achill and the north Mayo area in REPS and cost compliance. The situation of hill men has been very severe because they have not benefited in the past from better prices because of their low output. There is now a common new premium support whereby one receives the same in County Meath as one does in west Mayo. It is unfair. The Mediterranean market which was good for light lambs has deteriorated and it is a situation which we are trying to address and on which we will push hard.

Investment is needed for An Bord Bia and promotions but it must be linked with an overall plan comprising traceability, quality assurance and money spent regaining market share.

To answer Deputy Quinn, I believe farmers should and do accept responsibility in improving their situation, but there should be traceability and computerisation in the Department. If an outside body had been hired to do it, it would have been done long ago, but it must be delivered. As late as yesterday evening, I spoke to the Department about it and was told progress was being made. However, it cannot come a day too soon.

As regards Senator Moylan's query, it is not my view but rather an old wives' tale at this stage that the farmers are afraid to take on the factories because some of their income is in the form of a levy from the factories and that they facilitate the organisation in collecting from its members. Since I was elected, my first job was to take on the factories. I met with all the main players in the industry and left them in no doubt where we stood. For the next move, a large group within the IFA wanted to block factory gates. I did not believe it would do any good overall within the industry, because confidence among farmers is a major factor. When prices are bad, farmers are inclined to sell. When they improve, they become very fond of their stock. I wanted to create greater confidence among farmers and we were successful in doing that. Factories are paying more for cattle now than they ever intended to. Maintaining the pressure and introducing the element of competition will be important.

I believe I have answered the questions as best I can. I wish I had more time to go through them.

Chairman: I thank Tom, Michael and Con for coming here this evening. The turnout is almost the full committee, so there is a deep interest in agriculture. We wish you the best as president. I am sure you will be back here again when the Commission's Agenda 2000 proposals are debated.

Mr. Parlon: I would welcome the opportunity of coming back again because it is a good idea.

Mr. Berkery: I share the view that it is very useful to meet Deputies and Senators without being under the pressure of some crisis. Members should think of productivity in their own parishes and areas, and how it has increased on what it was 15 years ago. The capital investment has been made, but the outflow must be seen as productivity as well as some sort of liability.

When we look at the decisions taken by the markets and the two-year money, which is close to the German rate, we want to bring the three- and six-month money close to the gilt rate. The Germans are paying the same for Irish gilts as for German gilts because they know we will converge.

The European model will have to be protected in connection with the green box, or else we will have to compete on strict monetary terms with the Argentineans or the world traders. On traceability, the real advantage of a State system is that once the animal is born, it is tracked until it exits, under veterinary stamps, to Russia, Asia or wherever. The hardware can be found in the companies and we will play our part, but State integrity from birth to exit will give us a key element on British supermarket shelves. Shamrockery will no longer sell beef because the British can beat us. There will have to be a quality and safety element.

The representatives withdrew.

Presentation by Macra na Feirme

Chairman: I welcome the representatives of Macra na Feirme, Mr. Tom McGuire, the President, Mr. Tom Curran, the Chief Executive and Mr. Damian McDonald.

Mr. McGuire: It is a great honour to give this presentation and to raise some core issues of our organisation. Some Members present are former staff members of Macra, which goes back to 1944. In the aftermath of the Second World War, many agricultural inefficiencies in Ireland were shown up, including the level of education in the agricultural sector. Macra na Feirme was founded as a result.

Its primary aim was to provide education for those who had left school very early, perhaps at primary level. Macra tried to build their confidence so that they could manage farms. From then until now the core value of the organisation has been farming. We are probably unique in attracting members from the urban and rural sectors of the community.

We have selected five issues to present to the committee. These reflect those matters which represent the future in rural Ireland. Most of us would appreciate that agriculture is the core value of rural Ireland and expand that to say that education is the core value of agriculture. That leads to the young farmer.

The installation aid scheme has been our main issue in recent months. It was set up in 1984 to help defray the costs of a young farmer taking over a farm such as stamp duty, legal fees and family settlements. This was a huge incentive to a young farmer. That scheme continued until last July, with 75 per cent funding from the EU and 25 per cent funding from the Exchequer. The EU announced it could not make any more money available to this scheme in July, and the Government responded on 7 August by suspending the scheme. We saw this as a major blow to the young farmer and farming generally. It sent a very negative signal to young farmers, particularly as more and more young farmers turn their backs on agriculture.

The early retirement scheme complemented the installation aid scheme, but there was an added cost in the enlargement clause which was part of the retirement scheme. The budget made £3.5 million made available to pay the outstanding applicants who were being processed before 7 August. No allocation was made in the budget for a revised scheme although we had lobbied for that. We favoured a new scheme which would be tightly focused on the small producer. We took confidence in the announcement of the Minister, Deputy Walsh, that he had secured agreement with the Department of Finance that a new scheme would be introduced and that he would talk to us as soon as possible. We are annoyed that it is now February and as yet none of these discussions have taken place. This would have been seen as a priority for him at the time.

A grant of £5,600 was available under the installation aid scheme. We must compare this with a cost of £11,714, according to IDA information and its annual report, to create one job. Regarding education a young farmer has to pay his own fees in agricultural college. This compares with the very substantial fees paid for people in third level.

A further issue concerns the future for young farmers. I am sure this was raised in the previous discussion. There is much pessimism among young farmers who have become totally despondent about agriculture. We cannot blame them for this in the context of the Celtic tiger and the more lucrative incomes available in other sectors. Many young people are taking manual labouring jobs on building sites in Dublin rather than remaining on farms. We are competing against such sectors.

The quota regime is also significant as it does not allow for expansion or new entrants to agriculture. We are also facing the new round of CAP reforms in the form of the Santer proposals. What we know of the proposals to date does not add to the joys of entering farming. We are moving towards direct payments and more price cuts which are huge issues for young farmers.

During 1997, 4,000 people left farming, a statistic which speaks for itself. The Opposition has a major role to ensure the maintenance of farmers in agriculture is high on the agenda. Many negative images of agriculture are portrayed, and politicians have a role in ensuring a balanced debate and presentation of farming. It is not as glamorous as it was. There are attitudes and traditions which never viewed farming as a profession. Farmers were never brought into schools during career guidance seminars for students. These issues mitigate against young farmers and farming as a profession.

Mr. Curran: I wish to concentrate on the issue of agricultural education. A key issue is that young people entering agriculture are trained and are not lesser beings. We are concerned about the standard of education received by young people entering agriculture. Young people can either do a year in training and complete their certificate in farming or do a part time course with Teagasc. There are 12 agricultural colleges with over 800 students undertaking the one year course. This year there was a 9 per cent drop in the number of entrants to the colleges. This is more marked on a line north of Dublin than in the south. Deputy Sheehan, therefore, may not be worried about the college in Clonakilty which is full, but people in the midlands may be very worried that numbers in the college in Multyfarnham have dropped by 40. The issue must be viewed from a national perspective rather than from the perspective of individual constituencies. We were in Athenry last week where four of the 42 class members could not read. This is the reality.

I had the pleasure of listening to the IFA presentation. It is very important for the future of the industry that those entering it, even if smaller in number, are articulate, committed to agriculture and believe there is a future in the industry. This is why we are very concerned about the standard of agricultural education.

Teagasc, as the provider of this education, is undertaking a review called Teagasc 2000. Perhaps representatives of Teagasc have come before the committee. I am always suspicious of people reviewing themselves, as one tends to be a little more positive about ones own performance. We have people on the board and have a very close relationship with Teagasc, but we expect politicians to stand back and look at the issue of agricultural education.

Another problem is the disparity in capital funding between the State Teagasc colleges and the private colleges. They are all doing an excellent job. Because Teagasc colleges have a capital budget, it can be more difficult for private colleges to receive money. Deputies with both types of colleges in their constituencies will fully understand the problem.

It is a major issue. We looked at the history of Macra and the issues concerning it in the early days in terms of agricultural education. There are different needs now: it is no longer about technical skills but is still about numeracy and literacy. People must be given confidence through the education system. It is an indictment of the system that people training as farmers cannot read. One wonders about their other skills.

In many colleges last year the ratio of applicants to places was 3:1. This year colleges are scraping the barrel, some of them having taken all applicants. There will be a drop in the standards among entrants, which has long term implications for the industry.

Macra is in a unique position regarding the issue or rural housing. While our core value revolves around agriculture, where the majority of our male membership - because of the demographics of farming - comes from. However, we have members who are not farmers and we are in a position to bridge the urban/rural divide. A survey carried out by the North Meath Community Development Association identified 600 unoccupied houses in north Meath, an area which is different from the rest of the county. At the same time there are no grants assistance for young people wishing to build a house on the land or for the son or daughter to move into farming. The push is towards urban centres where the housing stock exists. A grant should be available for the renovation of houses. I know such a scheme was abused in the past and people did well out of it. However, this does not mean it will be abused again. It is the duty of legislators to ensure there are safeguards in any new scheme, including provision that those receiving grants must be living in the area for a specified number of years. Ensuring the £3,000 first time buyers grant is made available for the renovation of property would be a step in the right direction. I know this was contained in election manifestos, but manifestos of Presidents and politicians take a long time to become reality. I am a paid official and can have a slightly different view. There is an opportunity for Members to make an impact in that area particularly around the Government's commitment to introduce a rural renewal scheme along the Shannon corridor. This could be a real opportunity to do something useful. Macra na Feirme is an organisation which takes a long-term view.

Mr. McDonald: I wish to raise the question of Ireland's industrial policy and its regionalisation. A lot of this arises out of recent comments by Mr. Richard O'Brien, who is a manager in the planning and regions section of the IDA, who alerted us that there was an increasing trend towards Dublin for foreign investors and that Dublin was getting the cream of the companies that are coming in now. While there appears to be an increase in regional job creation the majority of jobs are focused in the main population centres of Galway, Limerick and Cork. If you look at the eight regions you will see an increase of jobs figures in two or three of them giving the illusion of a greater regional spread of foreign direct investment but the reality is they are being concentrated towards bigger population centres. As we are interested in rural development we would like a greater spread of job creation.

In relation to rural housing mentioned by Mr. Curran, the ESRI in its recent report on direct foreign investment concluded that future regional success will depend as much on where people want to live as on where the jobs are. Therefore, the two issues of rural housing and industrial policy are connected. Unfortunately, the types of jobs being created here now are in the chemical and electronic engineering sectors and there are not many computer whiz kids living in rural Ireland. We need encourage suitably qualified people to live there. In many ways this is a chicken and egg situation. People do not want to live where there is no employment and foreign companies do not want to invest in depopulated areas. It is important to note that the IDA do not create jobs but it is the companies who decide where to locate. We have to think of ways to influence companies to consider rural Ireland as an ideal location. There are three issues where we consider there is room for improvement. First, a well developed infrastructure in rural Ireland is essential to foreign companies. The IDA end of year report stated that most European businessmen like to fly from Europe to Ireland and return home the same day. The reality is many rural areas are inaccessible in that short space of time. It is our priority to ensure the rural infrastructure is maintained and improved on a continuous basis. Second, differential grants are needed to encourage people to locate companies in rural areas and to live there as well in terms of Mr. Curran's rural housing proposals. Third, tax incentives are the best way to encourage companies to locate in Ireland but we need to provide extra incentives for rural location. Nobody would dispute the fact that a dispersed population around the whole island is better than having everyone clustered in cities. The rural way of life, of which many Members will have experienced while growing up, speaks for itself and is a very good way of life which is proven by the standard of people its provided. We should make it a priority to attract more foreign and local investment to rural Ireland. I was saddened by the fact that the Urban Renewal scheme in operation for the past few years resulted in a lot of investment moving from rural to urban areas because of tax incentives. We need a similar tax incentive scheme for rural Ireland.

In conclusion, many economists have spoken of the Celtic tiger so much so that it has become a cliché. From our point of view if we do not address the current situation we will end up with a Celtic leopard where we have spots of prosperity amongst a dying rural Ireland.

Deputy Coveney: Thank you for your excellent presentation. I note that many of the most successful dairy farmers live within a radius of 15 miles of Cork city. The key to their success is they all completed their secondary education and half of them went on to third level education. I agree with your sentiments on education. The standard of education in Irish agricultural colleges is quite inadequate for the future of farming. My son went to an agricultural college and found it to be very useful. But when he left it I felt he was not fully equipped to cope with new farming technology and sent him to a college in the UK. Given we will not have the resources to tackle the educational deficiencies you mentioned would a student grant scheme to colleges in the UK and Scotland be a short term solution? Like everywhere else the top UK and Scottish colleges are looking for people as well.

Senator Quinn talked about us doing things for ourselves, the best example of this is the Fermoy community led by a very high minded individual Mr. Tom Kavanagh. He is a very successful businessman and wanted to put something back into the community. The community joined with the local development agency and quickly identified, along with the IDA and others, that what would give them the edge was if they had an advance factory. They built it with the help of Mr. Kavanagh's and got an industry. If we are serious about attracting alternative jobs outside the main census population we need advance factories and we need to create the tax incentives where people will invest their money in them. The modern industrial investor is no longer content to put up with eight months of planning problems and then a year to build a factory because the market would have changed by the time a factory was ready. An investor now wants an immediate location. Do you think we should focus our attention on providing in larger rural towns a programme backed by tax incentives to develop local development agencies with the objective of providing an advance factory in order to attract industries?

Deputy Penrose: I welcome the group and I am glad your views reflect the view I have held for the past 15 years. I am an ex-pupil of Multyfarnham agricultural college and in 1976-7 you had to wait to get a place at the college but now that has changed. The situation reflects the economic situation in the midlands, particularly the beef industry referred to. The standard of education at the college was very high when I was a pupil because I went to the college after going to university. I did not think the standard of education had fallen so much but I am aware there are problems with numeracy and literacy which will have to be tackled. The president was right that greater emphasis should be place on agriculture at primary and secondary levels, which would also include the vocational sector. It should be recognised as a profession and I would encourage you to progress along that route.

The case for installation aid is unanswerable because of the demographic trends in that 12 per cent of farmers are less than 35 years of age. That is a worrying statistic. I was delighted with your presentation which focused on rural regeneration and arresting rural decline. We may pay lip service to it until the cows come home, of which we, as politicians, may be accused. You have identified the right mix, including the large number of unoccupied houses. There are areas in north west Meath with thousands of unoccupied houses. The impact of that on rural schools, Garda stations, churches and football teams is devastating. What will happen is that everybody will live in urban areas and large towns and nobody will live in rural areas. The Government is aware of this because many of its Deputies come from rural areas.

The rural renewal scheme is a pilot scheme. I agree there should be a £10,000 grant for people to return to rural areas. I am sure the Minister for Finance, deputy McCreevy, will look at these areas. The grant should be provided for people to build houses in rural areas. Some of the areas to which I refer have no longer have houses and it would cost a fortune to renovate unoccupied houses. This ties into the problem of obtaining planning permission. When we look at our county development plans and when the Minister for the Environment and Local Government, Deputy Dempsey, reviews the overall planning code, we should look at these issues, which are critical. Sometimes it is impossible to get planning permission because all the services must be provided. It is a multifaceted problem.

There must be a bias in the grant system. Although industries will locate near regional airports, areas of rural Ireland are off the map. Do you believe the “tele” cottage industry would help rural areas in terms of providing employment? Would you promote that idea? A good mix in relation to taxation incentives would help entrepreneurs and those with the skills, to whom Deputy Coveney, referred to promote the concept of living in rural Ireland.

Deputy Sheehan: I join with Members in welcoming the delegation. This is a worthwhile meeting with both the IFA and Macra na Feirme. I congratulate Macra na Feirme on what it has done over the years in pinpointing serious problems in rural Ireland. I congratulate your attempt to focus on that serious injustice.

Installation aid was to the fore. That issue is a hot potato and is on everyone's minds, particularly young farmers. I have spoken to Teagasc officials in the past two months and they have told me their is no interest in farm classes which it operated while the scheme was in vogue. I am amazed that in the mid-term review the direction came from Brussels to scrap the scheme. Was any attempt made by our Government to counteract that serious injustice?

In 1996, the scheme cost only £6 million, which was peanuts in comparison to the £20 million give to an organisation in the recent budget. What would this have done for young farmers? It would have shown young farmers that there is light at the end of the tunnel. Young farmers are in a dismal situation and believe agriculture will crumble and that there is no future in it. The statistics quoted were alarming. It is shocking to think there are people in agricultural colleges who cannot read or write. That problem must be addressed immediately.

There should be a scheme for rural housing and a £5,000 grant should be provided for the renovation of rural dwellings. To qualify for the grant, recipients should have to show the house would be used as their primary dwelling and that they would undertake to be resident in the house for a guaranteed period after the completion of the work. It is only natural such conditions should be part of the scheme if introduced.

We have not seen much of the Celtic Tiger in rural Ireland. In fact, it was suggested that it should be described as the Celtic leopard which would be a more appropriate name for it because it is in spots only that prosperity is evident. Those spots are near built up areas and the satellite towns adjoining our cities. On the need to encourage more young people to become involved in farming, you believe the central issue of access to production needs to be addressed and that there needs to be a serious re-examination of how we operate our quota regimes to ensure a more open agricultural sector.

We cannot expect a farmer with a 7,000 or 8,000 gallon quota to provide a living for his wife and family - it would be uneconomic. Anything under a 30,000 gallon quota would not be economic for a farmer today. We should use our clout in the European Parliament and our status as an island nation to ensure farmers will not be penalised for producing extra milk unless they exceeded the quota of 30,000 gallons. Above that amount, the quota should be rigidly adhered to. Like the delegation, I do not want to see vast tracks of rural Ireland turned into a wildlife wilderness for the benefit of wealthy Europeans utilising it for what I describe as safari trips. It is ridiculous that we do not stem the rot in rural Ireland.

Deputy Connaughton: I welcome the delegation and am delighted to see Macra na Feirme here for a variety of reasons. There are many issues about which we would like to talk but there are time constraints and it is getting late. Two issues struck me. Needless to say, the installation aid situation is nothing short of a disaster. It is not because of the £5,600, in which I was involved as a Minister of State. I was not too happy with it because there was too much red tape. However, it showed farmers taking over the land that somebody thought of them. That should have been adjusted as the years went by. A major mistake on our part was that it was not linked to some sort of an indicator to ensure it was as valuable ten years after it was organised as it was on the first day.

Most young farmers are rightly sickened by the fact that the Government and the EU see fit to take away the little bit available, whether £5,000, £6,000 or £11,000. I hope when the Minister re-introduces this it will be focused and young farmers given a certain set of circumstances will receive it and not have to wait two or three years for it. I do not wish to get too technical due to time constraints but what some young farmers had to go through to get the £5,600 was unbelievable. We are worse off now because the system is not in place.

I detected from Tom Curran that all is not well between Macra na Feirme and Teagasc in so far as agricultural education is concerned. I live beside an agricultural college in Mountbellew which is quite different to the college in Athenry. This Government and the last one argued for reasonable maintenance grants for the private agricultural colleges. Minister Yates put £200,000 into them. We were told that Teagasc, through their budget, would honour that £200,000 but now we are told that is reduced to £100,000 leaving us to make up the other £100,000. That amount is peanuts because to employ an electrical contractor at one of the colleges would use up the full amount. Management at the colleges are very sore about that. I do not know what the board of Teagasc are doing. I have raised this matter with them. I am not sure where the money has gone, who will get it or when it will be delivered.

I understood the bedrock of Macra na Feirme to be based on the question of the ability of young farmers to stand-in with competition the world over. That is the barometer I use for Macra na Feirme. They are very true to the flag because nobody else will deal with agricultural education. While other people throw in a thought about it at the end of the night at least Macra na Feirme start with it. That is very important.

There is no doubt that other colleges will come across people who cannot read or write at third level. What we are afraid of is that because of the under-funding and, in my view, the marginalisation that appears to be happening in colleges at the moment, they will become the poor relation of the system. I hope the Teagasc 2000 review will do more for colleges than has been done over the last five years. If we do not we are in for a very serious time. There are many other things I would like to say but I do not wish to delay the meeting any further.

Deputy J. Brady: I was glad Mr. Curran referred to the survey carried out on North Meath and the number of unoccupied houses there. I fully agree with him and I am aware of the problem which is a serious one. Parts of my constituency were the largest areas of depopulation at the last census. People look upon Meath as a county that is expanding rapidly. It is expanding in certain parts but unfortunately in my constituency that is reversed. We have a serious problem with unoccupied houses some of which are so bad it would be impossible to renovate them. I wish to dwell on the importance of getting planning permission in an area of depopulation. It is very important in that situation to try to keep the people on the land. Many Macra na Feirme members are not full time farmers - we have them in my area - but they have interests in agriculture and your organisation and should be allowed to live in the area where they were reared even if their fathers, mothers or relatives do not have land. We have a situation where the planners and officials in Meath County Council want to divert people to the larger towns and cities which is very unfair. We have a situation in North Meath where if a person works in the local town which is about ten miles away or Navan that is 20 miles away they are being told by the planners they have to live there. That is discrimination. I hope Macra na Feirme, the IFA and the Irish Creamery Milk Suppliers Association will come in behind us because we are not getting full support at county council or national level to try to keep these people in rural Ireland. I am very upset with the planning process in my constituency as are councillors in other counties. One can go across from Meath to Westmeath or Cavan and get planning permission but still we do not wish to keep the people of Meath living in Meath. That is tragic and is something which I am glad has been raised here today.

In regard to derelict houses there is a situation where people are coming from Dublin and buying these houses and local people cannot compete against them because they are offering £30,000 or £40,000 for derelict dwellings. We welcome people from Dublin to North Meath as would the people from Cavan and Westmeath also but we do not want to see young people reared in the area being deprived of planning permission. I fully agree with what has been said and ask that this be made a national issue in the interests of keeping rural Ireland alive.

Deputy Moynihan: While I concur with what my colleagues have said about agriculture I would like to raise the question of the depopulation of rural Ireland. More and more people are leaving the land and moving to large urban areas. For instance in the local football team seven people are living and working in Cork, 44 miles from the village and they drive that distance two or three nights a week for training. As time progresses they will set up home in Cork city and will be lost to rural Ireland. Thirty years ago the vast majority of people on any rural GAA team were farmers now we are lucky to have one or two farmers on a team. There has to be strong policy from central government and the IDA to encourage more people to set up factories and businesses in rural communities. In some rural communities there is easier access to ports or airports than in Dublin because of the traffic congestion. We must take a very strong view on this and all farming organisations will have to row in and make this a serious national issue or we will lose not alone rural Ireland but a fabric of our society. The only thing that will maintain the existence of rural Ireland is if young people are encouraged to set up home in rural communities.

Senator Moylan: I welcome the presentation by Macra na Feirme. I would like to raise a few points in relation to house decline and house grants. A grant was available in rural Ireland for farmers who had thatched houses to help maintain and preserve them but when people sought that grant they were hit with C2s and tax clearance certificates etc. and they ran away from it and took the option of letting them fall down which are now a loss to the rural area. There was an option attached to that grant in that if there was a second house it could be used as a holiday home but farmers have lost out on that.

I wish to raise a point with Macra na Feirme in relation to land prices. Land prices have gone beyond the reach of many young farmers who are well qualified and educated and want to stay in the industry but are unable to compete. The day is fast approaching where the sale of those lands will have to go back to be approved again by the Department of Agriculture and Food so that young farmers will have an option on them first before speculators who are buying up land. The price of land is unreal and the grandchildren of those buying it will not own it. It is unfortunate that farmers are losing control of the land and this must be tackled.

I compliment him on his presentation and acknowledge the excellent job being done by Macra na Feirme. As elected Members, we hope to work with the organisation to try and get its policies implemented.

Senator Chambers: Everyone has witnessed the decline in agriculture and in the north west 70 per cent of second level students leave the area and very few return having attended third level institutions. Our policies have failed in terms of maintaining economic and viable rural communities and the only way it can be addressed is for farming organisations and co-operatives to gear themselves towards this area. They should look at rural development in its totality and structures and organisations to cohesively carry out development should be put in place to channel the fundamental elements which maintain an economic and viable community.

Along the western seaboard two counties received £24,000 only each out of the last £3.5 million spent by the Government on the white fishing fleet. It is a clear indication of the amount of people using this natural resource to create jobs. There is not half enough use of it and the co-operative movement is not moving into the area which will be a developing sector over the next ten years if one is to believe the research being done and the figures produced by The Marine Institute. There is a future for the sector in rural Ireland but we must focus on the areas that will provide the resources for people to stay there but farming will not do so over the next few years. We should look at other areas where we can support families, schools, churches by using other resources that have been sadly neglected by the State for many years.

Mr. McGuire: Deputy Coveney said the best farmers were to be found within a 15 mile radius of Cork city and it is ironic that when Macra was set up it organised courses in colleges and the first evening courses were held in UCC. The input from local development and community groups is dear to my heart in terms of attracting industry. I am involved in one in Castleblayney and it is a unique project involving national, international and EU funding in addition to the community group. We have drawn down funding from IFI, INTERREG, Forbairt, Monaghan county enterprise board and the local area. We will be building an advanced factory for a meat processing operation which will produce a hand held microwaveable meat sandwich.

As a community group, we facilitated that by bringing the necessary groups together. It was a very frustrating experience in terms of the length of time we had to wait for funding due to the amount of red tape and bureaucracy with which we had to deal. INTERREG was one of the biggest culprits involved and we nearly threw in the towel on many occasions. However, this is an example of where a community can come together to use such an approach for development. Community groups have played a huge part in rural Ireland and the spread of them has been the result of Leader companies and ADM partnership groups.

We have no difficulty with grant aid being given to students to go abroad to colleges. If young farmers wish to specialise and would benefit from it, it should happen. Macra sends of them on cultural exchanges, particularly to New Zealand. It receives considerable funding for that and it should be encouraged.

Deputy Sheehan referred to Teagasc and the drop in classes. We argued that installation aid was a huge incentive and there was a compulsion involved whereby people would attend classes for that scheme. The reason EU money was taken away was that there were discussions between our people and EU officials and it was not seen as a priority. Those involved were badly advised because that was not the case.

We visited Mount Bellew college last week and were well received. Deputy Connaughton referred to the grant of £5,600. It was not so much the money that people were taking an interest in but the reports that supposedly damned the installation aid scheme stated the cost of transfer was £4,700. This backed up our argument that there was a need for it because of the costs involved. The scheme must be focused and we must look at farming in the long term. The day where we just meet each need as it arises is gone.

Macra na Feirme breaks down the agriculture scenario into three sectors. First, there is the case for small producers who are barely viable, especially new ones, and installation aid is of huge benefit and incentive to them. The next sector is larger, more commercial farmers, but there would be a case for tax incentives to be aimed at them because they do not get installation aid. The other sector is part-time farmers which must be faced, even though it has not been referred to today, particularly with the industry tightening up. They will come more into vogue which combines very nicely with the issue of trying to attract industry into rural areas because those involved will need an off farm job. The day is fast approaching where the sale of those lands will have to go back to be approved again by the Department of Agriculture and Food so that young farmers will have an option on them first before speculators who are buying up land. The price of land is unreal and the grandchildren of those buying it will not own it. It is unfortunate that farmers are losing control of the land and this must be tackled.

I compliment him on his presentation and acknowledge the excellent job being done by Macra na Feirme. As elected Members, we hope to work with the organisation to try and get its policies implemented.

Senator Chambers: Everyone has witnessed the decline in agriculture and in the north west 70 per cent of second level students leave the area and very few return having attended third level institutions. Our policies have failed in terms of maintaining economic and viable rural communities and the only way it can be addressed is for farming organisations and co-operatives to gear themselves towards this area. They should look at rural development in its totality and structures and organisations to cohesively carry out development should be put in place to channel the fundamental elements which maintain an economic and viable community.

Along the western seaboard two counties received £24,000 only each out of the last £3.5 million spent by the Government on the white fishing fleet. It is a clear indication of the amount of people using this natural resource to create jobs. There is not half enough use of it and the co-operative movement is not moving into the area which will be a developing sector over the next ten years if one is to believe the research being done and the figures produced by The Marine Institute. There is a future for the sector in rural Ireland but we must focus on the areas that will provide the resources for people to stay there but farming will not do so over the next few years. We should look at other areas where we can support families, schools, churches by using other resources that have been sadly neglected by the State for many years.

Mr. McGuire: Deputy Coveney said the best farmers were to be found within a 15 mile radius of Cork city and it is ironic that when Macra was set up it organised courses in colleges and the first evening courses were held in UCC. The input from local development and community groups is dear to my heart in terms of attracting industry. I am involved in one in Castleblayney and it is a unique project involving national, international and EU funding in addition to the community group. We have drawn down funding from IFI, INTERREG, Forbairt, Monaghan county enterprise board and the local area. We will be building an advanced factory for a meat processing operation which will produce a hand held microwaveable meat sandwich.

As a community group, we facilitated that by bringing the necessary groups together. It was a very frustrating experience in terms of the length of time we had to wait for funding due to the amount of red tape and bureaucracy with which we had to deal. INTERREG was one of the biggest culprits involved and we nearly threw in the towel on many occasions. However, this is an example of where a community can come together to use such an approach for development. Community groups have played a huge part in rural Ireland and the spread of them has been the result of Leader companies and ADM partnership groups.

We have no difficulty with grant aid being given to students to go abroad to colleges. If young farmers wish to specialise and would benefit from it, it should happen. Macra sends of them on cultural exchanges, particularly to New Zealand. It receives considerable funding for that and it should be encouraged.

Deputy Sheehan referred to Teagasc and the drop in classes. We argued that installation aid was a huge incentive and there was a compulsion involved whereby people would attend classes for that scheme. The reason EU money was taken away was that there were discussions between our people and EU officials and it was not seen as a priority. Those involved were badly advised because that was not the case.

We visited Mount Bellew college last week and were well received. Deputy Connaughton referred to the grant of £5,600. It was not so much the money that people were taking an interest in but the reports that supposedly damned the installation aid scheme stated the cost of transfer was £4,700. This backed up our argument that there was a need for it because of the costs involved. The scheme must be focused and we must look at farming in the long term. The day where we just meet each need as it arises is gone.

Macra na Feirme breaks down the agriculture scenario into three sectors. First, there is the case for small producers who are barely viable, especially new ones, and installation aid is of huge benefit and incentive to them. The next sector is larger, more commercial farmers, but there would be a case for tax incentives to be aimed at them because they do not get installation aid. The other sector is part-time farmers which must be faced, even though it has not been referred to today, particularly with the industry tightening up. They will come more into vogue which combines very nicely with the issue of trying to attract industry into rural areas because those involved will need an off farm job. It is crucial that we maintain viable rural communities. Deputy Brady raised the question of planning applications. A friend of mine came to live just outside Moynalty and he was crucified with planning application details as to whether the house would be built of red brick, whether there should be a ditch or wall at the roadside and how close he was to a corner. It was a terrible ordeal to put someone through. This would have been an extra house in rural Ireland contributing to the local community. In relation to local employment, the attraction of local enterprise to inject money into rural communities is needed.

Senator Moylan raised the subject of thatched houses which are of enormous tourism value and should not be under-estimated. The thatching of cottage roofs is a dying skill. In regard to land prices, we have a situation as a result of the early retirement scheme and the enlargement clause where people are buying small sites to qualify for the early retirement scheme. They are buying land which they do not need. In some cases they are buying land 20 or 30 miles away from their holding and so the practicality of moving livestock is out and perhaps the land is not being utilised. That is creating a huge distortion in the market in terms of land prices for the man nextdoor who needs theland to be viable. That is a very important point.

Mr. Curran: Deputy Coveney raised a question in relation to the agricultural colleges. An argument could be made that one of our colleges could specialise in dairying in particular and only take people who have done year-one courses in the normal colleges. We have 12 colleges which may be too many. I would not like to be involved in the dogfight that would decide which one it should be but some rationalisation needs to be undertaken. Many young farmers are now obtaining their agricultural education in Northern Ireland.

Mr. McDonald: Deputy Penrose raised the question of tele-working - people working from home via computer. It is something close to the hearts of many of our members. Many young farmers are computer literate - a point the Department of Agriculture, Food and the Marine have not come up to speed with. If farmers could input information into their systems it would eliminate much red tape for them instead of the Department having a company working for them that could only send certain documents they needed.

In relation to land prices, the single biggest problem in terms of leasing land and selling it is that farmers who have 200 or 300 acres are required to expand their farm by 10 per cent for enlargement purposes whereas a neighbour might be waiting for land to come-up in order to enlarge his farm by five or six acres. I am sure members will remember the great Wexford expression that came about when people were inquiring about the increase in land prices which was “well, they are not making anymore of it”. I suppose that is the bottomline with regard to land prices. The introduction of the enlargement clause is causing problems and needs to be tackled.

Mr. McGuire: I thank the committee for the opportunity to make our presentation. The main points raised by us were in relation to young farmers, the installation aid scheme, education and the need for a cash injection in that area, the barriers to young farmers in terms of quota and marketing farming to make it more attractive, keeping people in rural areas to maintain viable communities and an industrial policy to attract jobs to the area.

Chairman: On behalf of the committee I thank the members of Macra na Feirme for attending this evening for this very frank exchange of views. I am sure our paths will cross on a number of occasions over the lifetime of this Government

Deputy J. Brady: I propose that we meet with only one organisation per meeting.

Deputy Connaughton: We were late starting which was unfair to Macra na Feirme. We should be able to do our business in one hour.

Chairman: The next meeting will be held on Tuesday, 10 February 1998 at 2 p.m. for one hour. It is a special meeting with representatives of Irish Meats Association.

The Committee adjourned at 6.50 p.m.

An Comhchoiste um Thalmhaíocht, Bia agus an Mhuir

Joint Committee on Agriculture, Food and the Marine

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Dé Máirt, 10 Feabhra 1998

Tuesday, 10 February 1998.

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The Committee met at 2.05 p.m.

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Members Present:

Deputy John Ellis (in the Chair)

Apologies received from Senator Feargal Quinn

Presentation by Irish Meat Association.

Chairman: The minutes of the previous meeting are agreed.

Appearing before the Committee is Mr. Tom McAndrew, Chairman, Irish Meat Association and Mr. John Smith, Chief Executive Officer. There will be a ten minute presentation followed by approximately a 40 minute question and answer session.

Mr. McAndrew: We are glad of the opportunity to appear before this Committee and give our views on the meat industry at present. I will ask John to go through a document which we have prepared.

Mr. Smith: We submitted to the committee in advance copies of two other documents, the position paper published by the industry in May of last year, Going Forward in Partnership, and a beef industry news bulletin published at the beginning of January. This was an attempt to identify the key issues facing the industry at this time. In the document before us we sought to identify the key facts impacting on both the industry and, in turn, the producers and also the challenges that face the meat sector. If these factors are addressed in a coherent fashion it will safeguard the sector and help its development into the new millennium. We have tried to be succinct by identifying ten key issues.

The sector shows continuous growth in the volume of output in circumstances where market opportunities are declining. In 1997 there was a record level of kill in the meat industry and the indications from An Bord Bia are that the level of kill in 1998 will be at least on a par, if not greater, than the 1.65 million cattle slaughtered in 1997. Because of the fact that we have a very small domestic population we must find export markets for nine out of every ten cattle produced in Ireland, a level of self-sufficiency far above that of any other member state in the Community. That creates many complications in the context of internal markets within Europe and the GATT restrictions imposed on third country exports.

In the context of trying to develop markets within Europe, the various meat companies have been operating their own beef quality assurance schemes and have invested heavily in such schemes. Despite these investments, as a result of the BSE crisis and the labelling legislation which was introduced, there has been a re-nationalisation of the beef market in Europe. We first witnessed that in the case of France in the second half of 1997 and we have experienced it in the UK in more recent times, to the extent that in 1997 we have seen a volume of exports to France in the order of approximately 25,000 tonnes to 28,000 tonnes as compared to 80,000 tonnes in previous years. The UK remained a very important market for Irish beef in 1997, but the indications in recent weeks are that, because of pressure brought about by UK farmers, the Meat and Livestock Commission is undertaking a specific campaign to promote the consumption of British beef. That, in turn, will create difficulties for traditional Irish exporters to the UK market. Prior to the BSE crisis two-thirds of beef exported from Ireland was being sold within the Community but in 1997 that situation changed. The volume of beef exported to the UK or the rest of Europe in 1997 accounted for approximately one-third of our total exports, with the other two-thirds going either into intervention or to the volatile markets in third countries, particularly Russia and Egypt.

Our dependency on third countries is particularly great in the case of steers. In 1997 approximately 80 per cent of steers were sold to third country markets. The indications are that in 1998 that situation is unlikely to change. Our level of dependency on third country markets for steer disposals may even be greater than in 1997. Exports of beef to third country markets from the EU are governed by the GATT agreement of 1995. We are now experiencing the difficulties that have been created by that agreement because of the diminishing availability of export licences. In the first year of the GATT agreement, the EU subsidised export volume was 1.24 million tonnes. By the year 2000 this will have fallen by 400,000 tonnes, resulting in the availability of licences being restricted to 822,000 tonnes of carcase beef equivalent in 2000-01. In order to remain within the volume restrictions of the GATT agreement, the EU Commission has adopted the policy of continuously cutting the level of export refunds. In 1997 the level of export refund available was reduced by in excess of 20p per lb. On 1 January 1998 the level of export refund was approximately 40p per lb carcase weight equivalent. The corresponding figure for 1 January 1997 was approximately 63p per lb. No other country will be effected by this reduction to the same extent as Ireland, particularly if we have to export 80 per cent of our steers to third country markets.

The pressure on the export licence system will continue through 1998 and in subsequent years, but because of developments in Europe we are going to continue to be dependent on third country markets. Our need to gain access to the available licences is likely to increase. In 1996 we were getting approximately 25 per cent of licences. This has increased to between 26 and 26.5 per cent in the current GATT year. However, An Bord Bia has projected that in order to maintain export markets for the volume of beef which is likely in the future we will have to gain access to approximately 30 per cent of the total available GATT quota.

There were technical changes in the export refund system at the beginning of the year, such as that which enables a differentiation to be made between the refunds for male and female forequarter beef. While the decision will enable the Commission to be more selective in terms of refund cuts which might be imposed in future, and thus favour the export of male beef, the changes will create complications for people trying to supply steer beef to markets in Europe.

Another big consideration for the industry is that the Commission feels there is an opportune time over the coming two years to dispose of some of 650,000 tonnes of the large stocks of intervention. Yesterday we saw the first attempt by the Commission to sell intervention beef to third country markets. We have seen a situation, witnessed since the beginning of January, where third country buyers, particularly in large markets such as Russia and, to a lesser extent, Egypt, stand back in anticipation of getting beef at low prices when they see the Commission embarking upon stock disposal programmes. It remains to be seen the extent to which pressure from the Government on the EU Commission will be successful in discouraging it from disposing of large quantities in direct competition with beef being produced on an ongoing basis.

Regarding the beef intervention purchase system, the Commission has clearly signalled its desire to cease buying beef into intervention. It wants cattle to be sold at a much lighter weight into the market place. Under the terms which currently exist, with a carcase weight limit of 350 kilos and the exclusion of the 04 grade steers, intervention access is in effect available for 15 per cent of the steers normally slaughtered in meat factories in Ireland. It is not going to provide any effective support for producer prices.

There is concern within the industry that the beef being produced is over fat and is out of line with the requirements of the market place. It is a matter of some concern for the industry that in 1997, 82 per cent of steers slaughtered in Irish meat factories were categorised as over fat by the Department of Agriculture and Food, and placed in fat categories 4 and 5.

We consider the issues outlined to be the salient elements of any serious conversation or discussion about the future of the industry. There is a great need for the Government, farmers and the industry to work together to develop a partnership and a coherent strategy for the future. The circumstances in which these problems arose, largely outside our control, necessitate a combined approach and the development of a combined strategy. The key issue is to regain proper market access, whether it be markets in Europe or third countries. With reduced sales to Europe we will be very much dependent on exports to third countries and the manner in which the EU support mechanisms are operated. There is a challenge for us to gain an increasing access to the availability of export licences which will be available in diminishing supply in years to come. Our special export dependency must be given proper recognition at European level in the forthcoming Santer and WTO negotiations.

In the context of the market place, there is an urgency in focusing on producing beef which fits more into line with consumer requirements. We must produce leaner type beef at lower production cost and improve the efficiency of processing in order to improve the viability of the sector. The integrity of Irish beef must be beyond reproach, and quality assurance and beef traceability systems are a prerequisite for the future.

In addressing these challenges, we have already embarked upon negotiations and dialogue with the farming organisations and the Department of Agriculture and Food in a forum chaired by the Secretary General of the Department with a view to coming up with a strategy for the future. Government initiatives to bring about better market access should be strongly encouraged. Recently, a technical delegation visited Iran to examine the possibility of reopening that market. Initial indications are less than positive but steps are being taken.

We must develop a coherent strategy to re-enter the European market. The labelling system which identifies beef by country of origin favours countries with large domestic markets and will create major obstacles for an Irish export industry trying to supply large volumes of beef into those markets.

In recent times we have seen a divergence between producer prices in Ireland and elsewhere in Europe. Clearly, the market in Europe has recovered to a large extent for beef produced in countries with large domestic markets. The French producer price is quite satisfactory, largely because the French consumer is giving preference to the purchase of French beef. We see a similar situation in Germany and, in more recent times, in the UK. We made it clear in the document we published in the beginning of January that the dependency on the intervention system in 1997 in countries such as France and Germany was only a fraction of what it was in previous years, indicating they do not have the problems we have.

There is a need for the Commission to adopt a very prudent approach in disposing of intervention stocks. The export licensing system must be structured to favour the export of Irish beef. We must maintain export refunds at least at the current level or reinstate the levels which pertained 12 months ago. There is a case to be made for a parity premium being paid directly to farmers as long as there is a divergence between Irish prices and prices elsewhere in Europe. Traceability and quality assurance systems will be essential if customers in Europe and elsewhere are to be fully satisfied about the integrity of Irish beef.

We want to supply beef to consumers at competitive prices. In that context we want to produce beef that the customer requires by applying a carcase dressing specification more in line with our Europe counterparts. Some people may be familiar with the system already in operation in France and Germany.

Better production systems at farm level involving better grassland management and more integrated production systems may help to improve producer margins in the future. As part of the discussions we are having with the producers and the Department of Agriculture and Food we are seeking to develop one of the items incorporated in a document we published last May which is a price transparency system. This system would allow producers to clearly see the movements in producer prices and reflect changes in the returns from the beef market. It is quite a complex exercise but we have taken the initiative on that with a view to having better confidence operating within the system.

A key decision will be made over the next couple of months on our entry point on the exchange rate for the euro. Our view is if we want to have a competitive industry in the future we have to enter the euro at the central rate of 2.41 Deutschmarks. This view is supported by the farming organisations

At industry level the difficulties are clear. Last year was a very difficult year for most of the industry. Many of the meat companies incurred losses in the second half of 1997. That reflects a situation where there was serious over capacity within the industry and we believe there is a need for a rationalisation programme in order to achieve better efficiencies at factory level. We have a study under way by McKenzie and Company which I hope will address some of those issues. Overall the Government has a vital role in guiding the European Commission in the future policy proposals for the sector and to convince our European partners that the Irish beef industry and livestock producers are the people who are most exposed in the current circumstances.

Chairman: A lot of emphasis has been put on quality assurance for Irish beef. How will the recent announcements on DNA testing and ENFER testing affect you? When do you see the Department's proposed quality assurance scheme coming into operation?

Mr. McAndrew: Taking the last question first. The initial indications on the quality assurance scheme is that full computerisation should be completed within the next few months but you will have to wait a while before all the cattle come through the system. It will be at least two years before we see the full benefits of the quality assurance scheme. The Department started the computerisation of the national herd at the beginning of 1996 when the new tagging system came in. The system provided information on the animals, showed the premiums claimed and that they have been slaughtered but it does not show any movements either through marts or from farmer to farmer. The animals which remain on the same farm where they were born can be traced but we do not have total traceability for every animal. The Department have told us that computerisation should be finalised soon.

Chairman: How long will it be before we have full traceability of animals?

Mr. McAndrew: It will be almost two years before animals come through the system and we have full traceability of their every movement throughout their lives.

Chairman: The Department is telling us that they hope to have the system completed by mid-1998.

Mr. McAndrew: They probably hope to have the system up and running by then. They may have the seed planted but it will take a bit longer before we see the harvest.

Chairman: What about DNA and ENFER testing?

Mr. McAndrew: The DNA and ENFER test is available. A factor is the cost and who is prepared to pay for it. The Department has always done a good job monitoring meat for the industry, farmers and the consumer. They have their people on the ground carrying out post-mortem and anti-mortem checks and they certify that the meat is disease free.

Chairman: Did some of your members recently object to the introduction by Super Valu of the ENFER test into some of the meat processing plants?

Mr. McAndrew: I am not aware that we have formally objected to that situation. The ENFER test is available to anyone who wants to use it.

Chairman: At least one Super Valu supplier recently refused it until they were threatened with losing the business if they did not introduce the ENFER test. Is that fact or fiction?

Mr. McAndrew: As I commented earlier most of people supplying Super Valu through the system are non members of this organisation.

Chairman: Some of them are members.

Mr. McAndrew: I saw the list in The Farmers' Journal of all the Super Value suppliers and as far as I know none of them are members of this organisation.

Mr. Smith: In relation to the ENFER test I should make some comment.

Chairman: We have only 30 minutes remaining and Members want to comment. The ENFER test seems to be the only mechanism by which to prove beef is BSE free. That is the only reason I raised this matter.

There was a recent tender in Algeria where newspaper reports state that the Irish factories fell out among themselves and to close the deal cut the price by $150 per tonne. Is the newspaper reports correct? The $150 per tonne was taken off the farmers and not the factories. If this did happen what will you do in the future to control your members and ensure they do not under sell the product seeing that we already have the lowest meat prices in the EU?

Mr. Smith: In the absence of a single selling organisation for Irish beef to third world markets or elsewhere you will have a situation where individual companies will compete with one another to get business.

Chairman: Are the newspaper reports correct?

Mr. Smith: There are newspaper reports which suggest that the price of the current contract is lower than previous contract prices.

Chairman: Is it true that the contract price is at least $150 dollars per tonne lower than the previous contract prices?

Mr. Smith: I would not be familiar with the details of the exact contract prices but the price is lower.

My understanding of the ENFER test is that it is very effective for establishing that BSE, in its clinical stage, is not present in the carcase. But it is questionable if it would be as effective detecting BSE in the case of sub-clinical circumstances.

The test is very effective in confirming the carcase is BSE free or it would demonstrate that there was BSE in the meat of an animal which was showing clinical signs of having BSE. In circumstances where the animal may have been suffering BSE but not showing clinical signs there is a question mark as to the effectiveness of the test.

Chairman: My information is referring to what has been said in the New Scientist magazine. I believe the people from Brussels who examined it recently found that what had been reported in the New Scientist was wrong. We need to be careful in case people leaving this meeting might say that the test which has been proven is questionable. I believe your members do not want to bring it in for the reasons that you stated such as the cost factor. That appears to be the perception of the general public even with regards to the whole meat industry.

Deputy Coveney: It is clear that while there is a lot of distrust between producers and processors, some well founded and some not, in national terms we are not going to have a successful market if we do not have such a partnership. People who speak about Irish beef always preface their remarks by saying Ireland produces the best beef in the world. However, we then read that Irish beef is too fatty and unsuitable for the market place. I do not know how those two statements can tally. I would like to hear some more about the quality issue. Some farmers tell me that whether the beef produced is top quality or not, they are stuck in a pricing system where the quality of the beef does not really matter. Processors say they cannot deal with these farmers because the supply of beef from them is large one day and small the next and the quality is good one day and bad the next. The situation is a shambles. Are we fooling ourselves on the quality issue vis-à-vis the Germans and French?

In the weekend edition of The Examiner, an Italian was quoted as saying that Irish beef was totally unsuitable for his requirements. Contradictory statements are being made on this issue and we are all afraid to say there is anything wrong with Irish beef, yet we have a problem selling our beef and finding markets for it. The purchaser is king now and we must meet his or her requirements. What are the delegation's views on this matter? What does the market want and what is the situation in regard to Irish beef vis-à-visour competitors?

Chairman: Do Members wish to have questions answered as they ask them or do they wish them to be answered together at the end? If Members asked all of their questions first, it might prevent an overlap in the answers.

Deputy Penrose: I welcome Mr. Smith and Mr. Mc Andrew. There is a common perception among farmers and others that there is a concerted practice in operation by beef processors. Given that there are a number of beef factories in the market, is it pure coincidence that beef prices collapse simultaneously? The farming community will be the first people to feel the pinch of competition. One hundred and ten dry stock producers bite their nails every week waiting to see what will happen in this regard. Can the drop in beef prices after the Christmas period, which cost farmers £40 per animal, be accounted for? How is it that prices rose substantially again last week when the leader of one of the farming organisations took an interest in the issue? Is there an explanation for that?

The market monitor for 24 January shows that Ireland is well down the table of EU representative prices with Belgium, France, Italy and Germany above it. Why are beef prices in Ireland so low? I agree that integrated beef production and a traceability system is the way forward in this area.

Deputy J. Brady: I also wish to welcome Mr. Smith and Mr. Mc Andrew.

I have a serious problem with the meat factories particularly in relation to the introduction of the slaughter premium at the beginning of the year. Prices dropped from 84 and 85 p to 80 p until pressure was exerted on the Irish Meat Association by the Minister for Agriculture and Food, his Department and the farming organisations. The Irish Meat Association carried out a very poor public relations exercise on this issue. It seems to me, and to other farmers, that the association was intent on cleaning farmers out.

The Irish Meat Association represents the meat factories and must realise there are fewer and fewer beef producers in Ireland. Unless the meat factories show the beef producers, who depend on a very small margin to survive, some respect, there will be fewer still.

The Bord Bia report shows that Ireland has the lowest beef prices in the EU. What is the reason for that? Many farmers have brought the issue of labelling regulations to my notice. Does the association feel that a single labelling system should exist throughout the EU or would we be better off having no labelling system at all?

Deputy Connaughton: I welcome the representatives of the meat industry and I am very thankful to them for coming before the committee as I know the wicket they bat from is not a particularly pleasant one. I am a farmer and I experience the ups and downs of events in the meat factories in the same way as everyone else. I have been in the trade for a long time and I am not at all impressed with what I witness happening in the meat factories although the factories, per se, are doing an excellent job.

I have always said that the beef business is an erratic one. If the meat factories were seeking to pull off a PR job in the same week they decided to liaise and co-operate with Irish farmers, they could not have stabbed farmers in the back in a worse manner. On 31 December, I was a guest on a local radio programme and forecast exactly what would happen in regard to beef prices as the following morning the slaughter premium was in place. When trade resumed on 2 January prices had fallen from 84 to 80 p.

I agree with most of the delegation's comments. No one sector in the farming system will solve this problem; the approach taken must be an integrated one. People were absolutely sickened by the actions of the meat factories and were even sicker when they found out on 10 January that they could have been paid 5 or 6 p more. It would be different if a case could have been made for the 80 p price at that time and if farmers had been told that situation would last for two to three months. What about the thousands of cattle which were sold between 2 and 10 January? The association should try telling farmers that a partnership arrangement exists between them and the processors in those circumstances.

As far as traceability is concerned, I sign a form for my factory every year to say that I follow best practice in beef production and I am delighted to do that. Do I take it that this form does not actually mean anything? Who takes notice of the certificates of best practice or traceability which I and thousands of other farmers have produced?

In so far as the supply of beef cattle is concerned, if the CAP is reformed to a stage where factories will only be able to pay 63 p they will be forced to rely a lot more on their own feed lots irrespective of what cheques come in the post or what compensation is offered. The factories will be feeding more cattle using their own feed lots. Many of them are doing so now. There will fewer farmers. There is much ground to be made up. Many confidence building measures need to be set out quickly. I have never seen anything as vicious. We need huge exports. If the intervention stocks are let back on to the market there will be a great deal of trouble. It is very important for every Irish farmer that we have good beef and live cattle outlets through our factories and processors to ensure there is competition at the point of sale.

Deputy Ring: I have two issues I wish to raise. The industry might not agree with each other when they are abroad negotiating prices but I believe, and the farmers of this country believe, the factories ring each other on a Friday evening and decide what prices they will charge on a Monday morning. That is what is happening.

I was appalled to learn this week that Tesco had erected signs at their checkouts in Britain stating that they would not associate themselves with cheap Irish Beef. I ask the Chairman to ask the Minister for Agriculture and Food and the Taoiseach to take this up immediately with their counterparts in Britain. The British Government are trying to start a trade war. It is wrong that a major player in the Irish supermarket game say in Ireland that we have the best beef in the world and say in England that they would not be associated with Irish beef. If it is a trade war they want, we import as much from Britain as they receive in exports from us. It is wrong for the same company to send out different messages in Ireland and in Britain. It is an issue which should be taken on board.

Deputy Finucane: I am glad to meet Mr. Smith. I thought you represented the Irish Meat Association, the meat factories, but Mr. McAndrews says you do not represent all of them. Would you give us an idea how many you do represent afterwards? I thought you were representative.

Many people here have touched on the fact that throughout the industry farmers think the beef factories operate a cartel regarding prices.

Deputy Ring has raised a pertinent point. The reality, as you stated in your document concerning Italy, France and Germany, is the beef market is declining as a result of BSE. There was a modest increase in the beef market in the UK. If you read The Sunday Times of 8 February there was a full page article regarding events in the UK and the way in which farmers have mobilised, particularly with regard to English beef. Deputy Ring is right, pressure was put on the distribution outlets of Tesco to ensure the Union Jack went up on the beef in England so it could be identified as English. Here is a situation where we have a competitive advantage in exchange rates with Sterling. That advantage has been eroded as a result of the activity in England. What is involved is extremely unfair on the basis of Tesco's huge involvement in the Irish supermarket scene and what has happened in England. This is a factor which has intensified in England, where we could have had a market which would have increased our beef consumption on account of currency differentials. This is being eroded due to factors in England. I agree with Deputy Ring. It is incumbent on the Minister for Agriculture and Food and the Taoiseach to make the loudest possible protestations to Mr. Cunningham in England. This is wrong. It is not in the spirit of an EU partner.

Senator R. Kiely: I wanted to ask the same question as Deputy Finucane about membership. Who do you represent?

Like Deputy Connaughton I am a farmer who supplies factories with finished steers. I was disappointed that in both years I got the worst price going. The same thing happened again this year. What happened this year after Christmas was a disgrace. For the fortnight the prices remained low. After 19 January the prices increased to the present level. They are 85p per pound now whereas at that time they were only 80p per pound. That is about £40 per animal, £400 for ten animals. That is a lot of money to farmers. The slaughtering premium was intended to ensure they would keep there cattle over the winter. That scheme was highjacked by the factories last year and this year. The factories should compensate the farmers who sold cattle in early January.

Senator Hayes: I join with my colleagues in welcoming the representatives here. It is good to come and put your point of view.

I am tickled by this partnership approach you talk about. Partnership requires co-operation. People must have confidence. The one thing farmers do not have is confidence in what the meat factories will do for them and their reactions at different times to different situations. You have a huge task ahead of you in building confidence with the producers as they do not trust the factories no matter what happens.

In your presentation you mentioned the ‘wrong’ type of beef. What is the ‘wrong’ type of beef? Indeed what is the ‘right’ type of beef? When will the factories pay a premium for the ‘right’ type of beef? I live in south Tipperary where the local meat factory has a contract with Sainsbury's. They are paying the same price for beef although the company was making a huge market return. This is not being passed back to the producers. When will people be paid a premium for the ‘right’ type of beef?

Senator Callanan: I will not blame the meat factories, they are no different this year or last year to any other year. They always fleece the farmers when they get the opportunity to do so. That is a fact of life. Those of us engaged in the production side of the industry know that.

My questions are related to what Senator Hayes said about paying for quality. I see a contradiction between items 9 and 10 as you present them in your analysis of the beef industry in the section ‘The Facts’. Both points made are facts but to present them in the same document is contradictory. The plants, being involved in the processing end of sales should have encouraged the producers to produce a lighter weight. I would fully support a lighter weight. There is a difference of opinion, but if you produce lighter cattle there is less fat, resulting in a more attractive meat to sell.

The second question is related to item 3 in ‘The Challenges’ and to item 2 in ‘Addressing the Challenges’ as contained in your analysis. I note you mention seeking greater export licences. I submit that in the next three or four years, after the next world trade negotiations, outside the EU markets will not be as attractive to us as they have been. I contend that our efforts would be better directed into Europe where we would have a stable market.

Mr. McAndrew: Deputy Coveney raised a question on the quality of beef. There are two issues, quality and fat. The quality of our beef is good because our cattle are, generally, grass fed and are reared on natural pasture whereas many of the continental cattle are raised in feed lots and they are mainly bulls. Our dressing specification leaves a lot of fat on our animals. In some cases farmers keep animals too long. In some cases finishers of cattle, because of the various premium situations, cannot buy animals until they are close to 22 months. Since we have successful suckler cow arrangements people are buying cattle to finish when the cattle should be slaughtered. These cattle put on weight and producers are not penalised for putting weight on cattle. We would prefer to buy cattle on a graded basis but farmers prefer to sell them at a flat rate. If quality meat is covered with fat there is an economic factor involved in taking the fat off. As John Smith said, 80 per cent of our steers go to third countries and they do not want any fat. We are, therefore, at a disadvantaged compared with the bull production on the continent. They can achieve yields of 78 or 80 per cent. We are lucky to get yields of 76 or 77 per cent even while leaving a lot of fat on the beef.

The question of beef prices at the beginning of January was raised by some Members. The cattle trade is always slow at the beginning of the year. In 1998, in particular, there was a good deal of uncertainty. After the beginning of our Christmas holiday period on December 21, it was decided in Brussels that no licences would be accepted for the two week Christmas period. These licences have a validity of only 30 days. People had applied for licences to give them work for the early part of January and they heard during the Christmas holidays that the Commission had not accepted their applications. During Christmas, also, we heard that the Egyptian government was introducing new regulations banning cattle more 20 months old. This presented a new requirement for packaging and labelling beef for Egypt. The Commission announced in December the decision to sell beef out of intervention. The Government managed to stall this decision. Farmer protests took place in the United Kingdom and Irish beef was prevented from entering the UK market. There was a move to have supermarkets stop buying Irish beef. On top of all of this new rules were introduced for intervention which is the support market for cattle. The weight limit was reduced to 350 kilos and 04s were being excluded. This meant that instead of 35 per cent of our beef qualifying for intervention only 15 per cent would qualify. The uncertainty reduced the demand for beef from the factories.

Since then the Irish pound has weakened against the major currencies which we deal with. Much third country business is done in dollars so this was a benefit for the Irish beef trade. The green pound devaluation effectively increased our export refunds. These were positive developments. More applications for licences were made in the new year and they were accepted by the Commission and prices picked up over the next few weeks.

Our biggest problem compared with continental cattle is that we must export our cattle while continental producers have a substantial home market. Our market place is on the continent. We have a transport problem which can add 5 pence per pound to boneless beef. The trim on our cattle is different from the continental trim. On the continent all fat is taken off while we leave some fat on. That could account for a 5 or 7 per cent difference in price. These two factors could add 10 or 12 pence before taking into account the fact that continental customers like to buy local, national beef.

We welcome labelling. We would like to see a single label for the whole of the EU. This would follow the lines of the USDA system. We seem, however, to be moving in the direction of nationalisation. In a single market we think there should be one label.

Chairman: Thank you Mr. Smith and Mr. McAndrew for coming at such short notice. We did not have sufficient time but I hope we will discuss this matter at greater length in the; future. We need to examine the question of abattoirs and family butchers.

The next meeting of the Committee will be on Wednesday February 18, 1998 at 4 p.m. We will discuss the fisheries sector with representatives of the Irish South West Fisheries Organisation and the Killybegs Fishermen's Organisation.

Deputy Finucane: Mr. McAndrew and Mr. Smith did not have sufficient time to finish their responses. Could they send a summary of their responses to the Committee.

Chairman: If you could send a summary to the Clerk of the Committee it will be distributed to Members. Thank you again.

The Committee adjourned at 3. p.m.

An Comhchoiste um Thalmhaíocht, Bia agus an Mhuir

Joint Committee on Agriculture, Food and the Marine

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Dé Céadaoin, 18 Feabhra 1998.

Wednesday, 18 February 1998.

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The Committee met at 4.05 p.m.

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Members Present:

Deputy John Ellis (in the Chair)

Apologies received from Deputy John Browne (Wexford)

Presentation by Killybegs Fishermen's Organisation

Chairman: Item 2, discussion with Killybegs fishermen's organisation. The two witnesses in attendance are Mr. Joe Murrin, Chief Executive and Mr. Martin Howley, Chairman. There will be a ten minutes submission followed by a question and answer session.

Mr. Joe Murrin: I thank the Chairman and the Committee for the invitation to the Committee to enlarge on a few points from our submission. I would like to introduce my Chairman, Mr. Martin Howley who is an active fisherman of the fishing boat Atlantic Challenge. Martin has vast experience of fishing with all sizes of boat with a wealth of knowledge in all sectors of the fishing industry. I always feel comfortable when accompanied by somebody of this calibre from the grass. roots.

I would like to refer back to some points already made. Everything we say here today is not the unanimous or majority views of fishermen around the coast but it is a vision for the future. In tough times it is difficult for fishermen to agree to anything particularly tough measures that might mean a reduction in their earnings in the short term. In my position of Chief Executive I have to look to the future from a long term point of view. I see the review of the Common Fishery Policy in the year 2002 as a field day for consultants with very little benefit accruing at the end of the day. The fishing industry is about fish, fishing vessels and processing factories to give employment to people in disadvantaged regions. The only way we can ensure our fish stocks in the sea is through a proper set of conservation measures by using young fish for a future generation and protection of nursery grounds. Technical measures like the use of mesh sizes, square mesh panels, selective grids, selective gears are also needed. I cannot see the Danes or the Dutch giving Ireland six, seven or eight per cent of fishing rights. Realistically, the only way we can get any increase in our fish stocks for the future is through proper conservation measures. That is the only way forward.

Perhaps Mr. Martin Howley might say a few words on control.

Mr. Martin Howley: I have been a practising fisherman for 25 years with 15 years of that as a skipper. I have seen controls come and go with good times and bad. The bad times were when fish stocks were low. The good times being stabilisation of fish prices and a good supply of fish stocks.

Over the last number of years there has been a big change in the industry due to the Dutch, German and French fishermen. The Dutch, who control the pelagic freezers have gone from being the small players to the main players in the fishing industry. Savings we made over the years through tight control have been wiped out by the Dutch. Over the last few years grading structures at sea has changed so much. For instance fish like mackerel weighing 600 grams would be priced at £1,5000 a tonne, a 400 to 600 gram fish at £800 a tonne, and a smaller fish under 400 gram at £300 a tonne. The Dutch in order to beat the control system would dump the undersize and possibly the medium size fish back into the sea whereas the Irish and the UK fleet being unable to grade or process at sea are subject to the penal control systems. Yesterday we had an example in Killybegs where three boats came for the mackerel season. It was the first day the factories actually processed the fish since before Christmas. We had nine fishery officers control the vessels. We landed 900 tonnes yesterday in the presence nine fisheries officers while there were 18 Dutch vessels in the sea dumping more in one haul than we landed in the whole day. We are not against control but we would like a level playing field across Europe. We want control in a fair and even handed manner. We are not going to be controlled while everyone else gets the benefit.

Mr. Murrin: There are two main elements to the Irish fleet: the pelagic fleet which catches horse mackerel. mackerel, herring and blue whiting and the white fish fleet. In the pelagic fleet there are 23 boats. The rest of the fleet would concentrate on white fish such as cod, haddock, plaice, brill, turbot, monk fish and sole. There has been a great deal of publicity over the past three years, particularly since the loss of the Carrigatine and its six man crew in November 1995. This tragedy spawned the idea of a fishing vessel safety report. That was launched in May 1996. Little has happened since that regarding the renewal of the white fishing fleet. This is a burning issue. When people some to Killybegs we bring them aboard the super-trawlers to see what they are like. However, I took Hugh Coveney aboard a white fish vessel and he was horrified at what he saw. No package has been put together to rejuvenate the white fish fleet. We were hoping for something in the last Budget but it did not materialise. In the Finance Bill of last week there was light at the end of the tunnel, a tax incentive scheme is being proposed. This is only one element of a package required to encourage people to invest in the white fish fleet and to make it meaningful to practising fishermen. The tax incentive scheme is welcome but it is not the total answer. Hopefully there will be more on the table to make it practical for fishermen to rejuvenate the industry. We need new boats to compete with our European counterparts in our own waters.

Apart from cohesion cod, the Irish white fish fleet is tied to fishing within its 200 mile limit. It is vital we are effective in that field. The safety report states that 85 per cent of the boats fishing for white fish are more than 15 years old. These figures highlight the difficulties which exist. When I was a fisherman 20 years ago the living and working conditions were better than they are today. It cannot be said of any other industry that it is worse off 20 years on. The tax incentive scheme is welcome but it must be lengthened. Three years is not adequate to do the job. It must be more attractive to the fishermen on the boats.

On harbour infrastructure we have to be parochial. The Minister came to Killybegs in July and promised a £20 million refurbishment of our port facilities. Nothing has happened since. There is a £100 million investment from fishermen themselves in the Killybegs pelagic fleet. If that investment does not deserve support from Government what does?

Mr. Howley: I am tired talking about the harbour in Killybegs. It has been a bone of contention for ten years. The problem has grown as newer and bigger vessels come in. It is now operating on a wing and a prayer. If the weather is bad you cannot be sure a tied boat will be there in the morning. We spent Christmas Eve on the quay as there were no there was no berthage and no way to tie boats properly.

Draft in the harbour is a problem. All new vessels are sent to dry dock every year for a cost of at least £40,000 for bottom damage. For this kind of damage to a vessel costing £10 million year after year is unacceptable. The problems last year were particularly bad. We would like to see some movement on the structural developments of the harbour at Killybegs.

Mr. Murrin: The exclusion of deck hands from the EU directive on working time 93/104 warrants attention. The European Commission are discussing a fall back position. I have outlined five elements of the directive which cause difficulties for owners. Having been a deckhand myself, I believe it necessary to create social working conditions for deckhands on fishing vessels. No fisherman will work 24 hours in the conditions expected without protection for his wife and children. New legislation must be framed to take into account the deckhands' special position. This job is different to any other in any other industry. When a man leaves home he does not know how many hours he will work or when he will return home. He has no control over his working life while he is at sea. Fishermen do not mind this as long as there are fair conditions: protection for his wife and children the same rights as a factory worker. There is a middle ground where both the boat owner and the employee on the boat is satisfied. A fisherman should expect at least the same entitlements as any worker ashore. This needs very careful attention.

Chairman: We will circulate the working directive problems which you have outlined to the Members.

Mr. Murrin: These are only five elements which cause serious difficulties.

Chairman: You speak about renewal costs. How much of the white fish fleet needs to be renewed and what is the life span of the current fleet? It would appear that there is need for major investment. Is there room for more super trawlers? Will our super trawlers be affected by the super trawlers which you mentioned which will fish off Africa? Will these trawlers take catch which would be potentially ours?

Mr. Howley: I will answer the second question. There is not room for more super trawlers. We distinguish between white fish boats and super trawlers. There is not much more room in the whole European fleet for more super trawlers. Look at the Irish fleet in contrast with the Shetland Islands fleet. The Shetland Islands have a population of 60,000. They have more catching power per ton and per horse power that we have in the whole of the Irish fleet. We do not have a huge fleet. For the share of quota which we have our fleet is just adequate. The Dutch are pushing out the limits. They are building ships for Africa but we see these ships fishing off the west coasts of Ireland and Scotland and landing their catch in Las Palmas which is a free port. This practice presents huge problems of control. The tight controls which are in place mean nothing if they are breached in this way. It is impossible to get reports from the Canary Island on the level of catches being landed there.

Mr. Murrin: These boats are being built on the pretext of fishing off the coast of Africa. They fish off Africa for a part of the year and for the rest of the year they fish off the west coast of Ireland. They will cherry pick what fish they take on board, grade out through the side what they do not want, steam to Las Palmas, land the prime species and place them in massive cold storage facilities. The Spanish fishery inspectors are controlled by the Las Palmas chamber of commerce. This is the vulnerable position in which we find ourselves. If we are to have a European fishing industry we must have controls. We do not object to controls but they must apply equally to everybody. We see the investment being made by the Dutch in the Canary Islands on the pretext of serving Africa. This is not to serve Africa. It is to serve the Dutch fleet off the west coast of Ireland.

You asked about the white fish fleet. I probably know every fishing boat in that fleet. Only 30 or 40 boats in the white fish fleet are capable of competing with their counterparts in our own 200 mile limit. I question the sense of the refurbishment programme. It is simply putting Rolls Royce engines into Morris Minors. The body work will eventually fall off the chassis. A major programme of refurbishing good boats and building boats at a reasonable cost is necessary but we are trying to refurbish boats which are not capable of taking it. We need an extension of the programme announced in the Finance Bill to bring the fleet ro a competitive level.

Deputy Finucane: I welcome Mr. Murrin and Mr. Howley to the meeting. Mr. Murrin spoke about conservation controls. Can the Government do any more to deal with problems such as those posed by the actions of the Dutch fleet. My colleague Deputy McGinley has given me information about the vigilance of fishery inspectors in Killybegs. I am interested in Mr. Murrin's ideas about the future direction of the industry. He criticises the refurbishment programme. Is he saying that money is being wasted in this programme? Can he suggest amendments which could be proposed in the Finance Bill which might improve tax incentives for fishing vessels?

Mr. Murrin: Heretofore our fleet structures were not properly adjusted to allow us to build new boats. The refurbishment programme was the only programme BIM had. I accept that any boat which was considered for the programme had to have a marine surveyor's report but this does not stop me questioning the long term viability of the programme. I have to say that much of the money spent on this programme is wasted. For very little more money new boats could be built. Many fishermen would question the value of the programme but they have no alternative but to participate because it was the only way forward. There is now a possibility of fishermen getting new or better second-hand boats.

We can expect no hand-outs in the review of the CFP. It will be up to ourselves to try to rejuvenate the stocks which are in our own waters. We have 90 per cent of our white fish stocks in our own waters. It is up to us to create conservation measures which will improve these stocks. People are tired listening to me speaking about the Norwegian fishing industry. Although Norway is not part of the EU they have set an example in taking measures to create a sustainable fishery. In our region, at the beginning of the year, a fisherman can nearly bank the money he will earn. He knows what he is allowed to catch and where he will fish. Apart from slight variations, he will know what he will do for the fishing year.

We should use Norway as a model. I was there in the summer. We have a limited fishery protection service. In Norway, there is a control and check-in system and they know the boats in their waters at any given time. If someone fishes there for whatever number of days, they will ring and tell them to be at a certain position in 24 hours. If they are not there, their licence is taken away. There is a great deal of hypocrisy in the EU about taking proper conservation and control measures. It never wants to take measures which work. The main players in our waters - the French, Dutch and Spanish - do not want effective control measures.

Our boats are going all over our 200 mile limit. There are two escape routes from Ireland - north and south. In a time of advanced telecommunications, I do not understand why a proper control system cannot be set up to monitor boats which are not landing in Irish ports, but in Las Palmas, Concarneau and other foreign ports. It is all right for the Minister to say there will be a satellite programme next year which will track where boats are. Unless we know what is aboard those boats and what they are catching, we have no control. There is no way we can define what fish are within our 200 mile limit until we can establish what is being taken out.

In Norway, a research vessel will have a trial in a particular area. If small fish are found in the net, any boat in that area will be told to take control measures such as putting a grid on the net or using a certain type of mesh. If the fisherman is prepared to do that, he can continue to fish in that area, if he is not, he has to leave the area. There is no issuing of press releases condemning Ministers or politicians. They accept it as standard practice and the only way forward. It is not beyond the realms of possibility that we will reach that stage and thus ensure the future of our industry.

Deputy Connaughton: Unfortunately, my constituency does not have any coastline. Mr. Murrin referred at length to the ability to know what is caught. I did not think it was possible to know. If the Norwegians can do it, why not us? Is it our mindset, are we unable to implement it, or do we not have the resources?

Are many young people entering the fishing industry? Is it a job for the middle-aged or are young people making a career from it? For years I have listened to demands for the development of Killybegs. Is it too costly? Can the fishing industry contribute a certain amount of money? Killybegs does very well commercially and it would be expensive to reconstruct and modernise it. Where will the money come from?

Mr. Howley: In relation to control measures, since we entered the EU, we have used the logbook system. The logbook can only be used when the vessel is boarded and checked. There is not enough personnel to do that. The Norwegians have a different approach and have taken control on the shore. The factory where the fish is brought is liable for inspection and there are heavy penalties. While in Europe, the control is targeted directly at vessels on the sea, in Norway the vessels are controlled when they come ashore. Norway takes its fishery seriously and we do not.

The Spanish, Dutch and Germans do not want good controls. They see themselves as the losers and if they find any loophole they will use it. There are proposals for a satellite system. This will help the situation but it is not the answer. The Irish Government seems to have taken the onus for controls for Europe on itself but only applied it to Irish vessels, resulting in what happened in Killybegs yesterday.

There is a certain amount of flexibility in every control measure. A certain amount of mackerel and herring stock is estimated. Fishery control in each country in Europe makes an allowance for that but Ireland seems to have forgotten this.

Mr. Murrin: Deputy Connaughton asked if many young people entered the fishing industry. We have two fleets. Conditions in the pelagic fleet are very good and every young man would love to have a berth on a pelagic boat, which is not possible. It is a different ballgame on whitefish boats. The standard of deckhands has dropped dramatically because the social conditions in that fleet are not right. Until a year ago, there was a question of whether a deckhand was an employee or self-employed. We finally established he is an employee, although there can be a partnership arrangement whereby the other can apply.

We cited social conditions in our submission. We must it make it better for good people to work aboard these boats. Good people are leaving that sector of the industry because of the condition of the fleet. Skippers are put in the position of hiring untrained people who are not only a danger to themselves, but to other deckhands. If a proper renewal scheme is put in place for the whitefish fleet and a social environment created for deckhands to protect their families, that sector of the industry will improve. However, there is a great deal of work to be done.

Mr. McGinley: I welcome Mr. Murrin and Mr. Howley. I am not a member of the committee but it would be neglectful of me if I did not attend the meeting and listen to their views. I represent County Donegal and I appreciate the contribution of the fishing industry to the county's economy and to the creation of employment there. The state of the fishing industry is a good barometer of the economic well being of County Donegal. We appreciate the level of private investment and the initiative shown by the fishermen in the county, particularly in Killybegs.

I visited the harbour in Killybegs last Saturday and it is full every time I visit. Everybody realises there is an urgent need to develop and extend facilities there. Until that happens, it will not attain its full potential. and there will be downside in terms of employment in the area. The Minister announced last July that a major investment of approximately £20 million is envisaged for Killybegs. I tabled a parliamentary question to the Minister yesterday on the operational programme. Only £3 million or £4 million remain in that fund. This indicates, unless the development is postponed until more funds become available after the operational programme expires, that the funds must come from the Exchequer. What indications have the delegation received that money will be made available from the Exchequer to carry out this much needed development?

Controls and other aspects have been mentioned. I am amazed that it is still not possible to control or monitor the fish caught or landed in European waters. Any fish caught by Irish trawlers are well monitored and controlled. What are the delegation's suggestions in terms of ensuring there is a proper picture of what is happening, particularly with regard to the Dutch and others, the percentage they are catching and the effect that may ultimately have on our stocks?

Is it more difficult or is there less of an incentive for the pelagic fleet to land fish in Killybegs rather than elsewhere? We are still lagging behind the European norm of up to seven jobs on shore for every person fishing at sea. Ireland has not yet reached its full potential with regard to employment on shore.

Mr. Howley: As a testimony to the current position, 1,200 people are walking round Killybegs who should be working because of the way matters are structured. The processing industry in Ireland finds itself unable to meet the prices paid by the European factories, particularly the Norwegian factories. This is understandable because Norway is on the edge of the best markets. It has the best quality fish and it is close to the fishing grounds. However, there comes a time when economics enter the equation. Vessels with a small quota must consider what they should do and whether they should go to Norway or Killybegs. They must ask if they can live with a 40 per cent reduction in price. It is an economic decision for most fishermen. They must go where they will get the best prices.

There was a little flexibility in the system up until last year. The vessels were allowed to land more fish as compensation and to bring the price level with the Norwegian prices. However, that disappeared this year with the result that vessels leave Killybegs and land the rest of their quota in Norway. It is a sad reflection on the town if it was only to have one day's production in the year. Unless there are some changes, no more mackerel will be seen in Killybegs for the rest of the season. The situation is that serious for the industry.

Mr. Murrin: Success breeds resentment at times. We have no bother with that because the KFO comes in for a certain amount of criticism occasionally for doing things or ringfencing situations. In defence of the pelagic fleet, nobody can yet answer the question that if we did not have those 23 boats today, who would be catching the fish? These 23 boats create over 70 per cent of the processing jobs in Ireland at present. This highlights the importance of the fleet.

Regarding the harbour in Killybegs, we have tried everything. We have pleaded and gone on bended knees about it. We have withheld harbour dues but paid them on the promise that something would be done. However, nothing was done. People will think I am alarmist when I say that the pier in Killybegs is in a very dangerous condition. However, this has been admitted by the Department's engineer. The pier could fall into the tide. In 1984, 4,200 tonnes of boats were tied to the pier. Today, there is 23,000 tonnes tied to it. One would not need to be a clever engineer to deduce that this is a dangerous situation. We have canvassed every fisherman and every port user. We have 100 per cent support for withholding harbour dues, which is totally illegal. However, it is the only avenue open to us. We can collect £250,000 to £300,000 this year and we will put that into an account. When it is collected we will ask the Minister what we are supposed to do with it. That is the bottom line.

Deputy Finucane: If the delegation was to prioritise items in terms of the £20 million fund, would it allocate £1.5 million to £2 million for dredging?

Mr. Murrin: We are seeking £750,000 to dredge the fairway into the pier. However, we cannot get this sum let alone £20 million. We are not hanging our hat on £20 million. We must be realistic. The Minister hung his hat on that figure, based on a Coopers Lybrand report. If we got £20 million, it would be fine. However, this should be structured and phased. There should be three phases with a £5 million tranche paid first. This would be used to dredge the harbour and build a pier. If the oil industry on the west coast takes off, we will have no option but to live with it irrespective of whether we like it. However, there will be conflict. If the facilities were provided, it would be lovely to be able to service part of that industry because the jobs are needed. In fairness to the committee, much of the work in Killybegs has been done by ourselves.

Chairman: Only 15 minutes remain. Deputies Blaney, Sheehan and Coveney have indicated that they wish to speak. Perhaps they could all put their questions before Mr. Murrin and Mr. Howley reply. This would give everybody an opportunity to contribute.

Deputy Sheehan: I welcome Mr. Murrin and Mr. Howley. I know Mr. Murrin for the past 25 years and I regard him as the chief brains behind the fishing industry in the west. He has highlighted in no uncertain terms the situation in the fishing industry in the country. It was said that the fortunes of villages sink or swim with mackerel. However, it was also stated that the fleet at Killybegs has undergone a multi-million pound refurbishment. Is that throwing money down the drain? Should that money have been spent on new and modern vessels in an effort to level the playing pitch between us and our EU neighbours?

We were told when Ireland joined the EU that farmers would survive against all the odds in competition with other European farmers. This happened and Irish fishermen would also survive because they are as good as their counterparts in Europe. However, are they getting the finance they should receive? Were large sums every injected into their industry? Fishing has been treated as the hind teat industry since the foundation of the State.

I also believe that Killybegs has a very serious problem. It is the main fishing port in the west of Ireland. Castletownbere, which is in my constituency, is next in line to it. We were fortunate enough to get a good pier development in Castletownbere, but then we have our own problems due to silting.

I appreciate Mr. Murrin's comments here when he said that they are not looking for a £20 million development in Killybegs all at once because no Government can afford to give that. However, if the allocation could be spaced out in three or four sums of £5 million to fund each stage at a time, at the end of five or six years the scheme would be accomplished and that would help to keep the industry going. Without proper infrastructure, such as piers, roads and harbours, one will not have a viable marine industry.

Chairman: Deputy Sheehan, I would appreciate it if you could ask the questions. There is only ten minutes left and I do not want to be unfair to Deputies Blaney and Coveney.

Deputy Sheehan: Take Las Palmas, which is supposed to be the centre of landing operations by the Dutch who are applying under difference guises, we should be emphasising to the Minister for Marine and Natural Resources-----

Chairman: Deputy, will you put a question and not lecture?

Deputy Sheehan: I move that we ask the Minister for Marine and Natural Resources to explore this situation. Are the Dutch creating unfair trading situations?

Chairman: I suggest that what you are trying to do should be put down as a parliamentary question to the Minister.

Deputy Sheehan: Yes, but I want to discuss it here with Mr. Joe Murrin and Martin Howley. The Netherlands and Spain are member states of the EU. Las Palmas is Spanish territory. Surely it is under Spanish rule and control. Have we any say in the EU? Are we the goodie-goodies of the EU? Are we trying to observe every law while the other member states are flouting the laws, sweeping up our fishing stocks and depleting the stocks completely?

It is a little late for conservation because for the past 30 years our trawlers contributed by catching all the small fish and dumped them in the harbours when they were selecting them for export. Therein lies the tale. If one kills the young of any species, one will not have good, healthy, virile stock.

Deputy Blaney: I apologise for being a little late. I did not hear all that Mr. Joe Murrin said but, from the submission I have in front of me and what I heard him say, I see there are a number of matters about which he and most fishermen are worried.

The first of these is controls. It is an indictment of the Department of Marine and Natural Resources, the Government and the EU that the necessary controls are not in place. It is an indictment of all concerned that we do not know who is catching which species.

The Irish fishing industry was at a very low ebb when we first entered the EEC and the fishery policy was drawn up, and it has not nearly caught up. The Irish have been at the wrong end of it from beginning to end and fishermen from others countries are taking the best from it. I can see what the delegation is getting at in that regard. Something needs to be done. It should have been done long ago. If the delegation keeps up the good work which they have done over the years, maybe they will bring it to a conclusion. I hope their attendance here will be of help to them.

On the white fish renewal package, Mr. Murrin spoke of the type of boats the Irish fishermen use. I arrived in time to hear him compare putting a Rolls Royce engine into a Morris Minor to putting engines into the boats our fishermen use at present. He is quite right to make the comparison. If what he says is correct, that another few thousand pounds would build a new boat, I cannot see the logic in throwing good money after bad, refurbishing boats which are not worth refurbishing when we can nearly get a new one for the price of what we are doing to them. It seems illogical to me and I cannot understand why it is happening.

On harbour infrastructure, all around the country - certainly in County Donegal - the harbours are falling down around us. There may be a lot of development in Killybegs but a lot more needs to be done. Much development needs to be done in Greencastle and all the smaller harbours around the county. I could name many which are just falling down. The Minister of State at the Department of Marine and Natural Resources, Deputy Byrne, is to visit the county shortly and we hope he will examine them closely. There is a need for investment in harbours and the fishing industry in County Donegal, and I am sure other counties are no different. I am hopeful that something will be done to ensure that fishermen are safe whenever they go to sea and that there is a harbour when they come in to land their catch. They do not have these facilities at present and the situation is chronic.

Mr. Murrin will know as well as I do that trawlers will go to Derry before they come to Rathmullen for the simple reason they know where to land. There is not even a fender on the pier at Rathmullen. Thousands of tonnes are coming in and they are being shipped elsewhere. The will go to Derry to unload their cargoes but they would rather come into Rathmullen because the turnaround would be much quicker, and that is what it is all about.

We must push to get something done about social welfare and fishermen's tax because it should be streamlined to the extent that at least they know where they stand, and they do not at present.

Deputy Coveney: I welcome Mr. Martin Howley and Mr. Joe Murrin.

The first time I came in contact with any of these issues I was when I Minister of three days and I went to Brussels. One of the experienced UK negotiators came up to me and said, “Minister, be aware of one thing; everybody here is telling lies about the quantity of fish that they were taking.” Given that that was what was said to me and given that the longer I was there the more I was convinced it was probably the truth, what is the view of the industry about the approach of the Government to the review of the Common Fisheries Policy in 2002. I agree with Mr. Murrin that what we do not need is a wagon of consultants, but we need the beginnings of a partnership between the main fishery interests and some Government agency to begin to prepare for this because 2002 will be a last chance saloon and we need to do it well.

I want to clarify the Dutch question because it has come up in recent years and I had not been aware of it. It is an extraordinary partnership between the Dutch and the Spanish. This is particularly ominous because I spent most of my time in what was then the Department of the Marine listening to genuine complaints about Spaniards and not much was said about the Dutch. From what has been said today, the Dutch are now as big a threat, if not a bigger threat. What is the legal basis for their existence in Irish waters? How does the delegation see this being tackled by the Irish Government, either in Brussels negotiations or with our fishery protection effort.

The delegation mentioned the Norwegian experience and I know it is very efficient. However, I take it that most of the Norwegian management is basis on most of the fish being caught in their waters being landed in their country, and that is manageable. In the EU context, where everybody is telling lies and landing here, there and everywhere, how does one bring the Norwegian experience to bear in a rather different situation?

That is manageable but how does one bring the Norwegian experience to bear in the EU context, where everyone is telling lies and landing fish here, there and everywhere?

Mr. Howley: The Dutch have gone from being one of the smallest players in the pelagic sea to being the biggest.

Deputy Coveney: Bigger than the Norwegians?

Mr. Howley: No, the biggest in the EU context. First, they bought up the German and French pelagic fleets.

Deputy Coveney: The Dutch have their quotas?

Mr. Howley: Yes, and they have two or three vessels sailing under the German flag, two or three under the French flag and one or two under the UK flag. When Spain came into the EU it received a 30,000 tonne set allocation of horse mackerel which it has never taken up.

Deputy Coveney: Part of the sweetener for the deal.

Mr. Howley: Yes. This year the Dutch ordered three new super trawlers - one has been launched and two are to come - from Spanish yards. Everyone thought it was strange that the Dutch were moving away from their traditional shipyards but the picture is becoming clearer now. We expect the Dutch to take up the Spanish quota and catch that also. This is coupled with their free access to Las Palmas and the west of Ireland. They are doing much damage by grading the fish at sea - we estimate they are grading about 50 per cent of fish in that way. We know their policy is not to take any fish under 400 grams but if fishing is good they will take nothing under 500 grams, which could be up to 60 per cent of the catch. We know that from our catch record of fishing beside them. If we lose 50 to 60 per cent of the catch by not recording it that is one thing but then they sail to Las Palmas and either do not record it or record it as horse mackerel or blue whiting.

Deputy Coveney: Can our helicopters land on those ships and check them?

Mr. Howley: Last year we put pressure to get a Navy ship to inspect them. It came along side, boarded three Irish boats and one Dutch boat. the Dutchman cried that he was being victimised, the Navy ship went over the horizon and we did not see it after that. Part of the problem is that they have such a powerful lobby. When the Minister walked out of the negotiations his back was to the wall and there was nothing he could do because he had to contend with the Germans, the French, the Spanish, the Dutch and the UK. The control everything and that is where our problem is.

Mr. Murrin: There is a lot of EU and other countries fishing in Norwegian waters - the Spanish, Portuguese and Russian are there and we have a boat there too.

Deputy Coveney: All bringing it back to their countries.

Mr. Murrin: The French and, in particular, the UK also do a lot of fishing in Norwegian waters.

Deputy Coveney: How can they control that and we cannot?

Mr. Murrin: They call the shots and that is it. Mr. Howley fished in the area.

Mr. Howley: If a ship is going into the Norwegian sector it reports its position at a particular time and if it is not there it is in trouble. They have the infrastructure, the controls and the ships.

Mr. Murrin: Ships have to check in, the Norwegians have helicopters and put a search light on boats at night to see if they are fishing.

Deputy Finucane: Anyone fishing there must have a licence?

Mr. Howley: Yes.

Mr. Murrin: In case people are under the impression that we are talking simply from a Killybegs viewpoint on harbour infrastructure, Killybegs is used by every fisherman in the country, including people from Greencastle and Burtonport, so we are making a plea not just for Killybegs boats but for everyone. Last year 100 reefer ships exported fish to different countries and also had to be catered for. Killybegs is an international port. Also, in case people thought I was knocking the refurbishment scheme for whitefish boats, I was making the point that this was the only scheme available to fishermen. They had no option other than to go for this scheme to refurbish old boats. I was questioning how viable this was in the long term - how long can one keep refurbishing an old item until a new one is needed?

Chairman: I thank Mr. Murrin and Mr. Howley for their presentation because we are more enlightened than we were before the meeting. They have highlighted the problems faced by fishermen. Their colleagues from the Irish South and West Fishermen's Organisation will probably say similar things because many of the problems appear to be common to the entire fishing industry.

The representatives withdrew.

Presentation by Irish South and West Fishermen's Organisation.

Chairman: I welcome the members of the Irish South and West Fishermen's Organisation - its chairman, Mr. Dónal O'Driscoll, its secretary, Mr. Tom Hassett, and its administrator, Mr. Jason Whooley. Our guests have ten minutes to make a presentation, followed by a question and answer session. We have a time constraint in that we must leave the room by 5.55 p.m. because it is required for another committee.

Mr. Hassett: We made a written presentation but we have not had much time to go over it because my colleagues have been away for the last few days, discussing tuna fishing with Cornish and French fishermen. We have divided up the subjects among us and will take them in turn but all of us may speak on some points. We are also prepared to answer questions. Mr. O'Driscoll will start by discussing social welfare.

We have a document to distribute which will be of interest to everyone in the room. It is a map of affluence and deprivation in Ireland which shows the 20 per cent of areas which are most disadvantaged places in Ireland, all located near the fishing ports on the west coat. The blue spot represents Dingle, home of Fungi the dolphin, which is in the top 20 per cent or least disadvantaged areas, but all the other areas are among the most deprived. This is the people we are speaking for and about.

Chairman: We want to give everyone the opportunity to put their case and would prefer that it would be put in that manner. We do not say you have not the right to bring in material from another source but we are mainly here to deal with fishery problems. Given where I come from, I understand the other problems more than anyone else.

Mr. Hassett: The map is from the report of the rural development policy advisory group.

Mr. O'Driscoll: Social welfare has been a problem in sea fishing for a number years, as can be seen from our submission. Early last year the Minister for Social Welfare, as he then was, introduced what he called a new scheme. Many people in the industry were annoyed about this because we had looked for a scheme which would give fishermen something worthwhile. We must take into account the work they do so that if they are off due to bad weather or other reasons they would have a reasonable opportunity to receive benefit. The matter is still ongoing and we are disappointed that we have not received a response from the Department. We met officials on 6 December and had to contact them again some weeks later to seek a response, which was promised but has so far not been received. We have sought a meeting with the Minister for Social, Community and Family Affairs for some time but we have had no success on that either. We can take it up in our discussions afterwards.

Chairman: Training and Education?

Mr. Whooley: No matter what industry we are talking about, we have to consider how we can succeed in future. We can talk all we want about the past and what is needed to redress it, but we must look at the future of the industry. Whether that is in terms of new vessels or crew members it must be closely addressed. The training issue is not being addressed adequately. If you look at the submission you will see that Greencastle is the only training facility for fishermen, but it is 350 miles from where we came today. It is totally inaccessible.

The fishing vessel safety review group has highlighted the fact that 86 per cent of all deck hands are untrained. That is apart from those coming into the industry, which we estimate at one per vessel per year or an extra 1,500 people. It is well known that many people working in the industry really do not know anything about fishing, but it is regarded as a last chance for anybody who did not get a job elsewhere. They look at the fishing industry as a possibility but, given the fact that it is such a dangerous industry, it is a highly questionable move. Young people are not being trained for entry to the industry and that presents a serious situation.

One of the main reasons there is no proper training is that the budget for facilities is not there. BIM has been given the task of training for the fishing industry but given its limited resources it is just not feasible.

A major problem for self-employed people in any industry is that if they attend training courses they must do so at their own expense. In our industry this involves a loss of fishing time, which is not practical. As far as the south and west are concerned, we must look at a more realistic plan to train fishermen - not just to do their jobs better but to save lives. Untrained people are going out to sea in vessels which are, on average, over 30 years old. It is not safe to have untrained men in such a dangerous occupation.

The EU has suggested several methods, including localised training courses, which have merit and are worth examining. We have vocational education in every town which is totally under-utilised. With some imagination fishing could be introduced to the curriculum. The average number of fishing days is 200 per year, but what are fishermen doing for the rest of the year? Can fishing courses be arranged at short notice in ports? It is not practical for people to travel 350 miles at their own expense to attend training.

A school may have been proposed for Castletownbere, but that is 70 miles from Kinsale - a day's travel there and back - so it is not practical. We must make training accessible so that people can be trained for the future.

There is merit in the EU proposal for vocational training. A formal recruitment programme is an option and it is number one on our agenda. Should someone be going around actively seeking people? We have 300,000 unemployed, yet some boats are tied up in ports in the south west due to a lack of crew members. That does not make sense. We should not have to hire Spanish crewmen as deckhands when 300,000 Irish people are unemployed. We could create a lot more jobs with a formal recruitment programme.

Chairman: The proposed ban on driftnets?

Mr. O'Driscoll: This ban is being proposed by the British Minister for Fisheries, Mr. David Morley, as the United Kingdom currently holds the European Presidency, but it is uncalled for. No scientific proof is available to us or to the British Minister to justify taking away our traditional method of tuna fishing. There is discrimination between what the British Minister is suggesting for the north east Atlantic and the Baltic region. He will allow Baltic fishermen to use 21 km drift nets, but is talking about phasing out 2.5 km nets which our fishermen have been allowed to use in the north east Atlantic. This is blatant discrimination.

There is no foundation for such a ban on drift nets. Scientists were called together in November 1995 by the European Commission to come up with a reason for banning drift netting for tuna. The scientists sat for two days but could not come up with a reason to justify a total ban on driftnets. To our knowledge, and that of the French and British fishermen we met on Monday, there is no new scientific evidence to justify banning it.

We wonder what the British Minister is up to. Will it be done on a political whim? If so, we will be setting a dangerous precedent by departing from scientific evidence - whether positive or negative - and allowing people to make a decision without any solid evidence to justify it. We will get into a dangerous situation whereby people who are not qualified to take decisions on this matter will be allowed to do so.

Chairman: We are under time pressure. We still have to discuss the Common Fisheries Policy and the fact sheet. Members want as much time as possible to pose questions. Can we move on to item 4, the CFP review?

Mr. Hassett: Many politicians, especially in the European Union, talk about the Common Fisheries Policy review. We had a mid term review but absolutely nothing happened. A review means nothing, it is just a format of words. The future of the CFP is already cast in stone, treaty and regulation and it cannot be changed. Ireland was made to walk into the CFP through a lack of knowledge of the facts. The European Union was very clever at achieving this. The infamous regulation 101 of 1976 stated that “members states shall ensure, in particular, equal conditions of access to, and the use of, fishing grounds”, so that all states can fish wherever they like, subject to certain controls.

Regulation 3760 of 1992 stated that the Commission may make certain provisions, including: establishing zones in which fishing activities are prohibited; limiting exploitation rates; setting quantitative limits on catches; limiting the time spent at sea; fixing the number and type of fishing vessels; and laying down technical measures. This amounts to total control.

Two years later, more legislation was introduced in the form of regulation 1627 of 1994 which introduced the fishing permit system. While one might think all one has to do is obtain a fishing permit from the Department, a special fishing permit, in fact, is “a prior fishing authority issued to a Community fishing vessel… in accordance with the measures adopted by the Council”. That means it comes from Brussels.

The regulation further stipulates that “members states may call the permit by a different name”. In case it might be branded or people would not know it came from Brussels, they can call it something else but it must come from Brussels. Our Department will have no authority to licence vessels except in accordance with what Brussels does. This amounts to total control from Brussels and we will be totally overruled. If one or two nations band together, Ireland will have no say as to what happens in its waters. It is a disastrous situation.

These regulations will definitely be introduced. Everyone thought the Treaty of Corfu concerned only the entry of Austria, Finland and Sweden to the EU - Norway did not join, as you know - but it states: “Unless any provision to this chapter stipulates otherwise, the arrangements for access laid down in this section shall be marked by the date of the implementation of the Community fishing permit system will not, in any event, by later than - they do not give the date - the expiry of the period laid down in Article 14.2 of Council Regulation 37/60/92 on 27 December 1992. That period expires in 2002. It is a closed shop.

Chairman: We can take it that is the ordinary situation. The witness spoke about fisheries training. Is the fishing industry prepared to make a small contribution towards the setting up of such training? Other industries contribute towards the training of skilled people. I know he is only speaking in a personal capacity, but does he honestly think the fishing industry is prepared to contribute towards the skills of its labour force?

Mr. Hassett: Yes. Between 1991 and 1994 £410,000 of EU funds for training had to be reallocated because they were not taken up.

Chairman: Was that the fault of the industry or the Government?

Mr. Hassett: It was the Government's fault. The European Social Fund has produced a damning report on training, which is freely available from the evaluation unit of the ESF.

Deputy Finucane: I welcome the witnesses. I have had several discussions with Jason on different issues and he has been most helpful. I raised two of those issues - bad weather compensation and the collapse in herring prices - with the Minister yesterday.

Training is an important element for the future. The fishing vessel safety report greatly criticised Bord Íascaigh Mhara for its lack of imagination in this regard in the past. The report referred to the need for a sense of vision for the future. Is the new unit in Castletownbere working? There are 350 miles between Greencastle and Castletownbere and it is probably necessary to create a structure in the south similar to that in Greencastle. The present arrangement only meets a temporary need rather than-----

Mr. Hassett: They are there for six weeks.

Deputy Finucane: I would welcome Mr. Hassett's observations on that. If the fishing industry is to have a sense of vision for the future it must adapt.

I am aware the organisation was in Cornwall yesterday in regard to the banning of drift nets, which we heard about on the news. The organisation focused on the point that there was no scientific evidence and that the industry was worth £3 million in the summer. Have the French also objected? Are we likely to get support from other member states? The British Government is talking about introducing it during its EU Presidency.

Mr. Whooley: The mobile training unit has been very useful over the past months and has proved the benefit of being located on the pier side. While a school in the south similar to Greencastle would be a help - 100 miles is better than 350 miles any day - it would not solve all the problems. We must examine why the mobile training unit was successful.

If fishermen are limited to 40 weeks at sea per year, it does not matter to skippers and other crewmen if there is a mobile training unit there during the week because they are going to go out fishing. There is a need for imagination and to cater for fishermen when the time is right. Training courses should be organised during winter months when the weather is bad. There was no fishing activity for seven weeks this year. Department officials should examine whether funds could be drawn down during such times to provide training, to pay crewmen to attend training courses and to alleviate the need for us to ask year after year for compensation for those months. It is a fact that the weather will be bad at a certain stage of every year. Why not organise training courses for that time of year, which would suit the industry, and draw down readily available EU funding for training? We must examine more imaginative ideas because a fixed 9 a.m. to 5 p.m. training course does not work in our industry.

Mr. O'Driscoll: I was asked if the French have a problem with drift nets. They are as concerned as we are. The strange thing is that we were told by some of our people here that the Italians had allowed themselves to be bought out of drift net fishing for swordfish in their part of the Mediterranean. The French sent a delegation there from Thursday to Saturday of last week and found that was true in parts. Some Italian fishermen - perhaps they were old - said they would accept compensation and get out of the industry but about 35 to 40 per cent said they wanted to stay in the industry which has been their livelihood and way of fishing for many years.

The French have already arranged an audience with the fisheries committee of the European Parliament on 25 February. We agreed in Plymouth at our meeting on Monday that, rather than the French going on one day and us seeking an opportunity on another day, we should go as a combined group, including the Italians who we had been told had gotten out of the industry and were no longer a factor. However, the French found out that about 35 to 40 per cent of the Italians still want to use drift nets and are very concerned that their method of fishing will be taken away. We are hoping to be part of the joint delegation which will meet the fisheries committee of the European Parliament on 25 February. We are all concerned with the arbitrary taking away of this method of catching tuna fish. The British, French, Italians and ourselves are at one in this regard.

Deputy Sheehan: I welcome the delegation from the Irish South and West Fishermen's Organisation which is based in Castletownbere. I thank them for all they have done to promote the fishing industry in the area and the amount of work they have generated through their efforts over the years.

The organisation has presented us with a very comprehensive and detailed submission which contains a great deal of food for thought. In regard to the social welfare scheme for the fishing industry, has the organisation fully made up its mind about what sort of contribution system it wants? I have spoken to several fishermen who have very diverse views on the matter. I would like a definite suggestion which could be put to the Minister for Social, Community and Family Affairs as soon as possible. A training school for Castletownbere was mooted as far back as 1981 by the then Taoiseach Garret FitzGerald. He advocated a training centre should be located there to coincide with the other in Greencastle. It was logical it should be located there, but it never came to fruition. It should be emphasised to the Minister that there should be some type of training facility in Castletownbere. It could be availed of in winter, when weather is bad and fishing impossible, to train established and young fishermen.

The ban on drift nets is not affecting the amount of Albacore tuna being caught, but we are told it safeguards the dolphins which associate with the tuna. I have spoken with different fishermen in the EU and they told me the dolphin does not associate that much with Albacore tuna but more so with Pacific tuna. Therefore, drift nets are no threat to the dolphins. We ought to be specific on this. I would like to hear the views of the Irish South and West Fishermen's Organisation on that. We need to influence the Minister to veto any ban in Europe. It is nonsensical and is a caving in to people who do not understand the situation.

As regards the CFP review of 2002, the regulation states a special fishing permit differs from a fishing licence which merely recognises that a vessel is a fishing vessel. A special fishing permit will specify who may fish, where they may fish, for how long, the time of year at which they may fish and the quantity of fish which may be caught. This is absolute power for Brussels. It is dreadful. It will sound the death knell of the fishing industry if this is allowed through. We must support the delegation's submission to the last when presenting it to the Minister and we must do it quickly before this regulation is copperfastened in Europe.

Ireland has 16 per cent of European Union waters, yet the share of the total allowable catch allocated to her is a mere two 2.9 per cent by value. This represents a complete rip-off of the Irish economy. It appears £2,000 million worth of fish is taken from Irish waters by EU boats every year and Ireland's share is only £100 million. Who is codding who? We should receive special treatment because we are the only island nation in the EU since England opened the Channel Tunnel to Europe. We will have to take this up with the Minister and brief him as well as possible to ensure he is well cushioned to take on his counterparts in Europe. I thank the delegation for the magnificent submission they made to us today.

Mr. Hassett: Social welfare is a complex issue and I have two fat files on it which have been created in the past 18 months. At first, fishermen were not insured. Then they were fully insured; they paid full stamps under category A1. That was dropped and fishermen had no cover and were not allowed to have any. Two court cases arose over this: the McLoughlin case and the Griffith case. One dealt with social welfare and PRSI and the other with PAYE. In both cases, the fishermen were found to be self-employed and could not be insured.

The last time Deputy Woods was Minister for Social Welfare, he introduced a new Act in 1993 which established an optional social welfare scheme. Many people joined, yet the Department now states no one is joining. We know an accountant who deals with 50 boats, 40 of which are part of the scheme. How is it he has 40 boats all eager to join? In Caherciveen, Clonakilty and elsewhere, we found social welfare offices had never heard of the scheme and did not know what it was.

Benefits exist but they are limited. We requested for the scheme to be improved and argued that, for a little extra money, the scheme could be made worthwhile. Instead of paying people unemployment or sickness benefit for 13 weeks, people could be paid for 26. The Department can work out the cost as we cannot do it. When we met with the then Minister, Deputy De Rossa, certain other people were involved who owned large boats, were well off and had accountants to look after their financial affairs. Deputy De Rossa, who was involved in his own court case at the time, had people advising him and he ordered that everyone be included in the scheme. People left the meeting happy as it suited them. However, we have built up a large fund from Greencastle, Howth, Clogher Head, Kilmore Quay, Dunmore East and Galway and it is set aside to challenge this decision. We have failed to meet the current Minister but we have met his officials. The matter has been ongoing for months when all we ask is for them to consider a proper optional social welfare scheme for share fishermen. We believe anyone is entitled to be self-employed if they wish to be.

The issue is related to the shortage of crew. Some 40 Spaniards fish out of Irish fishing boats in Castletownbere alone and there are six in Baltimore. Irishmen cannot be found to fish on the boats as they are treated as self-employed in their own country.

Deputy Sheehan: I spoke to a fisherman on this matter and he said he would not be in favour of paying contributions because he wanted to get his money and would pay his own contributions.

Chairman: I do not want to stifle anyone, but two other Deputies indicated they wish to ask questions and there is possibly a third, so we shall have to move on.

Deputy Penrose: I welcome the Irish South and West Fishermen's Organisation. Coming from a midlands county where fishing only takes place in lakes, I was enlightened by their presentation and contribution.

I recognise sea fishing is a highly skilled area in which to be involved. One needs to be highly skilled and competent in maritime navigation skills, life saving, repairs, etc. Given about half the 15,000 people involved in the industry work on fleets, why was a concerted effort not made in the past 15 to 20 years to secure a number of specific training schools dotted around the coastline from Clogher Head to Castletownbere to Killybegs? Some of these skills could have been incorporated into FÁS schemes or taught in the vocational education sector or included in the school curriculum in areas where such work could be secured.

As regards the Common Fisheries Policy review and the quota allocations, I see many parallels and similarities between the position in which fishermen find themselves and that of the farming community. I believe we were completely underdeveloped in those areas in 1973 and accepted schemes and systems which did not take due cognisance or account of our state of development. That is pertinent to farming and is obviously pertinent to the position in which fishermen find themselves, especially as regards quotas. I have no doubt fishermen will continue to be penalised. The figures concerning our percentage of EU waters, of the EU fleet and of the quota are frightening. The fishermen have a case which cannot be argued against. It worries me that the regulations appear to have a limited duration attached, which is unusual. Unusually, it appears the regulations are of limited duration which means there is a possibility of reversion to the original legislation. This would permit uninhibited access by all member states to the fishing ground and there would be no derogations. This is a matter of concern and I am supportive of efforts to address it. I look forward to joining the effort to ensure a reversion of the present situation and in seeking increased quotas.

What type of lobbying will the group engage in to ensure, at least, no rolling back of the present situation and an increased quota? We are entitled to this and any fair minded and objective person would deem it reasonable.

Mr. Hassett: We have circulated material on this matter to every Deputy, Senator and MEP. I do not know whether they have read such material in the past - it might be necessary to send fresh copies. We have done much lobbying. We write to those who take an interest in the subject, including journalists. We are a small organisation and have only been in existence for five years. We have built up from nothing to become an established organisation.

There was a lack of cohesion in the industry - many people just looked after their own town or area and did not care about the overall picture. Fisherman are very ignorant - I say that with the best will in the world - as it is not possible to keep up with all the regulations or even get one's hand on them. I have asked the Department of the Marine and Natural Resources if it had a copy, for example, of document 37/60 of 1992 to be told it did not keep such documents. However, the Department is becoming more aware. It is only in existence for seven years.

Mr. O'Driscoll: The common fisheries policy, known as the beach doctrine, allowed every country fish to the other countries' beaches without restriction. Our fear is that the Corfu agreement will take precedence. We met high ranking officials of the Commission in Brussels and asked them if the common fisheries policy was going to be reviewed and whether the Commission was prepared to embark upon a review with an open mind. The officials said they would approach the issue with an open mind, but it is very hard for us to take their word when their written word is different. We must find out if there is going to be a real, worthwhile review where everything will be in the table for discussion, including our share of the TAC, the waters in which people are allowed fish, etc. We should move forward from 2002 with a totally new perception of what each country requires.

Mr. Hassett: Each coastal state should control the waters surrounding it.

Mr. Whooley: We are not the only people being penalised by this policy. We must form alliances we those in similar circumstances. Collectively we are more powerful but we do not have power when it comes to voting. We must examine alliances with different countries and regions, be it Cornish or French fishermen, etc., and form a consensus about what can be done for the future.

Mr. Hassett: We made alliances with some of the other fishermen's organisation, including the Killybegs organisation and the IFPO.

Deputy Blaney: We discussed a social welfare scheme for fishermen when the Killybegs fishermen's organisation came before the committee. There is a need for such a scheme, although where it would start or end is another question. This should have been drawn up long ago as it is an ongoing saga with fishermen. It must be taken in hand and streamlined. There is a training school in Greencastle which was established in the 1960s. I am surprised that no other school has been established since then. The Minister should examine this situation. It is a long journey from Castletownbere and other parts of the country to Greencastle.

Mr. Hassett: They travel by public transport.

Deputy Blaney: There is little public transport in Donegal. The proposed ban on drift nets is an ongoing saga. It is unbelievable that the issue has been allowed go on for such a period of time. There are people who want to get out, but these are a small proportion. Most fishermen wish to remain because getting out is a short term thing. There is a future in drift net fisheries and there is no reason why they should be curtailed or banned in any manner.

If there is to be a review of the common fisheries policy in 2002 we must be better prepared than we were in 1972 because at that time we sold ourselves so short that we never recovered. We had opportunities to renegotiate the policy in the past number of years, including during discussion of the Single European Act, but we failed to take them. It should not be beyond the bounds of possibility to prepare ourselves for 2002, if we have to wait that long, to ensure we get the best deal. Perhaps there were good reasons for what happened in 1972 - we did not have the fleet we should have had - but we sold ourselves short. This should not be allowed happen again.

Deputy Coveney: I welcome the representatives who are before the committee. Drift netting is a political and not a scientific issue. The only thing one sees on going into negotiations in Brussels are dolphins. The issue has become very political. I am surprised that the organisation has found allies in the French because I found them politically committed to this policy. The organisation has done well if it has convinced the French.

Regarding training courses, I cannot see the possibility of establishing a training course designed to run only during bad weather. January can be a frosty month with no wind and fishermen would attend training courses in such circumstances. Therefore, while desirable, I am not sure it is practical.

In my period as Minister there was much discussion about a new naval training college in Haulbowline for which, apparently, large amounts of EU funds were available. I established a small working group to examine the issue and see how Cork Institute of Technology and the naval base could develop a new education facility which could include fishing interests and have a good training school for new technology which, hopefully, the new boats will have. A mobile unit would be inadequate. Does the organisation think such an idea could be revitalised? Haulbowline is not a fishing port but close to some fishing ports.

I was depressed to hear the organisation outline its pessimistic analysis of the common fisheries policy, but it is good that we should hear it and not live in a false paradise. Mr. Joe Murrin made reference to the same subject. I understand why the Irish industry is somewhat fractured - perhaps that is not the correct word - and how it developed in the different areas. But just as the farming community are coming together now to deal with Santer's Agenda 2000 proposals, which are a huge threat to them, it will be necessary for the fishing industry to form a joint group with the Department, Government etc., on this issue and tell politicians what they want before negotiations take place. It will be too late in 2002.

Finally, when we spoke to representatives from Killybegs they mentioned the white fish fleet renewal and the current state of it. We hardly have to tell people in Castletownbere anything about it. Do you think the new tax incentive scheme included in the Finance Bill will be helpful? Do you think it will be enough?

Mr. Whooley: As regards training, perhaps January wasan extreme example. In reality if a training course is fixed for a Monday morning in Castletownbere or wherever, if the weather is bad the students are not going to attend. We need more flexibility when this situation occurs and this will require imagination.

Mr. Hassett: There are modules available which people could take to sea. They are not available in Ireland but they are available on other courses. There are also videos available. Some people in our area have all the equipment but they need money and space to use them.

Mr. O'Driscoll: Prior to when the navy built a college on their own land at Haulbowline they approached us stating they were interested in building a college on their own land at the back of the island. They asked us to state publicly if we were happy for them to train students and they could employ outside people to teach any subject they were incapable of doing. We were both in agreement on this. Mr. Hassett and I visited the naval base and we spoke at length on the issue. As we all know nothing has happened.

Mr. Hassett: Net mending was the only course they could not do. They have courses on hydraulics, diesel, navigation etc.

Mr. O'Driscoll: The Deputy asked about the scheme. Unfortunately, Jason and I have been abroad for a few days and have not had time to look at the deal. We welcome it because anything is better than nothing.

Mr. Hassett: It is only one part of the scheme. The rest of it has to come in grant form. We welcome it. It is the first time in many years that fishing has been mentioned in the Budget or the Finance Bill.

Mr. O'Driscoll: Deputy Penrose asked why have we not done something about training in the past. I have had an interest in training since 1954 when I travelled to Dublin with a delegation to meet the Department of Education to ask them to include some fisheries training in the curriculum for schools in coastal areas.

Mr. Hassett: We are a linear constituency right around the coast. We do not have enough people in any one place to influence individual politicians.

Chairman: I would like to thank Donal O'Driscoll, Jason Whooley and Tom Hassett for coming here this evening. As I said to their colleagues from Donegal prior to that, this meeting has given us an insight into the problems faced by the whole industry and its hopes for the future. Hopefully, during the lifetime of this committee we will get time to see how you suffer on the ground both in Killybegs and Castletownbere. Killybegs is probably nearer to me. We have been enlightened with regards to the entire fishing industry. I ask that you give us time and we will have further deliberations with regards the 2002 situation.

As the Finance Bill will probably be in session we will not have a meeting on 4 March but if it is not we will. It has been suggested that we invite An Bord Bia and discuss with them their role of promoting Irish food at all levels.

Deputy Coveney: I support that.

Deputy Sheehan: Can we invite the Minister for the Marine and Natural Resources , Dr. Woods, to attend and discuss the Balcas situation?

Chairman: Yes, at a later stage. During the past two months members have suggested we have a discussion with An Bord Bia at an early date. We will also invite the Minister with regards to the Balcas situation.

On the day the Minister attends we might discuss fisheries and forestry matters separately. I do not know whether Members would agree to that.

Deputy Finucane: There are two other organisations which represent the fishing industry, the IFO and the Irish Fish Producers. They should also be invited to attend in the near future.

Chairman: We will look at that.

Deputy Penrose: In relation to farming, the ICSA and the UFA should also be invited.

Chairman: Yes.

Deputy Coveney: I think it is opportune that we looked at genetic engineering in food as there is a certain amount of concern about it with these tests etc. coming up. Can we consider putting it on our agenda for sometime in the next month? Can we also invite in the people concerned, as well as Monsantu and get a scientific appraisal from somebody in the universities? You might talk about who that might be if we can find a neutral person.

Chairman: We will work on the list that we have for the next meeting and see who is available.

Mr. Hassett: We thank the committee for receiving us. It is great to have the opportunity to talk directly to you.

Chairman: Deputy Sheehan has been looking after your interests at a very high level.

The Joint Committee adjourned at 6 p.m.

An Comhchoiste um Thalmhaíocht, Bia agus an Mhuir

Joint Committee on Agriculture, Food and the Marine

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Dé Céadaoin, 1 Aibreán 1998

Wednesday, 1 April 1998.

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The Committee met at 4.05 p.m.

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Members Present:

Deputy John Ellis (in the Chair)

In attendance: Deputies S. Doherty, S. Fleming, D. Roche and D. Naughten and Senators M. Finneran and J. Connor. Apologies received from Deputy Paul Connaughton

Chairman: I call the meeting to order. I wish to refer to the tragic death of our colleague, Deputy Hugh Coveney, which has taken place since we last met. I extend the committee's sympathy to his wife, family, party and colleagues on his tragic and untimely death. There is very little any of us can say. Hugh Coveney was the perfect gentleman. That is the only way one could describe him. We would all like to convey our deepest sympathy to his wife and family on their great loss.

Senator Callanan: As a neighbour of the late Hugh Coveney, I would like to be associated with the vote of sympathy the Chairman extended to his wife and family. I come from a politics different from Hugh's but from an adjoining parish. I knew him for many years as a man of integrity, honour and principle. I also would like to be associated with the vote of sympathy extended to his wife, Pauline, and his family.

Deputy Finucane: We have had the opportunity in other situations to pay tributes to Hugh. He will be sadly missed by Leinster House where he was respected by all political parties. In the period since he became his party's spokesperson on the Marine he gave me a great deal of advice. I also join with the Chairman in extending sympathy to his wife, Pauline, and his family.

Deputy Penrose: On behalf of the Labour Party, I too would like to be associated with the Chairman's vote of sympathy to Pauline Coveney and her family on the death of Hugh. As the Chairman said, Hugh was the epitome of what a gentleman should be. He was devoted to the public service ethos and his word was his bond. In the fortnight prior to his untimely death he assisted me with a particular matter and made light of what was an onerous task to assist me. I also would like to be associated with the Chairman's vote of sympathy.

Deputy Kitt: I join in the vote of sympathy to the family of Deputy Hugh Coveney. He was responsible for overseas development aid in his capacity as Minister of State at the Office of Public Works. I was the spokesperson for Fianna Fáil at that time and am aware of his commitment to the people in the Third World. I found him to be a very helpful person in his ministry and in his dealings with the Dáil.

Senator Quinn: I attended the funeral of Deputy Hugh Coveney who was a close friend of mine whom I came to know over 20 years ago through our involvement with the Imperial Hotel, Cork. The funeral was a striking event in terms of the words spoken by Father George and Deputy Coveney's son, Patrick. It reminded us of how much one can fit into a life of 62 years and leave behind far more than most people who live longer. My sympathy is with his wife and family.

Chairman: I will request the Secretary to convey the sympathy of members to the wife and family of Deputy Coveney.

Are there any matters arising from the minutes of the previous meeting?

Deputy Finucane: We welcome Deputy Michael Creed in his new brief at the Department of Agriculture and Food. I do not think he is yet an official member of the committee but he was anxious to come along.

Chairman: I take it Deputy Finucane will not be making way for Deputy Creed?

We formally welcome Deputy Creed and wish him well. The Deputy will find this a place of reasonable harmony most of the time.

Deputy Creed: That goes without saying.

Deputy Finucane: Who are the West and Northwest of Ireland Livestock Producers?

Chairman: They have been in existence for quite some time. They are mainly people who are involved in exporting to Northern Ireland and the UK. They represent dealers throughout the country who formed this organisation about 18 months ago.

Deputy Lowry: Are you interested in become a member chairman?

Chairman: Not any more though I would have been more than eligible one time. I have never denied that.

Good afternoon. We welcome the opportunity to hear your submission. Perhaps Mr. Clarke, you might introduce your colleagues for the benefit of members of the committee.

Presentation by the West and Northwest of Ireland Livestock Producers

Mr. Clarke: On my left is Mr. Gus Egan of Associated Marts, Mr. Hubert Maxwell, Chairman of the Livestock Producers and Suppliers Association; Mr. Stephen Foley, Secretary of the Livestock Producers and Suppliers Association; Mr. John O'Rourke, farmers' representative; Mr. Michael Foley, Chairman of the Munster Livestock Producers and Suppliers Association; Mr. Brian Mullen, executive member of the Livestock Producers and Suppliers Association and Mr. Philip Deegan, Leinster Chairman of the Livestock Producers and Suppliers Association.

Chairman: We propose to hear a ten minute submission from you followed by a questions and answers session.

Mr. Clarke: Chairman, members I, on behalf of the West and Northwest of Ireland Livestock Producers and Suppliers Association, farmers and marts thank you for this very necessary opportunity to make a submission today. We address on the issue of the revised draft of 5 January 1998 on the Approval and Registration of Dealers and Premises Regulations 1998. The proposed regulations therein would put the business of livestock trading under threat for survival; bring about a decline in family farms and farm associated bodies.

We recognise the importance of traceability, quality control and animal welfare regulations and stress our willingness to work within the present regulations. We are talking about thousands of rural families who are dependent on trading in livestock for their livelihood. Those involved in trading on a part-time or occasional basis extends far into the wider farming population. To restrict the free trade of livestock would have serious consequences on the livelihood of farmers, mart employees, hauliers and farm labourers and the entire rural community.

We have worked within the ever changing regulations to date but the proposals being made would deny thousands of people the right to support their income, would remove the very European essence of free trade and deny the farmers of Ireland competition for their produce. Therefore a threat to the survival of livestock trading is a further threat to the future of rural Ireland. Livestock producers, dealers and exporters have had to endure many problems and changes in regulations but 1997 will probably be known as the worst year for the livestock trade since the foundation of the State when only about 55,000 head were exported alive to all destinations. Regulations, as proposed, would remove a vital cog from the wheel of free trade between the producer of livestock and the requirements of the bigger feeder farmer, the abattoir feed lot and exporter and would result in the closure of a number of marts, loss of employment and many other offshoots relating to the livestock trade. Most important would be the decimation of the family farm now based and dependent on the various agriculture premia and headage schemes put in place by our Government in conjunction with the EU. The Government has established a production line for livestock and now some of its officials are proposing a major breakdown in its operation. The non-movement of cattle within Ireland would result in our inability to supply our European partners and third country markets. These markets established by livestock exporters throughout Europe and third countries over the last 25 years will cease because, without free trade, nobody will be able to supply them. On one hand we have the potential opening of the live trade to Libya and Egypt through help from various Government Departments while the same said Government Departments are trying to overregulate the industry by bringing it to a complete stop. The lack of outlets and competition for farm produce would result in thousands of farmers and their families being added to the present urban labour force thus upsetting rural development and creating increasing difficulties in urban areas. I asked the Department of Agriculture, Food and Forestry a year ago, when the document first appeared, why it was never sent to any of the livestock traders organisations or the national executive of the livestock trade in Dublin. The question remains why we were not notified of the proposals directly. In view of the co-operation that should exist between Government Departments and our members, we would appreciate prior consultation and/or discussion of matters relevant to our association members, their families and their livelihoods.

We would also like to make a submission on the question of brucellosis and its eradication. While our association has no objection to the introduction of a 30 day brucellosis test, we have grave reservations about some of the workings of the scheme. The introduction of a one sale, one test for heifers over 18 months old and bulls over one year old would again be seen to be directed at dealers as these cattle would be the most frequently traded in by dealers. This one rule has effectively taken the competition out of the market for these types of cattle resulting in a price reduction between regions and a scarce supply of heifers at most marts. This one regulation, coupled with very severe compensation rates for brucellosis reactors to dealers, begs the question whether it is brucellosis or dealers that the Department of Agriculture is seeking to eradicate? The compensation rate difference between farmers at £400 and dealers at £20 would lead one to wonder what are the intentions of the Department of Agriculture and Food.

Our association, together with marts and farmers, is requesting that this regulation be dropped and that free trade on a 30 day brucellosis test should apply for all female cattle. One example of the type of discrimination of our members is that if a farmer brings ten heifers to a mart and sells two to a dealer, the dealer must bring the heifers home and have them retested for brucellosis if they are over 18 months old before he can sell them. However, the farmer can go from mart to mart with his remaining unsold eight heifers over the period of the initial 30 day test until he has sold them. Where is the logic in this regulation?

We submit also that all female cattle be 30 day tested when moving from herd of origin whether to factory, farm or to mart, which is not done at present. Large numbers of heifers under 12 months come onto to the market from dairy herds that have never been tested for brucellosis. Those animals can be left untested up to two years of age. This type of movement must be questioned having regard to the current brucellosis crisis.

Another aspect of this issue is the fact that a farmer or other can dispose of heifers or cows that have not been tested for brucellosis by bringing them to the factory to be slaughtered where the animals can spread the disease to all they come in contact with. In some cases cattle are returned from factories to the owner's farm due to misidentification or other reasons such as dirty cattle, thus increasing the risk of the spread of brucellosis. These animals in turn infect clean cattle on the farm which now has been proven to spread the disease laterally from farm to farm.

If we are serious about eradicating brucellosis, all females and bulls must be tested. We do not agree with repeated testing within 30 days or with the flaws that exist in the new brucellosis regulations. This is supported by the well known delay with obtaining brucellosis herd test results. All heifers must be tested, test results must be expedited and the movement of animals must be given a full 30 days limit without another test.

We thank the committee for giving us this important opportunity to make our submission. In the strongest possible terms we submit that the revised draft of 5 January 1998 is impractical, unworkable and contravenes not only the ordinary rules of natural justice but also the constitutional rights and entitlements of a person seeking to carry on his or her livelihood. On behalf of the West and North West of Ireland Livestock Producers and Suppliers Association, farmers and marts we would welcome questions from members of the committee to clarify any points they wish to raise as it is essential we have full understanding of our problem and use the political influence and goodwill necessary to ensure the non-implementation of the proposed draft and the required changes to the brucellosis regulations.

Senator Connor: Are copies of the draft available for Members?

Chairman: We sought those from the Department today so that they would be available to Members.

Senator Connor: So did I.

Chairman: We received the standard reply that they would not be made available to us because it was a draft document. I will write to the Secretary General of the Department in my capacity as Chairman because not only were they requested from the Department today but also last week. Members should have been supplied with these documents as it is obvious they are in the public arena despite the fact that some of us may not know how that happened. It is a draft document and it is regrettable that it was not made available to the committee by the Department officials.

Deputy Finucane: It places us at a disadvantage in trying to follow this presentation. We seem to be operating in a vacuum. We do not have the regulations in front of us to see the interpretation Mr. Clarke has taken on behalf of his association. That is regrettable. I would prefer to discuss this matter with copies of the regulations before us even if that meant postponing the meeting for two weeks. That would have given us an opportunity to study the regulations but we do not have that advantage.

Chairman: I have one copy which only came into my possession this morning. I will ask the Clerk to photocopy it for Members. In the meantime we will allow Members to put their questions as we are limited to one hour. That may be the only way to get over the problem. Deputy Kitt, Senator Finneran and Deputy Penrose have indicated that they want to ask questions. I call Deputy Kitt.

Deputy M. Kitt: I had the good fortune to get a copy of the regulations from the West and North West of Ireland Livestock Producers and Suppliers Association and I thank the association for that. I want to deal with the point made so well by Mr. Clarke in his presentation on the difference between a farmer going to the mart and the dealer. Is it true that previously there was only one movement of an animal within 30 days that affected everybody, including farmers and dealers? It is strange that we are going back to a situation where there is a differentiation between the way farmers and dealers are dealt with.

There are currently difficulties in competition because we do not have as much live trade as previously thought. There are markets which we hope will open in the future. Could we have some examples of how the live trade could be further improved if the position was reversed to allow dealers have more than one movement within the 30 day brucellosis test period?

Mr. Egan: The scenario with the dealer is of vital importance for all the people who make their living from selling and buying cattle. If those regulations are introduced in their present form many marts will close down because if the dealers or agents are removed from the marts there would be no competition and prices would collapse. Some marts might remain open but people will not travel a long distance to sell or buy animals. They would plant the land and forget about farming. We know how disastrous that would be for rural Ireland. Many farmers go to marts with their sons and daughters and buy animals for them as an incentive for them to stay on the land. They give them an opportunity to own, feed and look after the animals on the family farm. When the time to sell comes, they go back to the mart with the children and supervise them as the animals are sold in their names and they get paid.

The Association of Livestock Marts met the Revenue Commissioners and I referred to this. They said it was in order to do so. A farmer with family members interested in the farming business is entitled to buy and sell those animals. It is proposed to abandon this facility because the individual must be approved and registered and this remove the offspring of farmers from the cattle business, which would be a big blow to the livestock industry.

When people, such as Mr. Maxwell, want to buy animals for live export they will not get them all in the one day because they must take the animals home to check their suitability, etc. If they find they cannot go to a mart, they will not be able to buy animals for export.

Senator Finneran: I compliment the Chairman on giving the West and Northwest of Ireland Livestock Producers and Suppliers Association the opportunity to appear before the committee. It is vitally important to hear the views of those on the ground, especially people such as Hubert Maxwell, Gus Egan and John O'Rourke, who are directly involved with the farming community. I examined the regulations over recent weeks and 13 pages of restrictions are involved which will put dealers out of business. The document will regulate trade to the extent that it will no longer exist. In 1997 only 55,000 live cattle were exported and there will be no live trade shortly if something is not done about these restrictions. If we do not have a live trade to maintain competition, there will not be good prices for farmers.

Discrimination against the dealer with regard to brucellosis testing is uncalled for. Fine people have been involved in the cattle trade over the years and the opportunity of the internal market, outside of Third World countries, is excluded from people under this. Does the association believe it can continue its business under the proposed regulations and does it see a future for live trade?

Mr. Maxwell: Our association is an all Ireland one with representatives from Munster and Leinster. Earlier applications to the Department of Agriculture and Food for a meeting came from the west of Ireland association. The regulations in the draft document are totally unworkable. I have been working with cattle since I was knee high to a duck and the regulations will call into the question the people who put this document together. That might be hard hitting but until a chance is given to those who work in the business, this document will drive many people from rural Ireland which has been decimated over the past two or three years. It will lead to a situation where something will have to be done to entice people back to rural Ireland in ten years. If the people we represent are prevented from entering the marketplace to do business many people will suffer. Eventually smaller farmers will suffer most as they do not have the stock to go to an abattoir or factory. Their cattle are either exported live or moved on to other parts of the country.

I am involved in cattle exporting and I know the hardship that has been caused by BSE. The drops in prices and farm incomes have been dramatic. It is sad that the sons of farmers are not taking up the family business because there is no opportunity for them. It is impossible to earn a decent standard of living. It is important that the powers discuss the draft document with our representatives. I agree with parts of it but there are others which are totally unworkable.

Deputy Penrose: I have spoken to people in Leinster who verified Mr. Egan's comments. I met Phil Deegan and Andy Roche who explained in detail the impact the regulations would have. This trade is often used to supplement incomes on farms in the midlands at various times of the year. Does the association feel the thrust of the proposed regulations is to effectively overregulate to the point where the very existence of the trade is threatened with extinction and what is required is that the nature and extent of the regulations proposed should be examined positively? Will it outline the most important features of the proposed draft on the Approval and Registration of Dealers and Premises Regulations, 1998, which cause the most problems and would be perceived by you as impacting adversely upon your ability to maintain your trade. I understand you keep very detailed records, which can be tapped into by the Department and the DVO. Have you examined the impact of the EU directive on other members states given that they do not have the type of farming systems that operate here? Is it true that impacts more severely and adversely on our trading conditions than on those of any other member state? We must take cognisance of the discrimination pointed out by you in relation to brucellosis regulations. In order to analyse this matter in detail, perhaps the relevant departmental personnel will be asked to appraise us of the thrust of the regulations. We may have an opportunity of a discourse with the Department, having heard the views expressed today.

Chairman: If the committee requests that the officials come before it, I as chairman have no objection to passing on that request. Do you want to make a formal proposal?

Senator Lydon: I propose that Department officials be summoned to a very early meeting so that we can question them on the details - I received the document only today. I hope you are in a position to do that because there are problems.

Mr. Deegan: On the regulations, they are being brought in to eliminate us from the business. Last summer we met the assistant secretary who told us without hesitation that there was far too much movement of cattle in Ireland. Thus, there must be fewer dealers, and this is a follow-up to that.

On the second question, there is a point in the document which is relevant to the light in which we are held in the eyes of the Department. It states: “The Minister may authorise the involvement of dealers in the marketing of properly identified animals which do not fulfil these conditions, provided such animals are brought direct to a slaughterhouse without passing through the dealers' facilities for slaughter as soon as possible in order to prevent the spread of disease.” Our understanding of that is that if we bring cattle through our premises they will contract disease and we are spreading disease. Having been periodically herd tested and cleared, that is a very dim view of the way we maintain our business. If we are restricted we cannot move in our cattle, but if we pass the tests we should not spread disease by moving properly tested cattle through our premises.

There is one other point which we feel may hold us to ransom. It states: “The Minister may attach conditions or limitations in respect of the business that may be carried on in the premises.” That means that the Minister may handcuff us to certain regulations which may be totally unworkable, regulations brought in by people who have no understanding of the movement of and dealing in cattle.

On the position elsewhere, about three years ago I was in Holland where there is very little TB and brucellosis testing. Animals are tested for TB and brucellosis only in terms of exports. If TB shows up in one cow it is sent back to the farmer. There seems to be little strict regulation compared to the position here.

Senator Connor: Since I am not a member of this committee I thank you for giving me the opportunity to contribute. In this document, under five or six different headings there are regulations, which make up the proposed statutory instrument. We would like greater detail on your objections to those regulations. There are eight or nine headings under general provisions and limitations in relation to dealers. Which of those issues are most objectionable? It is very important that information is communicated to the Department. Many of us are very much on your side.

We appreciate that mostly what the modern dealer is doing today is carrying on the live trade in the sense that you buy cattle at marts and ensure they are exported live. You are also involved in the slaughter trade. The live trade has been carried on by a number of dealers who specialise in that area. It is very important that you are allowed to continue that business. If live trade exports to Libya and North Africa reopen, which hopefully will happen, you will be relied upon to buy cattle, ensure they are transported to ships, and so on. I am very much in sympathy with the problems experienced with regulations. As was stated, you could be regulated out of existence.

Most of you are herd owners as well as cattle dealers. You are registered as herd owners and you will now have to register as dealers. From looking at some of the regulations, you will have much difficulty continuing as ordinary farmer-herd owners as well as dealers. Perhaps you will comment on that. It is very important that we have a coherent list of the regulations to which you object. As Hughie Maxwell said, there are many with which you agree, but there are many with which you fundamentally disagree and they are the ones we want to hear about. If we are to make representations to the Department officials when they appear before this committee - I would like to attend on that occasion, with the permission of the chairman - we must be aware of the contentious issues.

Mr. Foley: I will deal with the last question first. On herd numbers and the registration aspect, our herd numbers should be sufficient to entitle us to continue as at present. The Department proposes that our herd numbers should be removed and that we should be issued with a registration number which will identify us as dealers. A register will be kept by the Department of every dealer in the country. If we want to buy cattle we would have to go to the mart manager for authorisation, prior to going into the sale to purchase cattle. The mart manager must have documentation stating that we are on the registered list. We totally object to that.

Those involved in the live trade, internally or externally, keep records and work within the present regulations, which are difficult enough, but those proposed are totally unworkable. We cannot get co-operation from the Department to have a discussion on these documents. It has told us that if there are any changes to be made we will read about them in the newspapers. We have grave reservations about that and, as an association, totally object to it.

In regard to the internal movement as distinct from the export status, on the brucellosis aspect in female animals - some people here deal in heifers - marts are devastated in terms of numbers on account of that regulation. Dealers cannot purchase these cattle. They have to re-test them if they are more than 18 months of age. With the compensation levels for brucellosis reactors, if a dealer has a breakdown he gets £20 as compared to £400 for a farmer. We are complying with these regulations. We test cattle daily. Anyone who handles heifers or bulls has to test them over a year. We comply more than anyone else with the regulations because we deal in cattle, and we object to that form of discrimination.

Deputy J. Brady: I, too, welcome these gentlemen.

If an agent is buying cattle for a shipper and the ship is sailing on Saturday night, Sunday night or Monday morning, the agent needs to buy the cattle between now and Friday. Naturally, he cannot leave them in the sales yard until they are going directly to the boat. If he brings the 200 or 300 cattle home, all those cattle must be tested prior to going on the ship. Maybe that is true, maybe it is not. If they are heifers, that is the way.

What is the difference between the regulations in Northern Ireland and those in the South? I believe a permit system works there. Would that be a better system here?

I would not agree with the delegation's document which states that if a farmer is selling heifers to a meat factory, they should be tested. We all know that the profit margin on finishers has been tight over the past number of years. This involves the imposition of an extra expense. Many farmers purchase cattle, particularly male cattle, to finish over the winter months. They find in February, March or April that they may have to test a couple of hundred of them. I am talking about men which would have finishers in 400 or 500 feed lots. I have heard many complaints in my constituency from farmers who had to test over half their cattle which were going for slaughter. I would totally disagree that a farmer must test his cattle beforehand. It is something about which I have been fighting with the Minister and I am sure other Deputies and Senators have been fighting about it also.

Chairman: There might be a simple way for the Department to get over the testing of female stock, that is if they were to do what is done in Northern Ireland and England where every female is blood-tested in the factory prior to slaughter. If that were done here, it would identify many of the reactors quickly.

Mr. O'Rourke: I want to reply to Deputy Brady's suggestion that those cattle should not be tested. Those cattle are bought from herds. I take it that everybody is in agreement that we must improve our brucellosis status. The cattle to which the Deputy refers are bought from herds all over the country. How could the Deputy be sure that those cattle did not come from brucellosis herds? They could have aborted as heifers after two or three months and they could have been bought by anybody for a feed lot. If one sends them to the factory, it will not show up.

What about the farmers in the area from where those cattle came? There is an unidentified brucellosis herd because those cattle were sold without being tested prior to that time. At any time during 1997 the could have been sold once they were within the year. Therefore, they can spread brucellosis. If we are serious about traceability and we want to know the source of the problem, we must test every animal.

I am a full-time farmer. I am also a full-time mart manager. As regards the 30 day test to which the Deputy referred, having tested for brucellosis two months ago and having been told I had a clear herd, I could sell five cows which have aborted in the past two months to the agent of a factory. I could tidy up those cows. I could sell them to an agent - I do not want to refer to him as a dealers because I am a farmer and a mart manager and those people are very credible agents. The agent to whom I refer could leave them under permit for a number of days on any farm before taking them to a slaughter premises. Those cattle could do an amount of damage because they have not been tested before they are slaughtered? I could sell those cows and still damage my neighbour. Therefore, I must disagree with the Deputy. Every animal should be tested before slaughter.

Chairman: I do not wish to be short but we are running out of time.

Mr. O'Rourke: If a person who is against live exports said we were slaughtering cattle which have not been tested and which are from a brucellosis herd, the beef industry would suffer. They should be tested.

As a farmer, the word “dealer” is a dirty word. I am a mart manager and a farmer. Agents are credible people. They do good business. They take cattle from one part of the country to the other to facilitate people who are running farms who do not have time to go and buy cattle to stock their farms. As a mart manager, I can assure the committee that those people have never left incorrect records in my office. The people, to whom the Deputy refers, are entitled to recognition and to be listened to in this regard. That document is a total disgrace, as far as I am concerned. I urge the committee to give us, as farmers, an opportunity to afford the existing competition. We need the competition which the dealers provide. Farming has no future if they are not left in it.

As regards their premises, if the day comes when their premises must be improved and an AO turns them down, I urge the committee to ensure they can appeal. There is no right in that document to appeal and there should be. If my AO does not like me, he can turn down my premises.

Deputy J. Brady: Mr. O'Rourke probably took me up wrong. What I was stating was that male cattle are tested in the factory for lesions. I believe female cattle could be tested in the same way.

Mr. O'Rourke: They cannot be.

Deputy J. Brady: What about the other two questions.

Mr. Egan: On the question about Northern Ireland, the cost in Northern Ireland is between £40 million and £50 million. It is enormous. The marts in Northern Ireland receive between £3,000 and £5,000 for the use of their premises for each sale - they are used by the Department.

The marts in the Republic receive nothing. We provide office space. We retain records for seven or eight years. Traceability is first-class in all marts and there is no compensation for it.

Deputy Lowry: I welcome the delegation. I am glad it recognises the importance of traceability, quality control and animal welfare regulations.

Maybe the delegation will provide us with some background. How long is the committee in existence? Is it a national committee because there is a perception, which is probably propagated by other people in the industry, that there is a difficulty with this sector, that is the moving of cattle, and disease. That is a perception which the delegation's committee must counteract.

These regulations are bureaucratic and cumbersome. In many cases there are anomalies which have been highlighted. The biggest anomaly relates to the brucellosis regulations. Dealers and agents are integral part of the culture of the livestock industry. They have given a tremendous service to rural communities and I would like to see this continued.

How many cattle do your members handle and what percentage of the total trade are you involved in? I agree with Deputy O'Connor that we need a list setting out your principal concerns. I support the view that the committee should call before it departmental officials so that it can put your concerns to them and report back to you.

Deputy Doherty: I am not a member of the committee and appreciate the opportunity to speak. Some members of the committee have consulted me on this matter.

Has there been any consultation between the Department and your organisation? In terms of its understanding of farming, departmental officials are academics or arm chair farmers. Have they participated in a consultative process, which is the well established practice in most similar areas. Who does the organisation believe will benefit from these proposed changes, given its clear statement that brucellosis will continue because of the anomalies which exist and that people will disappear from the business.

Senator Connor referred to the difficulties which arise for dealers who are also farmers. It is implied that the proposed changes are being introduced because of serious breaches of the law. No one condones this behaviour. How many members of your organisation have been prosecuted for such breaches of the law? Until the contrary is proven, the proposals are seriously defective and flawed and do not make any real attempt to eradicate brucellosis.

Senator Hayes: I welcome the organisation's representatives. I am a farmer and have heard many dealers and agents crib about their position. I am glad, therefore, that they have formed an organisation.

This regulation is typical of what emanates from the Department which is getting increasingly caught up in red tape. In an area close to where I live there is a huge brucellosis problem. The organisation said it has no objection to the 30 day test but has serious reservations about some of the workings of the scheme. Is it in favour of allowing free movement within 30 days or a shorter period? This is a very important point.

The farmers in my area say there are rogue dealers in the area who have caused problems. Some of these people have given the trade a bad name. I am not being critical of dealers or agents who have played an important role in the movement of cattle over many year. The idea that there is too much movement of cattle is rubbish and it is being bought by departmental officials who know nothing about it. There is a need for dealers. On wet November evenings there may be nobody to buy cattle in a mart and without dealers farmers would get disgraceful prices for their cattle. The organisation has a very important role to play and I welcome its establishment. Have you had discussions with the IFA, ICMSA and other cattle breeders' organisations and, if so, what is their attitude?

Chairman: As there are only ten minutes remaining, I would appreciate if the replies were brief.

Mr. Egan: On quality control and traceability, we have been in constant contact with Aidan Murray of the Department. It is proposed that marts should install computers which will contain details of all herd numbers, thereby ensuring traceability. The marts are willing to do this but I am sorry to say the Department is falling down in this respect. When we visited Aidan Murray last January he told us each mart would have a monitor as soon as possible. Today is April fool's day, and the lines have still not been installed. I may be shot for saying this but I am being honest. Marts are prepared to install monitors but the Department has not facilitated them in this respect.

Mr. Foley: In reply to Deputy Foley, we had a meeting on 16 May last year with Liam Fitzgerald and Tom Burke on the initial document. We had a further meeting with Seamus Healy on 9 July. We were told that our submission had been lost and that we could talk with the farming organisations or read about the proposed changes in the newspapers. Within the past month we sought a meeting with Mr. Malone but were told his calendar was full. Mr. Healy told me that by the time we met him the regulations would be in force and it was not worthwhile meeting him.

Suggestions about breaches of law and prosecution of our members have been bandied around for a number of years. We asked the Department for information on who has been prosecuted but we have still not received full details. We strongly object to the continuous assertion in the media that dealers are to blame for brucellosis. As John O'Rourke said, if dealers have all the necessary testing under the brucellosis regulations carried out there can be no problem. Prior to the introduction of the 30 day pre-movement test there was no pre-movement test for brucellosis, even though the Department was asked to implement one. It said the situation was not bad enough to require the implementation of a pre-movement test. If the animals bought by a dealer from a farmer or at a mart are subsequently found to have brucellosis, who is to blame? The dealers bought them in good faith. I do not know how stories are circulated which blame dealers. We have sought that information but we have not got it. We, as an organization, are not aware of members being prosecuted.

Senator Hayes: Mr. Foley will accept that some dealers carry out a messy operation.

Mr. Foley: We do not know them. We have asked the Department for that information.

Senator Hayes: Anyone living in the real world knows what is going on.

Mr. Foley: We want to know who these people are, if they have been prosecuted and if not, why not? Illegal activity affects all out livelihoods. Regulations to deal with them are in place and if there are rogues in the industry they should be removed.

Senator Hayes: I accept that. These people have given the industry a bad name. It should be admitted that these people exist.

Chairman: The six remaining Members may ask one question each.

Deputy Roche: I would like to know where the IFA stand on this question. I would like to know who gains and who loses. Finally, may I repeat a question previously asked, which sections of the regulations do the delegation wish to have removed?

My remaining question has been answered, in effect. It seems that the Department takes a malign view of the people represented by the delegation. This seems extraordinary. If there are rogues in any trade they should be dealt with. I am pleased that the livestock producers' association stands for this.

Deputy Creed: The Department may hold the view that there is too much movement of cattle. In an ideal world that might be the case. The organization here today act as an important conduit for farmers who, for economic reasons, must move their cattle. The voice of the delegation is a legitimate one.

Two debates are in progress. The first concerns the brucellosis pre-movement test. I received this document, “European Communities (Approval and Registration of Dealers and Premises) Regulations, 1998” from the Clerk a short time ago. I am unclear about the reasons for not wishing to comply with the regulations, notwithstanding the earlier presentation. Senator Connor was told, in answer to his question, that a farmer does not want to go to a mart and give the registration number of a dealer before engaging in a transaction. He was not told why not. Before we hear officials of the Department, the Committee must have a more coherent, sequential and itemised presentation of the objections to the regulations. I am unclear, even after an hour's questioning, about the precise objections to the regulations.

Chairman: I will request a direct submission setting out the relevant sections which are seen as hindering the free movement of cattle. It would help if these sections were identified at an early date.

Senator Callanan: Mr. John O'Rourke was introduced as a representative of farmers. Can Mr. O'Rourke tell us the farmers' view of the regulations as set out in the document which we were given half an hour ago?

Mr. O'Rourke: Competition is the life of trade. A farmer, when he takes cattle to a mart, needs to see as many buyers are possible. He does not want to see buyers eliminated as these regulations do. A farmer cannot, for example, buy cattle for his son if his son is not registered. Farmers are angry because these regulations do now allow them to sow the seeds which the next generation can reap.

Senator Callanan: Control of disease is essential to the farmer. Can you marry these two needs?

Mr. O'Rourke: Every farmer would like to see every animal tested and to be assured that his neighbour is keeping the law as well as himself. It is important that every female animal over ten months is tested before slaughter so that the origin of the disease is traced. Some herds which have not been tested for the last two years are selling weanlings under ten months. This is disgraceful and farmers are concerned about this situation.

Deputy Finucane: I will not repeat points which have been made already.

The document which has been circulated to Members today is a revised draft, dated 5 January, 1998. Was there a previous draft and was it even more punitive than this one?

Mr. Foley: This draft is more detailed and more regulated that the previous one.

Deputy Finucane: The document states that these regulations come into effect on March 1, 1998. Are they in operation now?

Mr. Foley: No.

Deputy Finucane: The document states that the regulations will come into effect in 1998. Has a date been set for their implementation?

Mr. Foley: Mr. Healy has said they will be implemented in three weeks.

Deputy Finucane: The opening paragraph refers to EU Directives and Regulations. Have these new regulations been extrapolated from EU regulations?

Mr. Foley: That is what we have been told by the Department.

Deputy Ring: I welcome the dealers to the Committee. I call them dealers deliberately because that is how they have always been known. They should not be ashamed of the title. Cattle dealing was always a part of rural life. It is wrong for Governments and Departments to introduce regulations which put people out of business. These regulations should be opposed by this Committee. Department officials do not have to make a living from agriculture. I support the cattle dealers and I will do whatever I can to ensure that these regulations will suit dealers and will not put them out of business. Rural Ireland has been attacked enough. Dealers have done a good job for the last hundred years. They do not need to call themselves agents. They are dealers, they have a right to make a living and they should not be put out of business.

Deputy Moloney: I am happy that the delegation has clarified the position on traceability and brucellosis. I am neither a dealer nor a farmer but I support the case being made. I would like to know if the IFA and other farming bodies support the case which has been made.

I am appalled to hear the position of the Department officials. I am particularly appalled to hear that an answer to a question was that the response could be read in the newspaper.

What parts of the regulations are favoured by the delegation? If the support of the Committee is sought we must know which regulations are supported and which are opposed.

Chairman: We have run over time and have taken 20 minutes of the next delegation's time. I invite a representative of the delegation to make a brief concluding summary.

Mr. Mullen: May I answer some of the questions? We have met the IFA. They are not interested in representing us. The Committee may interpret that in whatever way they wish.

Deputy Roche asked who will gain and who will lose when these regulations are enforced.

We stated in our submission that we will certainly lose but farmers and the marts will lose also. As far as we can gather from the Department, cattle will go from farms straight to the factory, so we know who will gain in that respect.

Concern has also been expressed about the Department's stand on this issue. It is stated clearly on the first page of the draft that we did not get a copy of the draft; it was handed to us by someone who managed to get one. We were not consulted and it seems no consideration was given to that.

In regard to what we want and do not want, we want fair play and we have asked for consultation. We are not against regulation and we are prepared to work within regulations that are as fair to us as they are to any other sector, but every dealer in the country is being branded the same because of the actions of a small number of people. The vast majority of people carry on their business in a legitimate manner and we should be left alone to do that. We are entitled to do that and our local offices concur with that.

Chairman: I thank the representatives of the association for their submission. I am sure Members have become enlightened with regard to the problems faced by the people involved and also by farmers as part of the overall situation. Not only are the dealers represented but also the marts and people with a dual mandate - John O'Rourke carries a dual mandate as a farmer and a mart manager. We will take up the suggestion made at the outset by Deputy Penrose and repeated by most members that we should request the Department to come before us and explain its position with regard to the proposed regulations. We will do that in the very near future.

I again thank the members of the association. I am sorry so little time was available but we have another group waiting outside which should have commenced its submission 15 minutes ago.

Mr. Maxwell: On behalf of the representatives I would like to thank the Chairman and Members of the joint committee. We would like to have covered the points we agree with and those with which we do not agree but, as the Chairman stated, time does not allow for that. Hopefully we can do that at a future date.

Chairman: Perhaps the association might come before us again, possibly between now and the end of the week. We realise that will put pressure on the association but it could highlight the points that will cause the most serious problems for dealers. Everybody accepts the points concerning traceability, etc., but the association will want to point out the punitive aspects and that would have to be done by the end of the week. There is little point in requesting the Department of Agriculture and Food to come before us if we do not know the points that will cause major problems.

Mr. Creed: And the reasons for that.

Chairman: If the association has alternative suggestions to make, it should do that.

Mr. Maxwell: Thank you, Chairman.

The representatives withdrew.

Presentation by the Irish Countrywomen's Association

Chairman: I apologise for the delay but we did not move on as quickly as we would have liked with the earlier meeting. I have a problem in that I have to leave to attend a deputation and I propose that Deputy John Brady act as Chairman for this session. Is that agreed? Agreed. I now hand over to Deputy Brady who will formally invite the representatives to make their submission which will be followed by a question and answer session.

Acting Chairman (Deputy Brady): I welcome Ms Hobbs and Ms Leahy. Unfortunately, the earlier meeting was quite long and we apologise for the delay. Also, many Members had to go to other committee meetings. I now call on Ms Hobbs to make her submission.

Ms Hobbs: This submission is from the Irish Countrywomen's Association's National Committee for Agriculture, Rural Development and the Environment, of which I am the secretary. Ms Leahy was not involved in the submission but she has come with me for moral support. There are eight members on the committee representing Sligo, Longford, Wicklow, North Tipperary, Meath, Cork and Waterford so we have quite a wide coverage. The paper reflects what the members considered the most important issues arising from a recent meeting in February. We realise there are several other organisations dealing with similar points but the committee asked for our opinions and we have come here to give a background to the submission.

The first point we made relates to markets for beef. Because of our island status we have to export 80 per cent of all beef produced. Our live cattle exports must be guaranteed and it is essential to recover the British market. We believe there are more farmers depending on beef exports than any other sector so it is vital that we recover the live export market to maintain a balance in the marketplace. One buyer in the ring is useless - there must be competition. In light of the hysteria generated recently about Irish and imported beef in the UK, it is important that we vigorously defend the quality and reputation of Irish beef on our principal market.

The second point we made concerned the price of meat in butchers' shops not reflecting the price paid to the producer. When the price of beef dropped dramatically during the BSE crisis, for instance, the prices to the consumer remained the same. The price of sheep meat is currently very poor yet the average size leg of lamb in the supermarket or butcher's shop is over £15. When the price of beef dropped dramatically during the BSE crisis, for example, the price remained the same for the consumer. At present the price of sheep is poor yet the average sized leg of lamb in the supermarket or butchers is over £15.

We are also concerned about the amount of New Zealand lamb being imported into the EU. Some supermarket owners say they must stock New Zealand lamb during the December to March period because they cannot source it at home. We pointed out that lamb is available for a certain number of months while mutton is available for the rest of the year. Now, however, everything must be available all year and seasonality does not appear to be a factor. One could argue that seasonality made foods a little more special and New Zealand lamb cannot compensate for that. The butchers alone cannot be blamed for the high prices because few appear to carry out their own slaughtering. They are more inclined to buy from distributors and wholesalers.

We also made a point about quotas. It is imperative that we maintain our national beef quota, while the dairy quota must be enlarged. Farming is a closed shop at present due to the operation of the quota system. It is no wonder there is such a fall in the number of young entrants to farming. In order to halt the flight from the land - five farmers give up dairying each day - it is necessary to provide access to milk quotas for farmers who wish to remain in agriculture but who cannot currently generate a viable income.

The fact that farming is a closed shop to young entrants is a major problem for some of our members who have sons and daughters who wish to enter the business. Even if young people inherit a farm, the lack of access to quotas makes it more a hindrance than a benefit to them.

Our final point was about quality assurance. About 82 per cent of consumers are female and quality assurance is most important. There should be a quality beef assurance scheme to enable us to market a quality product. Such a scheme must have a visual impact through labelling but labelling alone is useless if it is not followed up at all levels. The clean animal grading system now used in factories is encouraging but we must be aware that it is practically impossible to have clean animals off slats. Some members believed there was much to be said for the old-fashioned straw bedding system. However, farmers have been advised over the years to increase stocking rates and that has resulted in getting animals off the land for longer periods and removing them from their natural environment.

Fingers tend to be pointed at producers but they cannot provide traceability once the animals are out of their care. There must also be responsibility on the part of processors, wholesalers, distributors, retailers and consumers. Irish beef should be seen to be produced from grass and quality native grains and it should be clearly labelled as Irish. It is important that we continue to produce traditional Irish beef and forget the huge feed lots in the US and elsewhere. Our producers have a good healthy product to offer and we must proudly label it as Irish beef, safe in the knowledge of its food source of native grains such as rolled or ground barley which, surprisingly, costs more than the nuts which are supposedly the best. Suppliers do not appear to want to be bothered with grains. They are geared towards pellets, the content of which is questionable.

There is no doubt that animals are better fed now than they were previously. However, is there better flavour in the meat? Beef must be portrayed as a healthy, nutritious food with a fresh, green, animal friendly image. We should be proud of the product we produce which, in some areas, is close to organic. Organic farmers would not appreciate that comment but members of the Committee are aware of what we mean. Cattle and sheep reared in the west of Ireland or on hills in remote areas are treated differently from lowland house animals. The land is treated with few chemical fertilisers, if any, and many of the animals are outdoors all year. Who could ask for a more natural product?

Farmers must regain the confidence in themselves and their products which took a severe knock during the angel dust scandals. These practices were carried out by a small percentage of farmers. Media reporting tends to be negative. There is a need for sensationalism in the media which does nothing to help the producer or the consumer. In addition, advertising on radio by drug companies does not help the image of the agriculture industry. The advertisements, which are familiar to most people, are broadcast at a time when farmers are most likely to be at home, that is, lunchtime and tea time. At those times we are treated to the merits of certain products for dealing with maggots, fluke and parasites being blared across the airwaves. This type of advertising is offensive to all and we are not convinced of its merits. In these days of multi-media, there must be other ways to direct the message to farmers.

That is the background to our submission. I thank the Committee for its attention.

Deputy Penrose: I welcome the delegation and thank them for their submission. I cannot disagree with your earlier comments about markets for beef. This country has a strong dependence on exports. About nine of every ten animals produced are exported. Anything that impacts adversely on that trade has tremendous repercussions throughout the country.

Yours is one of the few organisations to emphasise the importance of marketing our beef in Europe. Have you any concerns about the increasing trend in European markets whereby countries are promoting their own products to the detriment of those of their EU partners? This has been particularly evident in the past 15 months.

It is true that farm gate prices have slumped dramatically. Did you carry out any surveys on the impact of that on consumer prices for meat products? Your point with regard to quotas is well made. When Macra na Feirme made a presentation to the Committee, it demonstrated how quotas have had a major impact on entry to farming. They certainly militate against people entering farming, particularly small scale producers. The Santer proposals will accelerate rather than arrest the drift from farming. The number of people leaving farming per year, which is currently 5,000, will increase.

The ICA has been the pioneering group in rural development, particularly with regard to group water schemes and so forth. What are the ICA's current policies in this area? Would you like to see the pilot rural renewal scheme which was introduced in the budget extended across the country, particularly to townlands which have experienced depopulation on a massive scale? Should the scheme be introduced automatically in areas which have experienced a drop of 20 per cent in their populations in the last decade rather than those areas having to wait to be promoted for the scheme?

There is a huge number of unoccupied dwellings in rural towns throughout the country. Would the ICA consider it wise on the part of the Government, from a socio-economic point of view, to introduce a once-off grant for owner occupiers of those dwellings or for their sons or daughters who might occupy them? I am not suggesting that such a scheme should be open to speculators. There are enough grants for speculators. Would grants of, for example, £15,000 be useful to encourage people to return to rural Ireland and promote the attractiveness of living in rural areas? Most of the houses are dilapidated and a once-off grant might be important in regenerating them and introducing life and vibrancy into the surrounding areas.

Ms Hobbs: Grants for doing up old houses would be a great idea and we would strongly support it. It would be preferable to people leaving homesteads derelict and building bungalows beside them or even in front of them. They would be particularly useful for people who have left the area but who wish to move back. Even on that front planning permission can be very unfair in instances where people want to go back to their own area. I can see how people are not allowed go back in and build anywhere they wish but people who want to return to their own area should have the right. In relation to ICA and rural development, this is ICA's rural development agriculture and environment committee and we are probably more involved in rural development than in the others. There are more organisations doing agriculture and doing it better than we can hope to on the budget we work on. The rural development policy advisory group of which I was a member is also involved in rural development. We have sponsorship from Bank of Ireland and we are running a rural development course at our headquarters in An Grianán. We hope to have 27 delegates at that conference who will go back into the counties and use their rural development expertise to facilitate members in each county to avail of anything that is available to them to revitalise the rural areas. I hope that answers some of your questions.

Deputy Ring: I welcome the two ladies and compliment them for coming before the committee. They have made some very good suggestions. I had hoped they would make a case in relation to disadvantage and how women suffer in rural Ireland. On the question of housing Deputy Penrose said people still have to bring water from wells. I deal with victims of that on a daily basis when they come to my clinics complaining about the lack of a proper water scheme in the area. If we want people to live in rural areas and we want those areas to develop the Government will have to make a policy decision to bring these services into rural Ireland. For example, in North Mayo, Barnock East, which has approximately 100 houses. If we get fine weather this summer the women - as opposed to the men who are at work - will suffer as they have to do all the domestic duties as well as bringing water by tractor or by hand. If we want people to remain on the land facilities will have to be improved.

Recently I discussed with Deputy John Bruton the question of old houses in rural Ireland. Perhaps a grant could be made available to people who would come and live in an area but not to farmers who rent them out in the summer months. There is no point in that. As Deputy Penrose said we have too many such schemes. That scheme has created problems for young couples buying land and moving into houses. Where there are old houses, a proper grant of say, £10,000, £50,000 of whatever the case may be, should be paid to young couples with the proviso that if they leave that house within ten years the grant should be repaid to the State. There is nothing wrong with that because if they sell the house part of that grant would be put into their deeds. That would help revitalise rural areas.

The Irish Countrywomen's Association has a major part to play in reversing the decision by Tesco, a few months ago, to ban the sale of Irish beef in Britain. That is something we will have to monitor. If down the road we found that Tesco was not selling Irish beef in its stores in Britain the Irish Countywomen's Association would have a major role to play. Women still do most of the shopping although men are beginning to go shopping on Saturdays. This is the beginning of equal rights and rightly so. Gone are the days where women controlled what happened in the home. The Irish Countrywomen's Association would be able to say to Tesco that if it did not support the sale of Irish beef in Britain the women of Ireland would not support it. That is a message we could send and it is the one I have been preaching on the radio and in the Dáil. We cannot have a situation where Tesco says in Britain that Irish beef is not of the best quality and that British beef is better than Irish beef. It is now telling people, Irish beef is the best beef in the world.

I wish to refer to the question of quotas. A young man who came home from England called on me recently. His mother had one quota of cattle but had not taken up the quota for many years. He took over the land. Since he had not working here and did not have an RSI number he cannot get a quota. That is disgraceful. We should be encouraging such people. There is an old house on the land which he intends to refurbish. He hopes to bring his family back and to take up farming as his livelihood. We are experiencing great difficulty in getting a quota for him. There was a similar problem with the milk quota. I saw small farmers in the west of Ireland who had very small milk quotas. I put down a question in the Dáil and discovered that all the milk quotas went to the big producers. The people who need support are the small producers. I agree with that in relation to quotas. The Irish Countrywomen's Association has a major input to make in Irish society and has done a good job in the past. It is an outlet for women and has helped them express their views. I would like to see the ICA, which is a powerful group, become even more vibrant, express its views and not to be afraid to do what the IFA and other groups have done. I compliment the ICA on its work to date and on its submission to this committee. I hope it will make further submissions on women's issues because in rural Ireland they suffer in relation to the whole infrastructure, schools and so on. It should tell us how we can make life easier for women.

Ms Hobbs: I thank the Deputy for his complimentary remarks. I agree with him in relation to the problem of quotas. We could talk about rural development forever. If we cannot get young people, such as the individual referred to by Deputy Ring, started off in rural Ireland then we are only talking. The point raised about Tesco is one I will bring before our committee and certainly it is something we can get into. I cannot recall the first question.

Deputy Ring: It concerned the water supply and housing.

Ms Hobbs: I concede the submission was a bit vague. One could ask why it is not related more to women. We could have done a lot more in relation to women given that we have been fighting the cause of women in agriculture. and how they get no recognition for what they are doing. We have been discussing that issue for several years and getting nowhere. I agree with the Deputy that in the case of the water problem the woman is left doing the chore.

Deputy Ring: Perhaps the ICA will return on another occasion and deal specifically with women's issues. They receive no payment from the State for staying at home, running farms, helping husbands and so on. These are the issues that concern women which I hear about every day at my clinics. They are not treated properly. The IFA they will be putting the issues in relation to the agricultural aspect. I suggest the ICA come back at some stage with a good submission on what the Government could do to assist women in the home, particularly in rural Ireland.

Ms Hobbs: Women's lives would be better if beef prices were improved and milk quotas were available.

Mr. Ring: I Agree.

Ms. Hobbs: I agree other organisations are doing this. Maybe we should be geared towards -----

Deputy Penrose: The Government is preparing a White Paper on rural development on which it might be appropriate to make submissions as suggested by Deputy Ring, the Chairman and my other colleagues. There are a number of issues in relation to a once-off grant. As Deputy Ring said it is important to stipulate conditions to ensure people remain and that it does not become a speculator's charter. In the forgotten hinterland of rural Ireland, attempts to get water schemes are still like Utopia. There are a number of areas on which the ICA could make submissions. It has made a major contribution and long may it continue to do so.

Senator Callanan: There is more to life than what is happening out there. Emphasis is put here by my colleagues on Government grant aid for X, Y and Z which the quality of life is what matters. Women's participation is important. We cannot see the ICA as a totally rural based organisation now since it includes towns and villages. We are aware of what is happening. Essentially we are talking about the quality of life. I will take issue, if I may, on one matter, that of quotas. The limitation on quotas is affecting many people. I come from Cork where I have noticed a mass exodus from the smaller farming areas. Equally that is happening where there are viable farms. A quota in itself will not preserve the life on the land. One has to see land use relative to supporting people rather than people supporting land. The ICA has the capacity within its organisation to do that. In the wider context of rural Ireland, if one looks at any of our towns, counties or villages one can see in many instances the impoverishment of that community by lack of participation and self help. For as long as we are dependant we will not achieve that quality that we might have if we resolved our own problems. Of course there is a need for central aid but it is not the answer to it. The answer is people achieving for themselves. The presentation you made on economic farming was excellent. I hope you will come back with your enlightened approach and avail of the opportunity of contributing to the white paper on rural development.

Ms. Hobbs: We can no longer consider ICA a rural organisation. We have fifty branches in Dublin alone so the town associations have blended in and we are no longer talking about farmers in rural Ireland but are talking about rural people. That is certainly a point we would agree with. We certainly will make a contribution to the white paper. Thank you for your comments about the organisation. We have been invited on the consultative group so we will certainly have participation in it.

Senator Hayes I commend you on this paper. The points you made are very sensible and good points. A lot of the presentations we hear are followed by details but this is very basic and easy to follow.

I would like to support the points made earlier about getting more people into rural Ireland and the housing grants. Now is the time to do it. The time was never more right now because of the huge increase in house prices in Dublin, younger people that come from the country cannot afford a house in Dublin. With the amount houses throughout the country in derelict condition I believe that is a line we should be thinking on and it would have immense benefit for the country. Since I became a councillor in 1991 for South Tipperary I notice when visiting schools every year regarding the tidy schools competition the drop in numbers consistently in every school. It is actually frightening. People do not realise the consequences of that down the road. This submission helps to foster the idea that we need to bring more people back into rural Ireland because the quality of life that is rural Ireland is like no place else in the world. I do not care where you go and where you look , it is easier to rear your children and do all the things that are normal in life in rural Ireland compared to the cities and built up areas and the problems are indeed a lot less in rural Ireland.

The point you made about butchers' prices has also been made by several people and organisations but nothing every happen about it. That is the problem. What would you think about imposing price control measures on the price of meat because there are times when the price of an animal can vary £100 in any one year with no drop in the price of meat. Nothing has actually happened and people are not getting value for money.

In relation to the quotas I would agree with everything you stated and the non movement of quotas. I came across the situation lately where a widow had a quota of 15,000 gallons and she wanted to give it to her married daughter who had a very small quota of 7,000 or 8,000 gallons but she could not transfer it to the daughter. It is an absolute disgrace. Keeping people in rural who can sustain their livelihoods will not come back with rules like that. I thank you for your submission.

Acting Chairman: That quota with 300,000 or 400,000 gallons is the sad thing about it.

Ms. Hobbs: On price control I do not fully understand the issue. Of course we would be in agreement but it is a contentious issue. There is no doubt there is a huge variance in the price of cattle from time to time and no reflection whatsoever in the butcher shop. No matter how little you are getting for your animal when it is going out the gate, you can still be sure you will £5 a lb. for steak.

Senator Hayes: I never saw a poor butcher.

Ms. Hobbs: Maybe we are pointing the finger too much at them. Perhaps they are buying from a central point and they are dictated to as well. In relation to their quota it is a terrible situation especially people who want to remain in rural Ireland working in the dairying sector.

Acting Chairman: I agree with everything that has been stated already especially the issue of the derelict houses in rural Ireland. Unfortunately it is too late bringing in anything because most of them have been bought up. If you are living within 50 or 60 miles from Dublin, the local people will not be able to compete against people that are able to give £40,000 and £50,000 for a derelict cottage. That is the sad thing about it.

I want to raise the issue of elderly people both married and single living alone with your organisation which has branches in every townland and parish in rural Ireland and particularly the small farmers living in rural Ireland with no water or sewage facilities and in some cases - as I have in my own area of County Meath which is suppose to be a rich and wealthy county but my part is running into county Cavan and Monaghan and Westmeath - no water or sewage facilities and in some cases with no electricity. I would appeal to your organisation to highlight this problem. I have been doing so but I am getting nowhere. It is an issue that should be highlighted. It would not cost the Exchequer too much to give a 100 per cent grant to people who have no basic facilities in their home, particularly the elderly. I compliment the ICA on the great work being done. At this stage I thank Ms Hobbs and Ms Leahy for coming in to assist the committee. I apologise for the delay at the start but unfortunately the other meeting went on for a long time. If the ICA wish to contact the committee, do not hesitate to do so.

Ms Hobbs: Thank you for your time.

Acting Chairman: Would Ms Hobbs care to comment on the point about the elderly.

Ms Hobbs: It is issue we will take on board. The committee will be aware that the ICA has worked with community alert in setting up branches throughout the country for security. Our committee, which is now regenerating and starting a new three years, would be very interested in the other aspect. I will take it on board and bring it back to our chairperson.

The meeting adjourned at 6.00 p.m.

An Comhchoiste um Thalmhaíocht, Bia agus an Mhuir

Joint Committee on Agriculture, Food and the Marine

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Dé Máirt, 7 Aibreán 1998.

Tuesday, 7 April 1998.

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The Joint Committee met at 3.10 p.m.

MEMBERS PRESENT:

Deputy John Ellis (in the Chair)

Apologies received from Deputy Paul Connaughton

Chairman: I apologise for being a couple of minutes late. In regard to item 1 are the minutes of 1 April agreed? Agreed.

I do not know if Members want to deal with item 3 now or leave it until later? The Committee is probably aware from what has been circulated that I have been invited to attend a meeting of chairpersons of the various committees throughout the EU to be held in Rome on 6 and 7 May. I need the approval of the committee before I can attend.

Senator Callanan: I think it is extremely important in regard to the function that you carry out as Chairman of this Committee and for our benefit that you attend. I accordingly propose that.

Chairman: While we are on that subject I think It would be a good idea to allocate ten or 15 minutes some day for Members to discuss travel plans for the committee for the year. There will be no meeting for at least two weeks.

Deputy Finucane: Is there anybody going on the trip with you?

Chairman: I need a minder.

Deputy Finucane: I propose that.

Chairman: Clerks usually travel with every delegation and I take it that will be the accepted procedure. The costings have been put before the committee and I pay tribute to the clerk because he found the cheapest possible fare saving approximately £500 per head.

Deputy Finucane: Would you not like to stay in bed and breakfast accommodation?

Chairman: We are back packing.

Chairman: Having travelled previously with Deputies Finucane and Penrose, I know they are good company.

Deputy Finucane: On a more serious note, what is the actual travel budget available, as it dictates everything?

Chairman: The original allocation is about £10,000, which is an initial allocation to each committee. I take it that, along with other committees, we will seek extra funding. We have £13,000 for travel and £6,000 for consultancy, so we have a budget of £19,000. We will be able to work from that. However, it was made clear at the initial meeting of chairpersons that, if extra funding for travel were needed by any committee, it would be expected to be forthcoming.

We now move to our meeting with the Irish Fish Producers. We have an apology from Deputy Connaughton who is still indisposed.

Presentation by the Irish Fish Producers Organisation

Chairman: On behalf of the committee, I welcome the representatives of the Irish Fish Producers Organisation. I ask the chief executive, Mr. Mark Lochrin, to introduce the other members of the delegation.

Mr. Lochrin: I am accompanied by the chairman, Mr. Seán Doran, from Howth, Mr. Neil Doherty, from Burtonport, and Mr. Brendan O'Rourke, from Dingle. In the material given to the committee, there is a full list of the directors. This is a representative group attending today.

Chairman: You are aware of the procedure of a ten minute presentation followed by a question and answer session? The maximum time available is approximately 50 minutes as we have already lost time having had to deal with other business.

Mr. Lochrin: I thank the committee for inviting us to make a written submission and for inviting us to this meeting to expand upon it. We will stick to the agenda laid down in the briefing material given to committee members. I hope they received the material in advance of the meeting.

Fishing quotas are not just a problem for fishermen. The Common Fisheries Policy is not the sort of concrete achievement Robert Schuman had in mind when he talked of Europe neither being built in an instant nor as one all-embracing construction but rather as a result of concrete achievements based on unity of purpose. The CFP is an elaborate contrivance aimed at institutionalising colonialism and at securing the “what we have we hold” philosophy for those who first held. It is a battlefield, not a cosy club, as Pat the Cope Gallagher, MEP, put it so well recently. There is no element of equity or fair play but a demonstration of raw power. It is the dark side of the European dream. What is being dealt with is something deeply flawed and shameful.

In any discussion of the Common Fisheries Policy, the phrase which is quickly come upon is the rather quaint “relative stability”. It is a fantastic expression given the volcano-like context in which it is set.

There is nothing especially extraordinary about the approach underlying the Common Fisheries Policy. Over the centuries, nations have always competed aggressively for control of natural resources.

There have been two instances where the EU has come up against other nations with significant fishing interests. First was Norway which has twice declined membership of the community. The first rejection was largely on foot of what it assessed the fishing situation within the community to be. The second instance was Canada, and I have given an outline of this in the material circulated to members. Two years ago, the Canadians, having exhausted diplomatic channels, took matters into their own hands and produced a world class diplomatic incident by surrounding a Spanish vessel, the Estai, fishing just outside their own 200 mile limit. It placed the EU, Ireland included, in a position of having to back a member state, Spain, whose behaviour was plainly inexcusable. That produced a situation where Canadian flags were flown around Ireland, not so much because people identified with the Canadian position, more that they empathised with the frustration of the Canadians at the failure of diplomatic channels to produce any sort of result. In both those instances, the EU was shown in a very poor light in this sector.

Whenever the topic of fisheries arises, the predominant reaction is one of perplexity. It all seems so complex, which it is and for a very good reason. One is not meant to understand. There is a great deal of talk about management, but there is no actual management. The system is constructed to diffuse responsibility and is liberally sprinkled with pockets of plausible deniability. When there is a problem and things go wrong, everyone has an explanation, such as "they did not know", "it was not their job", "or someone else should have done something".

It is accepted that, in joining the EU, we were given a bad deal on fisheries. Since then, people have been inclined to make a quick mental leap to the conclusion that it is a done deal and that we should move on. Is it a done deal? We believe it is unsustainable and certainly not without having a huge corrosive influence on standards of public administration right across the EU. Having started on the wrong road, every day brings a fresh contortion. It will have to be revisited.

During the committee's last meeting on fisheries on 18 February, it met the Killybegs Fishermen's Organisation and the Irish South and West Fishermen's Organisation. On that occasion, Deputy Sheehan, who knows a great deal about this sector as he lives in an area with a fishing tradition, at one stage exclaimed in exasperation: “who are we codding and who is codding whom?”. Deputy Sheehan knows about this sector, he lives in an area with a tradition of fishing. He exclaimed in exasperation “who are we codding and who is codding whom?”. The answers to these questions are regrettably quite straightforward and revealing. We are codding ourselves and everyone is codding everybody else.

There is no management and the database is unreliable, those are the two key features we would like you to register. This was fine when only fishermen were compromised but now the circle is widening, as we have set out in the article in a recent newsletter entitled:- "confronting the appalling vista". The political system is facing a Titanic style tragedy: it could survive one or two flooded compartments but after that it has become an inexorable progression as the lines of defence are breached. There are people jumping up and down on the deck at what is happening and we are being treated like steerage.

We have put forward three points for your consideration. We have to look at achieving a rethink, placing the issue on the EU Foreign Policy General Council agenda. It needs a commitment from Government to lie low on the big issues and await its opportunity to pounce. We must commit resources to an information system which puts our negotiators in a commanding position vis-à-vis our counterparts in other member states, the sooner the better, but for the 2000 review in particular. We need to aim at placing managers firmly in the driving seat. I stress managing as opposed to regulating.

As an incidental point, the committee might like to consider recommending that a nominee from the commercial fishing sector be appointed to the EU Economic and Social Committee whose term of office expires next September. The guiding tenet in fisheries matters has to be that with every boat licensed goes an opportunity to operate viably and legally.

When examining prices and fisheries control you will need to refer to the back page of our presentation where we suggest that there is too large a gap between net and fork. To a certain extent there is an opportunity for unilateral action within Ireland, but it is not the only solution; the definitive solution on all fisheries issues requires action at community level. There is some scope at national level on this matter of control in that there is presently an unsustainable situation where control is exclusively concentrated on the catcher. Once the fish is ashore there is carte blanche. We suggest that control resources, which have been augmented in the last year, be applied right across the distribution chain. You will agree that the person who trades in over-quota fish, sells it in his shop, offers it in his restaurant, and that eats it, is as guilty in the depletion of this scarce resource as the man who caught the fish. We would like to see a spread of control. The possibility would then exist of augmenting the price. The combined effects of a downward pressure on price and catching restrictions will drive people out of business. If there are to be catching restrictions then wherever possible there has to be an increase in the price returned to the boat.

The combined effect of these factors is particularly apparent in the whitefish sector where it inhibits investment and has resulted in the current, well documented, dire state of the sector.

Taxation of persons at sea is an issue which goes beyond the fisheries sector. It involves the buoyant state of the economy. Certain sectors of the economy are having difficulties attracting labour. After the last budget, Patrick Campbell, the chairman of Campbell-Bewley, put it well when he described the effect of the budget from his own perspective as marvellous for his company, because corporation tax was reduced, marvellous for himself, as he is a high earner in an executive position, and marvellous for his position as a shareholder, as he would pay less capital gains tax on share disposal. The one area it failed to address was his major business problem - Bewley's cafes employ 20 per cent foreign labour. The issue we are facing is an extension of that. The job into which we are trying to attract people, one which requires greater skills than that required of restaurant staff, does not offer a competitive package. Where we do not have the incentive of a man getting his own boat - because it is becoming an impossible dream for a deckhand to aspire to the wheelhouse - we have to be able to offer attractive working conditions. At present the taxation system treats the crew man in the same fashion as the factory worker. The two working conditions are entirely different. That is an issue which could be extended to many seafarers.

I will be brief on support for enterprise where it is demonstrated. The sector has demonstrated a number of notable instances of enterprise, something of which the founding fathers of the State would be very proud. While we can be justifiably proud of the Intel and Hewlett Packard developments, the enterprise shown in the fishing sector is long-term, sustainable and merits support.

In an era which is radically changed since it made its decision, the Dáil delegated all authority on vessel licensing to the Minister of the day. The committee might like to consider whether the unfettered discretion vested in this one office holder continues to be appropriate. As matters stand, fishermen have zero confidence in due process. Criticisms of present arrangements is, however, tempered by recognition that this is a difficult area. No matter what the system, decisions are likely to be unpalatable and contentious.

Chairman: We have 35 minutes left for Deputies to ask questions after which Mr. Lochrin or another member of the delegation will reply.

Deputy Finucane: I welcome Mr. Lochrin and the delegation to the committee. I have had discussions with Mr. Lochrin in the past and I found the Irish Fish Producers' Organisation Limited helpful.

Pent up frustration seems to emerge when fish quotas are mentioned. The Common Fisheries Policy has been in existence for a few years and it is due to be reviewed in 2002. Mr. Lochrin said we got a bad deal on fisheries. How does he feel about the other European partners, particularly the Dutch and Spanish representatives who have become more aggressive in recent times and who have adopted the attitude of what we have we hold? The Government and all relevant fishing interests will be involved in preparations for the next Common Fisheries Policy. Is Mr. Lochrin optimistic that it will be better than the last one? I am not being pessimistic but I am worried about the Spaniards and the Dutch and about what happened before Christmas on the horse mackerel issue when we were outfoxed. Is there something wrong with the negotiating policy of the Department of the Marine and Natural Resources? Do we wait for the renewal period each December to fight aggressively for what we want? Other European countries are involved in wheeling and dealing behind the scenes.

How would Mr. Lochrin reconcile the objective of an increase in fish quotas with the concerns expressed by another fishery organisation about conservation. The Norwegians have a strict conservation policy. They closed down their fisheries for a period of time in order to build up stocks and they also have a strict licensing regime. We know what is happening off the Irish coastline. Many undersized fish are dumped in the waters and Spanish and Dutch fishermen are becoming aggressive. Mr. Lochrin might try to clarify if an increase in quotas can be reconciled with concerns expressed about conservation.

Many people were disturbed recently by a “Prime Time” feature which showed the aggressive nature of the Spanish fishermen who have better fishing fleets than those used by Irish fishermen. Several people rang to ask me if the situation was as serious as it was portrayed on “Prime Time”. How can we compete with such aggression?

Deputy Sheehan: I welcome the delegation to the committee. We must adopt a more stringent attitude if we want to achieve change in the new policy which will be introduced in 2002. Fisheries were neglected when we became a member of the EEC. No proper register was kept of the exact tonnage of the boats at that time. It was a hit and miss situation as far as fisheries were concerned. We nurtured agriculture but fisheries were neglected. We must adopt an aggressive approach when formulating future fisheries policy. We cannot afford to let our fishermen be harassed on the high seas by other EU partners.

The Minister said he cannot accept a change of law as far as tuna fishing is concerned. He is being fobbed off with the suggestion that dolphins are in danger from Albacore tuna. There is no such thing as a dolphin being in danger from netting Albacore tuna. Dolphins do not associate with Albacore tuna; they only associate with Blue Fin tuna which is caught in the Pacific Ocean. Perhaps a few dolphins might stray off course and arrive in the north Atlantic Ocean but they are not associating with Albacore tuna. The Minister should keep to our method of tuna fishing and refuse to be dictated to by the Spanish and French. The Spanish and French should be allowed to fish for tuna with long lines if they so wish, but we have a history of drift netting since we started tuna fishing. I do not see any reason why that drift netting policy cannot be retained in future discussions with other Marine Ministers in Europe.

Deputy Kelleher: There have been alarming increases in the number of intimidatory attacks by trawlers from other EU countries. Are some EU countries turning a blind eye to the poaching of our fishing stock? Is there adequate policing in other EU states to monitor this situation? While we have a history of trading our fishing policy for agricultural policy over the years, it is time to ensure that proper policing methods are put in place in other EU countries. It is easy for us to say we do not have the resources to patrol our seas, but these fish stocks must be landed somewhere. It seems the Spanish have an official policy to turn a blind eye. I do not understand how flags of convenience can operate in such a blatant fashion and pillage our seas. Perhaps Mr. Lochrin could clarify that.

Deputy Penrose: The term Common Fisheries Policy is a misnomer because it is biased against Ireland. Ireland was totally underdeveloped at the stage it entered the European Community in 1973. Is it not the case that these policies were better suited to the more developed countries, that those countries received larger quotas as a result and that Ireland is now being left out in the cold? Is that a reasonable summary of the position? Is it not the case that we were totally unprepared for the magnitude of the import of our accession to the European Community? Should this matter not be raised by the Department of Foreign Affairs and the Department of the Marine and Natural Resources at EU level? The Amsterdam Treaty represents a further step in the process of European integration. Are we going to solidify the very unfair process which prevails in regard to management and the way in which quotas are allocated?

Mr. Lochrin raised the issue of licences and pointed out that the authority to deal with these matters rests with the Minister of the day. He wondered if it was appropriate that discretion in these matters should continue to lie with one office holder. A Minister's authority in these areas is well defined and delineated since the 1968 Supreme Court decision in the case of a co-operative in east Donegal. A Minister does not have unfettered discretion in these matters and cannot act in a capricious manner. Ministers are obliged to work within clearly defined boundaries and the way in which they exercise their discretion is open to examination. Does Mr. Lochrin think it would be appropriate for such discretion to be vested in someone else?

Senator Callanan: I listened to Mr. Lochrin's comments but I did not hear him refer to conservation boxes around the coast in which stocks would be grown. I would also like him to comment on the recent financial aid package announced by the Minister in regard to the whitefish fleet.

Senator Fergal Quinn: My question refers to the price gap which exists between net and fork. I find there is a very large gap between the price the consumer must pay for the fish and that which the fisherman receives. I do not understand why such a gap exists. Mr. Lochrin referred to controls but I wonder to what extent it is possible for the fishing organisation itself to shorten the price gap. Perhaps it could become part of the channel between the fisherman and the retailer or perhaps the retailer could even be bypassed and the fish sold directly to the consumer.

Mr. Lochrin: Senator Quinn asked whether the gap which exists between net and fork could be tightened. In theory, the system is carefully constructed to impose some responsibility for pricing structures on the fishing organisation but, in practice, anything we do is totally negated. Any step of that nature would involve a concerted action and such action is difficult to achieve given the fact that membership of the various fishery organisations is voluntary and any action we take is easily undermined.

I read recently that when the CAP was being formulated, a similar problem was experienced in regard to small multiple producer units. Agriculture was afforded a period whereby a degree of direction was tolerated. In later years, we seem to have become preoccupied with the need for competition and any kind of concerted action is out of the question. To that extent, fisheries missed the boat at an early stage. A body similar to An Bord Bainne would simply be out of the question in the area of fisheries at the moment.

I agree with Senator Quinn that a more cohesive approach is needed and that comes down to the issue of management. Someone somewhere must take control. That is not necessarily to say that the right decisions would be made all the time but at least someone would be in charge. No such person or body exists in the area of fisheries at the moment.

Senator Fergal Quinn: I thank Mr. Lochrin for his reply. His use of the term “missed the boat” was very appropriate.

Mr. Lochrin: Deputy Finucane referred to a recent “Prime Time” programme on fishing and the aggression exhibited towards fishermen. One could say that the world is becoming a more aggressive place. The aggression being experienced by our members at sea is exactly matched by the aggression displayed in Brussels.

Pat the Cope Gallagher's reference to the CFP as a battlefield, not a cosy club is very true. Any touch of benevolence experienced is bound up with the Commission whereas the Council of Ministers operates on the basis of strict power play. That is why it is crucial for us to get onto the agenda of the General Council. To remain solely in the area of fisheries will render the focus too narrow and technical and we will be completely outgunned. Ultimately, any action taken will always be fixed, irrespective of the level the decision is brought to. This issue demands the engagement of Government and the Minister for Foreign Affairs.

Deputy Sheehan raised a point in regard to tuna with which we would be in full agreement. There are endless items which we could have put on our agenda today but we attempted to restrict it to critical matters. However, the Deputy articulated the precise concerns of fishermen. There is an element of power play involved here; if the tuna issue were merely about fishing, one could perhaps understand it even if one did not totally accept it. However, there are other agendas and broader policy issues at play here. The problems in the tuna fishing industry have been created by a rather motley alliance of environmentalists, uninformed US public representatives playing on a popular theme and the Spanish industry protecting their patch. It is a complicated agenda. The projection that this is a conservation driven measure and that fishermen are being self-interested and greedy is not the issue. If this was purely a fishing issue we would be talking about dividing up the quotas between Spain and ourselves, etc.

Deputy Finucane: It may come down to dividing up the cake but tuna fishing will remain as will the Spaniards with their long line methods. Banning of drift nets is what is at issue. When one talks about drift nets as opposed to long line naturally drift nets allow one to catch more fish and that is what the Spanish are doing?

Mr. Lochrin: Not necessarily. If one has a quota and a reliable information system it really does not matter how one makes the catch.

Deputy Finucane: But the Spaniards will remain in that area with an abundant supply of fish.

Mr. Lochrin: Yes.

Deputy Finucane: The Spanish have won the battle again.

Mr. O'Rourke: They have a purpose built fleet and a tradition going back over 20 years.

Deputy Finucane: This will mean more business for the Spaniards. The poor Irish fisherman will be driven off again.

Mr. Lochrin: The Deputy is correct in relation to what he said about the 1973 situation in so far as the negotiators were obviously flying by the seat of their pants and were up against some very wily customers. The quotas were set in 1983. To put this in context, the tone of the Common Fisheries Policy was set by the original six. One must remember that at that stage the Community was dominated - and some say it is still dominated - by French interests. If one looks carefully at the figures the big share of quotas are in the French direction. I caution Deputies. Obviously the Spanish have received a great deal of bad press, and rightly so, but the French have been masters in operating this system.

The points raised by Deputy Kelleher are dealt with in our written documentation. Deputy Penrose raised the issue of sea fishing boat licences. We make the point that the officeholder has unfettered discretion. I will look into the case referred to by the Deputy. Our experience is that a number of questionable instances arose as a result of his exercising his discretion. There is no evidence of any fettering or any reference to consciousness of due process. Obviously we have a complete difference of experience in that the Deputy is starting from the point that there has been a perceptible trend and due process in the exercise of this discretion. That has not been the experience of the industry. Members will note from the documentation that there has been a great throughput of Ministers who have made it very clear that they reserve entirely unto themselves the discretion of granting or withholding a licence. While the system provides for the Minister acting on the advice of his officials, Ministers have shown themselves to be more than willing to completely override official advice. If the Deputy is in any doubt about the point I will be quite willing to investigate it further. We stand our ground on that point.

On Senator Callanan's point in relation to conservation, he will have heard us talk about management. The whole essence of management is to conserve the stock in which we have a future interest. While we find everything is geared to managing the stock rationally the one thing that is not happening is that the stock is being looked after. It is always the loser. We stand to be the frontline losers.

Senator Callanan: I would have thought that would mean you would put some emphasis on it.

Chairman: If we look at the submission the question of controls and quotas are interlinked with the management of the natural resource.

Senator Callanan: Conservation is a vital part of that package. If Mr. Lochrin can not identify and comment on that then I think we have another agenda.

Mr. Lochrin: I am sorry, Senator.

Chairman: I think there is a slight mix-up. There are quotas and specific sizes with regard to fish that may or may not be taken. Some of our continental friends do not abide by them. I think Mr. Lochrin and his colleagues would be equally as aware as us of the need for fish conservation. If we do not conserve fish we have no tomorrow. There is not much point in taking future catches out today resulting in short term gain and long term loss of employment and resources.

Mr. Lochrin: At the previous meeting with KFO and ISWFO, the Killybegs people dwelt quite extensively on the technical conservation measures. We restricted the agenda and kept to the five points selected by us. The Killybegs delegation dwelt on conservation measures. We are restricting the agenda to the five points which we selected. I would not like the Senator to think that we are not conservation oriented because we did not mention it.

Chairman: The Senator would not think that, he is a man of the world and he will understand from the submissions of the previous two fisheries groups that conservation is as much as an issue to you as sale prices. There is no use in doing away with tomorrow's supplies today.

Senator Callanan: Would the group make a brief comment on the recent Ministerial announcement on the financial package?

Mr. Lochrin: We give an unqualified welcome to the budget measure. As the Minister described it as one arm of a two pronged approach, we are anxiously awaiting the announcement of the second arm.

Chairman: Time has caught up with us. On behalf of the committee members, I thank the group for coming along and I complement them for their ensuring there was very little cross over with the subjects raised by their colleagues who appeared before us previously.

We are endeavouring to find a broad approach to the fisheries programme. I sympathise with the fishermen, I believe our European colleagues are using weight of tonnage and other legal methods to ravage the Irish fishing ground. This committee will be making recommendations to the Minister and to Europe. If we are going to enforce conservation laws, they should be enforced across the community. Everyone should be treated equally. If that were the case we would have a much more vibrant industry which would be able to develop into the next millennium. If we do not protect our tonnage, our natural resources and do not update our fleet, we will be fighting a losing battle as the quality of our fleet leaves much to be desired. The necessary finance has not been reinvested and many people have been slow to reinvest as they were unsure of the capability of the industry to repay investment.

We thank you for your submission and if at any stage in the future you wish to make any submission to the committee on any subject which is affecting you, do not hesitate to contact the clerk of the committee.

Mr. Lochrin: I would like to remind the committee of what they heard today. We hope we have contributed to informing you of the situation in the industry. We also hope to have contributed to policy formulation by commending a number of points for your consideration, and to have assisted in identifying the scope for concrete action by the committee.

After you have considered what you have heard we would like to be as helpful as possible in seeing something come out of these deliberations, even while recognising that much of what goes on is dependent on Europe. There are matters within the scope of this committee to influence. While we raise problems we do not do it to burden the committee with our woes, we are here to make a constructive contribution and will conduct ourselves in that spirit. We will be delighted to offer the committee any necessary assistance in the future.

The representatives withdrew.

The committee suspended at 4.05 p.m. and resumed at 4.10 p.m.

Chairman: On behalf of this committee I welcome the United Farmers' Association. I would ask you to introduce your officials and then give your ten minute presentation which will be followed by a question and answer session.

Presentation by the United Farmers' Association

Mr. O'Callaghan: I am the president of the United Farmers' Association. My colleagues are Mr. Paddy Murphy, Mr. Darren O'Sullivan and Mr. Paul O'Hanlon, national PRO. We wish you all well and we are delighted to be able to address this very important committee. We hope you will be able to take our views on board.

This organisation is a national farming organisation which represents low income farmers and we have officers in almost every county. I have been involved with the organisation since its inception and have seen great strides over the years. We look forward to a great future. I thank the Minister for Agriculture and Food, Mr. Walsh, for appointing one of our members, Mr. Pat Dillon from Galway, to the recently established sheep forum. We would like to have the same input into the dairy sector where the milk quota needs far more public traceability and accountability.

My organisation would like to see that all funding to agriculture should be tiered or modulated in order to direct financial resources to those in most need. This would slow down the exodus from farming and stabilise the rural population. A decent per capita support payment for every farm would encourage young farmers on small holdings to remain in farming.

Clean food production should also be given priority. The current emphasis on volume has damaged the public perception of farmers and our incomes. BSE was directly caused by pushing output to the limit with no regard to quality. Organic products not factory farmed production should be the model for agriculture. A moderately intensive farming system would give good output with undue damage to our water system or environment.

Farming should also take precedence over forestry when land comes on the market. To this end the Land Commission should be reformed and given powers of land designation. Current tax concessions for forestry is unconstitutional as they discriminate against farming.

Small dairy farmers should get maximum assistance to purchase milk quota and to modify their milking parlours and dairies. New hygiene regulations which demand capital input can be the last straw for many marginal dairy farmers.

Mountain sheep farmers should have their incomes protected by standard headage payments that take account of the fact that mountain lambs are lightweight. EU policies which do not recognise this fact discriminate against mountain sheep farmers.

These are only some of the issues that are important to us. We ask you to consider all of them.

Senator Callanan: Mr. O'Callaghan's assessment of the current situation in rural Ireland is correct. The small farmer is becoming isolated and has lost the impetus to provide a reasonable standard of living for the family. Last week in the Seanad I mentioned that Mr. Mansholt visited Killarney in 1969 and he outlined what he thought would happen in the agriculture sector in the future. Since then there has been a progression of what he outlined. At the rate we are going there will only be 25,000 farmers left in Ireland in ten year's time. This is an undesirable situation and small farmers should receive every support possible. If we want to keep rural communities alive exotic and quaint farming interests is not the way to do it. There is nothing more beneficial to the small farmer than the dairy industry. The UFA emphasise that the ideal model for farming is organic farming not factory farm production. You also state that “a moderately intensive farming system would give good output with undue damage to our environment”.

Irish farming consists of far flung areas with small producers, for example, west Kerry, etc. and sometimes the co-operatives put pressure on dairy farmers. Do you think there should be a milk subsidy for milk collection of about 4p per gallon? Dairy farmers with 100 or more cows will feel they are subsidising the small milk producer.

You also mention the new hygiene regulations which require capital investment by small farmers. This is a fact of life and the re-introduction of grants for it is essential.

There is also a voluntary exodus of farmers from the agriculture sector. It would be more desirable if more small farmers decided to stay on their land and so maintain food production and the surrounding rural community. I would like to hear Mr. O'Callaghan's views on my comments.

Deputy Brady: I too welcome the United Farmers' Association here today and compliment them on their submission.

Coming from a farming background and one of 11 reared on a very small farm I know the importance of keeping small farmers in tact. Unfortunately over the past few years we have seen too many small farmers die out and that is very sad. I thoroughly agree with the Association on the policy situation. Coming from County Meath which is suppose to have the best land it grieves me very much to see the amount of good land going into forestry. It is a shame and it should not be allowed. Two hundred acres of the best land in County Meath is being used for tree planting at present. It is deplorable. At the same time, small farmers who are trying to get land cannot do so. Any small parcels of land coming on the market are being bought by business people and that is a shame. I fully support the Association's views on that.

We all know the Land Commission did some good and some bad things but I do not think it should have been abolished. Some structure should be in place to help when small farmers need land and when parcels of land are for sale these professional people should not be allowed buy them. As extra quotas are the only hope for small dairy farmers every assistance and help should be given to ensure they are provided to keep them in tact.

Deputy Sheehan: Like other speakers I too welcome Mr. Michael O'Callaghan and his deputation here today. Mr. O'Callaghan has played a very significant role in promoting the interests of the small holders throughout the country. This is something which we should not lose sight of because if we are not going to nurture and preserve the small holders there will be no future in agriculture. We will end up in a situation with parish ranchers in every parish. It should be highlighted that a small farmer is as important as a big farmer because he is contributing to the life of the area, to the small shopkeeper, to the publican, the post office and so on. If we allow small farmers to die out, and it looks that way, we are barking up the wrong tree.

All funding to agriculture should be tiered in order to direct the financial resources to those most in need. That is the most important line in Mr. O'Callaghan's opening address. Clean food production should be given priority also. I am a firm believer that we are the only island nation in Europe since Great Britain was joined by the Channel Tunnel to mainland Europe and whereas islands always get preferential treatment we do not seem to be getting any from the European table when it comes to dividing the cake. Ireland entered Europe under the impression that we were going to become the natural bread basket of Europe, i.e. there would be such a demand for our clean, clear produce from our natural farms throughout the country that we would benefit wholeheartedly from that. Apparently it has acted against us. I support the Association's views in that regard.

Farming should take precedence over forestry but it boils down to a matter of money. Many farmers are going for the financial end of it and if there were any compensation that could be given to these farmers to preserve the status quo-----

Chairman: Sorry, Deputy Sheehan, I do not want to interrupt you but five of your colleagues have to contribute after you. I want to have enough time for Mr. O'Callaghan to reply. Perhaps you might ask a direct question.

Deputy Sheehan: The Chairman does not understand that I was born on a 30 acres small mountain farm in west Cork and I still have that farm to my name.

Chairman: The Deputy thinks I do not understand and that is a mistake.

Deputy Sheehan: I collected milk from 13 farmers at a shilling a day and do not tell me what it is like to survive on a small farm. Hygiene grants should be reintroduced immediately. How will a small farmer meet his requirements in the REP scheme if the hygiene grants are not reintroduced? It is a complete nonsense if that is not done and, of course, the reintroduction of the farm installation aid grant. That is very important.

Last year there were almost 500 students at agricultural colleges throughout Munster. There is not a fraction of that number enrolled this year because interest was completely lost when the farm installation aid grants were withdrawn. Farmers cannot afford to pay the transfer rate of transferring land to their sons unless they get the subsidy from Europe. I agree with the five points outlined by the Association and I understand it has the interests at heart of farmers who are trying to eke out a living on small farms.

Deputy Ring: I welcome the United Farmers' Association; I am glad to see them here today. For many years I have felt the small farmers with low incomes have not been represented by many farming organisations. I hope more small farmers will support and join the Association and realise that their best interests lie with the people who represent them.

I agree with the points made on forestry. There are parts of Mayo with so much forestry that the only ones who can go from tree to tree and forest to forest are the monkeys. It is a major problem. This happened in the REPS and I was glad the Government stepped in even though it damaged some farmers. In relation to REPS there were some businessmen in Dublin who leased land in the West and were getting paid REPS for it and the same with forestry. There were farmers in the West who could not get that land to try to develop the little bit of land they had and this is a serious situation.

The Government introduced the ten acre ruling in relation to farmers. The ruling should have been used in relation to people who were getting headage or premia payments over the past ten years because those people were actually involved in farming. There is a major problem particularly in Connemara, in Achill and in Mayo because of the ten acre rule. I was glad to hear the comments on the sheep sector and particularly the mountainous sector because in my constituency of Mayo those sectors have suffered over the years. In regard to the lambs and the bad prices at the end of the year there should be income protection for the farmers. There should be special needs for the farmers because there is nobody representing them. The sheep sector was the only one that Santer did not refer to in his recent proposals but I am sure he has something in mind for them; that he will not leave them untouched as well.

I want to see the Association being more active and fight on behalf of the small farmers because they are being squeezed by the business sector, the bigger farmers and the Department of Agriculture and Food. The Department does not want them as they are only a nuisance in terms of headage payments, etc. The delegation's organisation should fight for them and do whatever it can because there is a major problem with small farmers. Deputy Sheehan is right. In the case of farmers with young families, where one son would have stayed at home to take over the farm, they will not do it any longer. If they go to school, receive an education, get a job and see what is happening in the world, they will not return to agriculture and, like their parents, work seven days a week for nothing. That is what is happening and I do not know how they will be saved or what will be done with them. I am glad the delegation is here today fighting for them. Other organisations are more interested in big farmers and the beef sector and not in rural Ireland, which is what we are interested in.

Deputy Penrose: I am delighted the delegation has an opportunity to present its proposals to the committee. It is important a sense of perspective is kept and that the process of making submissions is inclusive and not confined to one or two particular organisations.

If we receive over £1 billion in income supports and subsidies to farmers every year, it is important we critically examine how these are allocated. One of the major objectives of the reforms was the retention of the maximum number of farm families on the land in rural Ireland. Some 5,000 families have been lost per annum since then, which is almost 100 per week. That is an indictment of current policy and it must be tackled; it cannot be allowed continue. Small farmers at the bottom of the pile are being lost and I know for a fact that that is happening across the midlands. This will continue to happen unless the subsidies are reformed. There must be maximum discretion at governmental and departmental level to ensure the distribution of these funds to those most in need. This must be an aggregation of all funding for farming rather than being part of various schemes. There should also be some form of assurance that those most in need of it are the recipients of the aid. That was the focus of the policy but it has failed. Anyone who says otherwise is not adhering to the true facts.

I agree with my colleagues that the real crux of rural degeneration and depopulation is the flight from the land and I issued a few statements on it in the past weeks. However, it is all interlinked. The fabric of rural society has been and is being damaged because of the direction in which policies have been focused in the past. Not enough thought has been given to this. The rot started in 1973 because we were not properly prepared for entry into the European Union. We accepted a system which was suited to the larger member states and we are now reaping the results and adverse impact of that.

We should examine the possibility of a land authority which would have a number of roles. It would primarily deal with the situation which has developed where land coming on the market is often bought by companies and large farmers - the cheque book brigade. Small farmers are bid out of existence when attempting to secure additional land. Something must be done in that regard. The abolition of the Land Commission has had a major negative impact on those small farmers.

At £5,600 per annum, installation aid was the cheapest means of ensuring young people stayed on the land. Any job secured by IDA Ireland costs £12,000 to £13,000, so the aid cost less than half that per person. Only 6,000 young people would have been involved so the scheme would only have cost about £6 million, which is cheap. Its reinstatement is something on which the delegation should focus in terms of its policy formation.

The drift is towards aggregation of holdings and a diminution in the number of farmers. There were 220,000 farmers in the mid-1970s and that is now less than 100,000. Many of these are in the beef area and they have had three to four troubled years. It has been especially disastrous for winter fatteners. Many are making up their minds as we have this meeting. It worries me that the number of full-time farmers will have reduced to 40,000 by 2010 if the drift is allowed continue. We all have a role to play and I thank the delegation for giving us the opportunity to hear its views.

Senator T. Hayes: I join with colleagues in welcoming the members of the United Farmers' Association. I am delighted they have the opportunity to put their points to us.

I feel very strongly about the situation concerning quotas. I believe the nettle has not been grasped in this country as regards the value of quotas to smaller farmers and the impossibility of small and young farmers obtaining quota. As a nation, we should fight more strongly on this issue in Europe and there is an ideal opportunity in the proposals to make such a better case for younger farmers. I came across a situation in the past few weeks where a widow wanted to pass a small quota to her daughter and son-in-law who had a very small quota and were under severe pressure. The addition of this quota would have made them solvent but it could not happen and that is disgraceful. It is perhaps something on which the organisation should focus.

The delegation stated it would like financial resources to be tiered. Where would this begin? At what level of quota for a dairy farmer or premia for a beef farmer would this happen? Much has been spoken of big and small farmers but it is not the size of farms rather the size of quotas and the amount of premia which can be collected which differentiates people.

While some may be critical of the REP scheme, I have a certain regard for it, although not everything is right with it. Since people find it difficult to enter into the growing of organic food because of the time lag and the fact they have no income for a few years, what would the delegation's organisation think of a special stamp being placed on food produced under the REP scheme? The cleanest and best food next to organic is produced under the scheme, yet it is placed side by side in the marketplace with food produced using more intensive methods. This is unfair to farmers who are serious about REPS. It is something the Government must examine and which I will push for. I have spoken about this and people who have listened consider it a good idea. It is an idea well worth examining and I ask the delegation's organisation to do so because some organisation will eventually adopt the idea.

There has been criticism of the considerable amount of land being planted for forestry, much of which has taken place in poorer areas. It is an absolute disgrace that some of the finest land in Ireland and in the world is being planted. These people are being well paid to plant the land so they will go where they get the most money. What proposals are there to stop this practice?

Deputy M. Kitt: I welcome the United Farmers' Association. I am glad it is recognised by the Department and the Minister because that is important. I welcome the fact that a Galway man is on the sheep committee. I am glad it represents small holders who feel they are not represented by other farming organisations.

As regards the reformation of the Land Commission, a White Paper was published in 1980 which recommended the establishment of a land agency. However, that idea was not followed through. I like the suggestion that land should be designated, particularly in relation to forestry, because people cannot acquire land now as a result of high land prices.

I support what has been said about dairy hygiene, farm installation and control of farmyard pollution schemes. There should be capital schemes for farm buildings because small dairy farmers and farmers taking over land need such help.

I agree with the comments about mountain sheep farms. However, we should look at sheep farming in general because, as Deputy Ring said, it was not mentioned in the Santer proposals. Extensification proposals for sheep have been put forward, particularly by the IFA. I know the delegation has different views on other issues, but this should be followed up because sheep farmers have also taken a cut in income.

Senator O'Brien: I welcome the United Farmers' Association to the meeting. I agree that clean food production should be given priority. Dairy hygiene and control of farmyard pollution grants should be reinstated as soon as possible. Pollution of our rivers and lakes is becoming a big problem, particularly in my constituency of Cavan-Monaghan. Farmers, particularly small farmers, must be given assistance to provide pollution control facilities. I do not believe the Land Commission will be re-established.

As regards dairy farmers, what do we regard as a small dairy farmer? It is not good for politicians or for a Government to decide what is a small farmer or a small farm. When quotas were introduced in 1983, a 20,000 gallon quota on a farm of 30 or 40 acres was enough to make it viable. Now a 40,000 gallon quota on 60 acres may not be enough to make a farm viable. The farming organisations must decide what is a small farm. There is off-farm employment in beef and other agricultural sectors but dairy farming is a full time job. We must decide sooner or later what type of small farm should be supported to make it viable.

Deputy Blaney: I welcome the United Farmers' Association to the meeting. I agree that a tiered system of farming should have been introduced years ago because small farmers took the brunt of whatever happened in the agricultural sector while larger farmers cashed in on subsidies. Some 20 per cent of farmers took 80 per cent of the grants. I come from a small farming county where there are a number of branches of the United Farmers' Association. I am a small farmer so I know the problems experienced by them.

I agree that farming should take precedence over forestry. We are going overboard as far as forestry is concerned. If small farmers got more incentives than they have at present, there would be less for forestry.

We all agree that we should strive to encourage and achieve clean food production. Small dairy farmers should be given maximum assistance. They are not able to compete with larger farmers regardless of the type of farming in which they are involved. The sooner we change this situation the better.

I agree that mountain sheep farmers should have their incomes protected by standard headage payments. This matter was brought home to us recently when subsidies to sheep farmers were cut, although they were eventually restored by the Minister for Agriculture and Food. In addition to lightweight lambs, there are also less lambs per ewe. Hill sheep farmers now have lighter and less lambs and are, therefore, unable to cash in on extra prices.

Chairman: I know we are taking up your time, Mr. O'Callaghan, but it is important for members to have the opportunity to ask questions. You can be as brief as you like when replying.

Senator R. Kiely: I am delighted that Mr. Michael O'Callaghan is here. I appreciate the problems faced by the United Farmers' Association and I congratulate it for fighting for the small farmers. It has a difficult task in trying to get a reasonable income for small farmers. As Deputy Blaney said, big farmers with large numbers of cattle are creaming off headage payments. Small dairy farmers need a bigger quota but where will it come from? The only hope is to get extra quota from the EU and we should fight hard for that.

A neighbouring farmer of mine sold his stock and is planting his land for forestry. His land is good and would be better utilised in beef or milk production rather than forestry. What is Mr. O'Callaghan's opinion on the recent 20 per cent increase in the clawback? It will help the situation where good land is acquired for forestry because farmers are paid for it with the increase in clawback.

Mr. O'Callaghan: Many interesting questions have been posed, the first of which related to the organic sector. As an island nation, examples should be made of people, such as Darina Allen, who passionately believe in our good food and there should be niche marketing higher up the ladder. Farming has received a bad name, as we attempt to put BSE behind us. As a farming leader, I know we have to be involved beyond the farm gate and we must be concerned about the quality of food as producers. There must be standards and one must be able to monitor food quality so that it stands up to certain regulations. This would result in a decent price.

The organic model referred to in our submission is a good one. I am not naive as I have farmed all my life but this model is better than the system we have been involved in through the years, which has led to difficulties. We have failed in stemming the tide from areas of diversity among small farmers because since we joined the Community everything has tended towards specialisation and growth. Diversity was lost in the hills and mountains where there were many farmyard enterprises. Members and myself visit those places on a regular basis but they are becoming fewer. There were two meetings in regard to smallholders in Athlone yesterday and it was recognised that many of these farms will be passed on and local enterprise boards, etc., should help out. Professor Jim Phelan presented a paper which the committee should obtain. Reference was made to the need for more grants but they have gone to a small group of well off people. I am not a begrudger but an optimist and I am decent, very generous person. My organisation is trying to stem the tide against the small family farm, but grants are given to people already making an investment. Certain people are hanging on by the skin of their teeth but their contribution must be recognised.

Professor Tom Raftery described some farmers as “dog and stick men”. I prefer to have a “dog and stick” man producing food than factory farms. However, it is a time for re-focusing. I attended a conference recently in conjunction with other farming organisations where one speaker referred to farmers as “business people.” Farming is a culture and if one loses that to replace it with business, anything goes. Our special farming culture should be marketed and developed in Europe. With the advent of the single currency, there is a probability of a greater attack on rural areas and there are no better examples than west Cork or Connemara where quiet, decent people have lived for years and then discovered they are in a SAC without consultation. That is not done in any other sector. These people have lived through change where different groups have come to live in their communities with a resultant increase in land value. There is a huge challenge involved if we have the political will to tackle it.

Many Members come from rural areas and know if people leave they will not come back. There have been great champions, such as Fr. Harry Bohan, who kept trotting out the message. We have many friends in Europe and I attended a conference in Brussels for the first time recently where all the small farming organisations in Europe were gathered in one room. The Norwegians, who are not in the Community, pointed out they have a model of tiered pricing. The committee should check out that system and I wish I had greater research facilities to do so. However, people, such as Neil Blaney, former Minister for Agriculture, and Jerome O'Shea, former secretary of the ICMSA, could put together a system of tiered system prior to the computer age and in today's world it should be simple to do so but there must be political will to do it. Farmers are going out of business even though dairy farms are resources. For example, imagine a petrol station which had been selling 8,000 gallons per week is asked to survive on 5 gallons per week. Farms with milking parlours can produce more milk but the smallholders are tied to low production levels while they see neighbours continuing to grow through greed. When one sees decent people being left behind in a race, it is not fair and rules must be put in place.

Another issue of importance is a land and quota authority. We do not need journalists to rake up stories if we are not prepared to have a transparent system. I served on a co-operative which was the subject of an EU investigation and there is speculation that it was not the only one that fiddled milk quota. This is a national resource which was won by people, such as Garret FitzGerald in Europe. They went to all the capitals of Europe and won concessions for Ireland which are now melting away in front of us. The Santer proposals should not drive fear into people's hearts, but be used as an opportunity to reform, change and gear price supports in their favour. As Deputy Sheehan has often said, if the supports are not replaced, there will be bullocks, briars and bachelors. There will not be a viable rural Ireland with that type of proposition.

Chairman: Regrettably, we have run out of time. Perhaps Mr. O'Callaghan and the PRO, Mr. Paul O'Hanlon, could reply in writing to the questions they have not had time to answer. The replies will be circulated to the members of the committee.

The problems associated with small farms and the other difficulties highlighted today, such as forestry, exist in my part of the country. It is obvious from the group's presentation that the only hope of survival is to ensure that whatever quota adjustments are made are aimed at small and younger farmers. A tiered pricing system in the national envelope may be the only way to protect small farmers and to ensure that rural communities have a future. As members said, we do not want farms consisting of entire parishes. The committee would appreciate it if Mr. O'Callaghan replied in writing to the various questions that were not reached. The responses will be circulated to members. The association should not feel shy about making submissions to the committee in the future. Such submissions would be appreciated and the committee hopes it will have the pleasure of meeting the association at least once a year. It is important the members of the committee are fully briefed by all the farming organisations on a regular basis. This gives us a broader insight into the problems. I apologise that the meeting must be curtailed due to lack of time.

Mr. O'Callaghan: I appreciate all the points raised by the members. I will supply written replies on behalf of the organisation to all the questions raised. I thank the committee and I wish it every success. It has a huge role to play and we look forward to appearing before it again in the future. I point out that the youngest member of the delegation, Mr. Darren O'Sullivan, is farming a 30 acre holding. I do not know how many young farmers appear before committees but he is living proof of the existence of small family farms. I thank the committee.

The representatives withdrew.

Business of Joint Committee.

Chairman: The chairman and representatives of Bord Bia will appear before the committee on Wednesday, 29 April at 4 p.m. Members have an opportunity to prepare questions for them between now and then.

Two Bills, the Merchant Shipping (Miscellaneous Provisions) Bill, 1997, and the Plant Varieties (Proprietary Rights) (Amendment) Bill, 1997, will come before the Select Committee soon. I hope these technical Bills can be dealt with early in May.

The Joint Committee adjourned at 5.05 p.m. sine die.

AN COMHCHOISTE UM THALMHAÍOCHT, BIA AGUS AN MHUIR

JOINT COMMITTEE ON AGRICULTURE, FOOD AND THE MARINE

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Dé Céadaoin, 22 Aibreán 1998.

Wednesday, 22 April 1998.

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The Joint Committee met at 9.40 a.m.

MEMBERS PRESENT:

Deputy John Ellis (in the Chair)

Apologies received from Deputy John Browne (Wexford)

Chairman: Are the minutes of 7 April agreed? Agreed.

Presentation by Representatives of the Department of Agriculture and Food

Chairman: I welcome officials from the Department of Agriculture and Food and their names are Mr. Seamus Healy, Assistant Secretary; Ms Bríd Cannon, Principal Officer, National Beef Assurance Division and Mr. Liam Fitzgerald, Principal Officer, ERAD Division. Three weeks ago we had a meeting with the livestock traders and they expressed grave concerns with regards to proposed regulations. At 11 a.m. on the morning of the meeting we requested a copy of the draft regulations from the Department. If Members look at a letter sent to Mr. Roycroft, clerk of the committee by the Secretary of the Department you will note that the time of our request is being disputed. I know that the request was made at that time on that day because I specifically asked the clerk to do it. There was also a request made that afternoon. As we received no reply to the first request we feel it was an unintentional snub to the committee. Departments should furnish documents when an Oireachtas committee requests them. I suggest we have a ten minute submission from the Department's officials followed by an hour long question and answer session.

Mr. Healy: On the first issue I can confirm we received a request in another section. The person who received the telephone call did not know that the committee was meeting and there was no intention to be uncooperative or ungracious.

We have circulated a background note with copies of the current regulations. We have also circulated an extract from the Council Directive on which the proposed regulations are based. These regulations must be seen in the context of a series of regulations and directives which have been adopted at European level by the Council and the Commission dealing with a range of related issues. These issues include: the regulation of trade; animal diseases and how they are to be dealt with; the welfare of animals in transport; the registration of persons dealing or trading in animals and identification, registration and tracing of the movement of animals and cattle in particular. These measures are designed to raise the standards of animal health and welfare in the EU, to regulate and facilitate trade within the EU and to provide mechanisms for tracing cattle by maintaining records. All of this is in the context of providing the necessary reassurance to consumers, dealing with the outbreak of diseases and, improving the operation of premia and headage schemes.

In the first paragraph of the submission I have listed some of the more relevant Council and Commission directives and regulations. I do not propose to go through them in detail at this stage. We have circulated copies of the draft regulations as well as the relevant extracts from Council Directive 97/12. The draft regulations also refer to other EU and national legislation where they apply to dealers. All States must transpose this Directive into legislation in sufficient time to allow the provisions of the Directive to come into operation from 1 July. Failure to do so would be a serious breach of our obligations under the Treaty, in particular Article 169, and would leave Ireland open to proceedings in the European Court of Justice. The Commission has a procedure in place whereby it checks the implementation of community legislation and constantly chases States which fail to transpose the legislation or do so in a less than substantial way. We would also leave ourselves open to the possibility that anyone in the EU who felt aggrieved could take a case for damages for any losses that they might claim to have incurred by an unregulated arrangement. More seriously our exporters could face difficulties in exporting cattle to the Continent.

It is essential that everyone engaged in buying and selling cattle must be registered and identifiable if we are to have an effective and viable cattle movement monitoring system and national beef assurance scheme, which we are in the process of finalising so as to provide the necessary degree of reassurance to consumers and customers.

The regulations are in draft form. They are working documents and the final form will be settled by the Parliamentary Draftsman's Office and the Attorney General. We have asked the Draftsman's Office and the Attorney General's office to finalise the regulations. These Offices may throw out the draft we have circulated or they may amend, add or delete sections. However, the new regulations will have to provide for the essential provisions of Article 13 of the annex to Directive 97/12. Article 189 of the Treaty of Rome provides that: “A Directive shall be binding, as to the result to be achieved upon each member state to which it is addressed but shall leave to the national authorities the choice of form and methods”. We have no alternative but to transpose what is included in the directive and, in particular, what is in Article 13 concerning dealers.

Other elements of the Directive are in the process of being transposed and will be the subject of separate legislation. Article 13 of the annex to Directive 97/12 includes various requirements which must be applied from 1 July 1998. In the submission we went through the relevant sections of the draft Regulations. I do not propose to do that at this stage other than to say that what is provided for in Article 13 is as follows: Member States must ensure that dealers are registered, approved and issued with approval numbers; dealers must deal only with animals that are properly identified and come from TB, brucellosis and leukosis-free herds, although there are some exceptions provided for. There is a provision that dealers must maintain records relating to animals dealt with, persons from or to whom animals are bought or sold, records of transporters of animals and, in particular, copies of route plans or health certificates. There is a further provision in relation to premises. In particular, there are requirements that premises used by dealers must be registered, given approval numbers, meet certain specifications relating to capacity and facilities and must be capable of being cleaned as required by an official vet. There is also a provision that where animals are kept on a premises, those looking after them must have appropriate training in animal welfare and meet the other requirements of the regulations.

We have no alternative but to implement the provisions of this Directive. In any event it is essential that all persons trading in cattle must be registered if we are to have an effective tracing system, address animal disease problems and provide the necessary reassurance to customers and consumers. Implementation of the Directive is also essential to maintain our access to the continental market, to avoid being hauled before the European Court of Justice by the Commission and to avoid being sued for compensation by any aggrieved people.

The new measures I have mentioned will not impose major additional problems for dealers. They require that dealers be approved and registered and operate under an approval number. They must maintain records of people from whom they buy cattle. They must maintain records of animals. They must ensure they have appropriate facilities and premises to ensure the welfare and protection of animals. They are not major impositions nor are they requirements that can be avoided if we are to provide the necessary degree of reassurance to others.

Dealers are not alone in being required to maintain records in relation to animals bought and sold. There are requirements on farmers to keep herd registers and in the near future they will be required to notify the Department of movements on and off their farms. It is not that dealers are being singled out, rather they are part of an overall package designed to reassure consumers, to deal with diseases and to ensure that premium and headage schemes operate satisfactorily.

The Secretary-General of the Department met representatives of dealers almost two weeks ago and went through the proposed regulations in some detail. Our interpretation of the dealers' concerns is that that they have particular concerns about operational aspects of the proposed regulations and they expressed considerable concern about the impositions in relation to the requirement that they would have to get precise details of the cattle they purchase and the standard that might be imposed in relation to premises.

On the first issue, it will be a requirement that farmers and anyone else dealing with cattle will have to know the source of the cattle and this is a specific provision in the legislation. We have undertaken nonetheless to see whether, in the case of cattle bought at marts, the marts can facilitate the provision of information as to the origin of cattle. It will be an essential requirement that dealers will have to secure the names and addresses of people from whom they have bought. Without it we lose traceability and we will not be in a position to have a computerised monitoring system or a beef assurance scheme. We have also undertaken that if the representatives of the dealers wish we will meet them at an early stage.

Chairman: The directive 97/12 relates to intra-community trade in bovine animals and swine and I presume that is the regulation that applies to trade between member states.

Mr. Healy: Yes.

Chairman: Therefore, we are imposing the intra-community regulations for internal trade nationally.

Mr. Healy: No. Directive 64/432 which is referred to in the annex deals with international trade but it also has many provisions dealing with national measures. For example, it sets out the arrangements for dealing with TB, brucellosis and other measures.

Chairman: I understand that. We already have those regulations for dealing with notifiable diseases. What is being proposed is that the regulations for intra-community trade will apply to national trade. We already have health regulations which have been in place for some time. The proposal is that intra-community trading regulations would appear to be imposed on national trade. Have we a right to have different regulations for national and international trading?

Mr. Healy: I dispute the interpretation that this applies only to intra-community rules and not to national rules. The various provisions must be taken individually. Article 13 obliges us specifically to implement various measures. This has been discussed at several meetings of the working groups at Council level and at Council. Although it was adopted in March 1997 it was adopted under the Dutch and not the Irish presidency. Our understanding of the text is that there are some provisions that apply to intra-community trade and others which must be applied nationally, whether we trade or not.

Chairman: I agree but some of the conditions and regulations for intra-community trade should not be applied to national trade. We would appreciate if you could examine this. There is a difference between those who trade internationally and nationally.

Everybody has been waiting for computerisation and it has been promised by the Department on three or four occasions over the past four or five years. Is there a definite date when it will be in place? A proper computerised system would allow traceability to be automatic, as is the case in the North, whereby one can go to the Department of Agriculture Northern Ireland with a tag number and get immediate details of the location of the animal.

Mr. Healy: I am not sure the DANI system is quite as good as that.

Chairman: I have seen it work. As a member of another committee I paid a visit to DANI and saw the system in operation as I described.

Mr. Healy: I accept it is a good system which has proved its worth with some of the market reopening. However, I will not debate the pros and cons of it.

Chairman: We want a date.

Mr. Healy: We have a date for the autumn but we are relying on a series of groups to co-operate. We have linked virtually all the marts to the central system. We are in process of putting PCs into the marts and that will be followed by linking their clients with our herd number identification file. That will be done in the coming months. We already have links to the meat plants and we have to extend them to ensure that the system works in the meat plants. We have tenders on hand for dealing with the farm notifications and for some additional programming work. Assuming there is co-operation on all fronts, we expect the system will commence in the autumn.

Chairman: Can Mr. Healy give an approximate target date?

Mr. Healy: The system will almost certainly be phased in. This is probably one of the biggest programmes ever undertaken in the Civil Service. I cannot give a precise date because it will depend on the co-operation of people, and there is resistance from dealers who do not want to keep records.

Chairman: Mr. Healy should be aware that all dealers in the past eight to ten years have been responsible for maintaining registers of the cattle they handle.

Mr. Healy: That is why I have difficulty in understanding why they continue to have difficulty.

Chairman: Mr. Healy said there is resistance from dealers at the moment regarding the maintaining of these registers. I know they must maintain them, otherwise they would be in serious trouble with the Department. Therefore, I do not think it is fair to say there is resistance on the part of these dealers because they have been implementing these requirements.

Mr. Healy: There were objections raised at the meeting.

Chairman: That is what we are talking about. Obviously there is a need for two types of operation. There should be national and international requirements.

Mr. Healy: In our view, a differentiation cannot be made between the national and international trade regarding the requirements under Article 13.

Chairman: Article 13 makes provision for different requirements.

Deputy M. Kitt: I welcome Mr. Healy. We have had a number of meetings with dealers in the west and north west. One of the points they made was that anyone except dealers could move heifers about. Despite what Mr. Healy has said, dealers, mart managers and farmers feel they are being discriminated against. Firstly, would it be possible to defer EU directives until full computerisation takes place and, secondly, if these directives are implemented will there be financial assistance for dealers to operate such a scheme? Even though dealers have said they want to eradicate brucellosis, it is a problem for dealers, in particular for farmers, that the 30-day test is not working out.

Chairman: I was hoping to take 15 minutes at the end of the meeting to try to deal with the 30-day test which is causing problems.

Deputy M. Kitt: I wanted to include how other jurisdictions operate that test.

Deputy Connaughton: I welcome the Department of Agriculture officials. This is a good way to do business before decisions are taken.

This is a huge issue throughout the country. I accept that we must implement Article 13 to some degree. I have spent a lifetime in the livestock trade so I think I have some experience about how the system works. I worry greatly that if we introduce too restrictive rules in the area of livestock trading we will cripple the marts. I want to make it clear that in the economic progress made in agriculture, the marts have played their part down through the years. They have afforded an opportunity for people to get the best possible price for their cattle and sheep on the day. If the factories or supermarkets through the new sourcing system get a monopoly, many people will have a smaller income at the end of the year. I must put on record that I do not like what is happening. In so far as the marts system is concerned, there could not be a better controlled environment. Firstly, the system is controlled by Department of Agriculture officials for whom a building must be provided by every mart in the country. Those officials check every single card on record in the mart. Secondly, the hygiene regulations are of the highest possible standard. Animal welfare has improved enormously. There has been a huge transformation in marts and in the way cattle are treated in the past ten years. Disease control is monitored every day at every mart under the watchful eye of Department of Agriculture officials. There are component parts at marts every day: first, there are the farmers and, second, there are the cattle. In order for the system to work there must be people who want to buy the cattle. If impediments are put in the way of too many dealers, there will be less hands going up as cattle are passing through the mart and eventually farmers will decide not to attend marts. I ask the Department of Agriculture officials to keep that in mind. This requirement must be tightened up and 95 per cent of people will obey the law. There is good and bad in every profession and a small number of dealers, like every other profession, broke the rules but 95 per cent of people did a good job in the area of agriculture. I believe that everyone will be crucified for the sins of a few. In so far as traceability is concerned, I have been informed by many sources over the years that it will be possible to trace the whereabouts of our seven million cattle by way of computer at any one time.

A few days ago the National Food Safety Authority attended the committee. We had discussions on the importance of having a mechanism in place in this country whereby we can stand over our beef, be it carcase meat or live cattle, wherever it is distributed. I am fearful that we will have three or four parallel lines. It will mean that people will have to do very difficult things in order to trade whereas one thing, done properly, would suffice.

My understanding of what will happen is that animals must first be booked into a mart in, for example, Ballinasloe or Tuam, the cattle numbers must then be transferred to the DVO office in Galway or elsewhere. will it not be possible, there fore, for the mart to give documentation to the dealer indicating where the cattle have come from and where they are going. It should not be necessary for the dealer to have a large number of documents of one sort and another. Many aspects of this Directive are very sensible but I see no need for wholesale duplication. Can we not implement the parts of this document which are necessary - which will not be duplicated elsewhere - and wait until the traceability measures are in place and have been put to the test? If the traceability measures are as good as the Department claims further measures can be proceeded with.

May I ask Mr. Healy some technical questions? Many dealers have no land and no herd number. May such dealers continue to trade?

My second question concerns calf dealers. Some calf dealers buy calves in Cork, Kerry or Limerick and bring them back to the midlands or the west. Many of these calves never come out of the lorries and no premises. What records will these dealers be obliged to keep and how will they fit into the scheme of things?

In store cattle areas such as the midlands and the west the womb to tomb system, where calves are sent to the factory immediately they are born, would be the ideal one. We are a long, long way from that and part of that system does not suit our pattern of farming.

Livestock dealing is part of our culture and provides a livelihood for many of our farmers. Any new system should not overly restrict that trade.

Deputy Finucane: I welcome the Department officials. They have clearly explained that they are trying to transpose the criteria of the EU Directive to Irish agriculture.

What consultation did the Department have with cattle dealers? We formed impression at our last week's meeting with them that the Department's attitude to them had not been co-operative.

Is there a deadline for the implementation of this EU Directive in Ireland. There is great concern in Limerick about outbreaks of brucellosis.

I note from one of the documents presented to the Committee that computerisation in the Department was first spoken of in 1990. In view of the onset of BSE and other problems in recent times, it is imperative that the Department proceed on this development with indecent haste.

When will the Directive be implemented and does the Department intend to consult further with the cattle dealers' representative organization, the West and North West of Ireland Livestock Producers and Suppliers Association or does the Department recognise them as a representative body?

Deputy Ring: Has this Directive been implemented in any other EU country? The Directive is causing major concern among dealers. To comply with it a dealer will be obliged to have a secretary with him at every mart. I would like to see the question of traceability computerised and dealt with at the marts.

Deputy J. Brady: I agree with everything Deputy Connaughton has said. I do not think the Department officials realise that middle aged bachelor farmers of 50 or 60 acres are unfamiliar with regulations and form filling. The Department is now concerned only with the large factory type farmer. The small and middle sized farmers are being squeezed out of the industry. Public representatives are approached by these farmers every day. They are unfamiliar with forms and registers and they get very little assistance from the local offices of the Department of Agriculture.

We have been talking about eradicating TB and brucellosis for as long as I can remember but little progress has been made, particularly with the eradication of bovine TB. No new testing techniques have been introduced. Ordinary TB testing is a joke but so many people are doing well out of the scheme that it will never be eradicated.

Senator O'Brien: I welcome the Department officials. Deputy Brady has highlighted the key point of the diffulties involved in filling complicated forms. They have improved somewhat in the last year but they could be simplified further.

I wish to address the issue of 30 day testing. Dealers are part of our culture. Dealers who do not own land and who would not have a herd number were mentioned. I do not think there are many such dealers. It is reasonable to expect that a dealer should have a herd number.

I have been reading Article 13 of the document. This Article should be modified. It should include only what is actually required. When traceability becomes possible - whether at the end of this year or the beginning of next - it will be the key to the success of our beef and cattle industry.

Senator T. Hayes: I listened to the deputation from the dealers some weeks ago and today's presentation. I asked the dealers some questions because as a farmer I use them more and more. The Department does not understand the crucial role they have played down the years in supplying farmers with cattle and that role is becoming more important because thousands of farmers are leaving the land for part-time jobs and do not have time to go to marts. It is making an example of a few rogue traders to the detriment of many people who are carrying out a good and effective business on behalf of farmers. This is the breakdown between the dealers and the Department but there is room for manoeuvre on both sides. I am one of thousands of farmers who rely on dealers to source their cattle. Dealers play a crucial role in the successful trading of cattle and must be protected but like every other sector in agriculture they must tidy up their act.

During their presentation the dealers forcefully pointed out that they could only sell an animal once after it has a 30 day brucellosis test, whereas a farmer could bring the animal to two or three different marts. That is an anomaly in the system and perhaps our guests could comment on it.

Chairman: We will be returning to that point.

Senator Callanan: Deputy Connaughton mentioned that some dealers have neither herd numbers nor land. How are such dealers identified and regulated or how is it proposed to regulate them?

Mr. Healy: There were many interesting comments. I am not sure it is fair to say we do not appreciate or recognise the important contribution both marts and dealers make, particularly in the livestock trade. The community and consumers are demanding more regulation and reassurance. Some supermarkets have hinted that unless the position changes they may not source cattle through marts. It is important that the system be properly regulated and in general marts and dealers provide a valuable service in the livestock area. There are some individuals and operators who misuse the position. We in the Department would accept virtually everything Deputy Connaughton and others have said about the importance of marts and dealers. Marts in particular provide a useful control point. We generally have people at marts and circumstances and arrangements have improved tremendously over the years, in some cases with community and national support. It is in everyone's interest that marts continue to flourish and thrive and I think they will do so, notwithstanding the fact that some additional requirements and regulations are being introduced for marts, including those under Article 11 of the Directive.

It is important that we proceed with a traceability system. As Deputies and Senators said, we have been talking about traceability and computerisation for many years and we are now at the point of doing something about it. We have links to meat plants and marts and have offers from external bodies to operate farm to farm movement systems and to upgrade the computers to operate them. Assuming we get full co-operation the system will start. Traceability means we know not just where the animals are today but where they have been. The consumer and the customer want to know every location where the animal has been and that includes a dealer's yard or premises. Unfortunately we must require dealers to provide information and keep records in the same way that farmers, marts and meat plants will. It is not as if dealers are being singled out - additional requirements are being imposed on all operators in the livestock and meat trade.

Someone asked by what date we had to transpose this Directive - it must be operational by 1 July so it is essential that we have the system in place and regulation and approvals issued from that day if we are not to run into difficulties. I do not know the position in other member states because we do not get an ongoing account of that but the Commission has an elaborate system of chasing up member states who fail to transpose and in general terms most member states observe the deadlines for transposition.

Chairman: I hope there will be major cross-Border dealings on Agriculture after 22 May. Given this, have you at this stage sought or had any discussions with people in Northern Ireland in view of the fact that the same regulations are intended to apply both North and South?

Mr. Healy: There are ongoing discussions. We do not know what will happen over the coming months. The Good Friday agreement provides that various issues have to be looked at with a view to having some of them dealt with by cross-Border bodies on an all-Ireland basis. In other cases there can be co-operation with the existing bodies continuing the same task. It would be premature to speculate on whether this tracability would be one of the areas-----

Chairman: Did you have any discussions with any of the other member states regarding their proposals on the implementation of this directive?

Mr. Healy: No.

Chairman: In other words, we are on a solo run within the guidelines.

Mr. Healy: No. The guidelines are clear. This directive did not appear out of thin air. It would have been discussed at numerous working and specialist groups and at the EU Council of Ministers.

Chairman: It was agreed at Civil Service and ministerial level, but not at an operational level. The members of the committee are worried about the operational level; how it is going to be implemented and operated. Only that it was brought to notice because of a leaked document, we would not be in a position to have the input we have at the moment.

Mr. Healy: To my knowledge we have had three meetings with representatives of dealers. I met representatives in the middle of 1997. Mr. Fitzgerald met them earlier.

Chairman: He described them as truckers and people who worked in the dark.

Mr. Fitzgerald: I refute that.

Chairman: That was attributed to you. If it was wrongly attributed to you I withdraw it.

Mr. Fitzgerald: I object to that.

Chairman: It has been attributed to you by people who met you.

Mr. Fitzgerald: Mainly because I understand and would be closely involved in the cattle trade. I would never make a comment of that nature with regard to anybody operating in the cattle trade.

Chairman: We will move on.

Mr. Healy: We had a meeting with the Secretary-General last week. Further meetings will be held as the regulations progress. With regard to some of the more operational aspects, the council text includes a definition of a dealer. Once the regulations are adopted, the intention would be to place advertisements. People meeting the definition would be invited to apply. If we do not get many applications through the network of district veterinary offices, we would in due course become aware of people who should be registered under this regime from our contacts, people at marts and other people scattered around the country.

Apart from this regulation there is another, which I referred to in the submission, and which requires all farms and people trading in cattle who place cattle on the market to be registered. If they are not registered as dealers they will have to be registered either as farmers or under the other heading.

Senator Callanan: What is the other heading?

Senator Hayes: If I want to buy cattle in six months time I will have to be registered. You referred to farmers, livestock dealers and another heading. What is that?

Mr. Healy: If one buys cattle one will have to be registered, as a farmer, a dealer or as somebody else.

Deputy Connaughton: How do farmers register? Do they sign on when they buy cattle at a mart?

Mr. Healy: Under Directive 96/23 there will be a requirement for farmers and farms to be registered.

Deputy Connaughton: Is this concerned with the traceability and fitness certificate which every farmer will have to get?

Mr. Healy: It will fit in with that.

Deputy Connaughton: I hope there will not be another-----

Mr. Healy: We would not envisage a series of registrations. The directive deals in general with the ban on hormones, illegal substances and so on. There is a specific provision that people will have to be registered.

Senator Callanan: Deputy Connaughton referred to people buying cattle who do not have a herd number and do not have land. What is the position in such cases? Given the concern with traceability is this not a huge gap?

Mr. Healy: Everybody will have to be registered under the dealers' regulation or Directive 96/23, which is in the process of being transposed, and which will require everybody to be registered. There is a blanket requirement, which is an essential aspect for traceability.

Deputy Connaughton: I know five or six people who did not have land but who made a living from this. If they meet the requirements as dealers the fact that they do not have land or a herd number will not make any difference. Is that the case?

Mr. Healy: They will have to be registered, either as a dealer or under the other regime.

Deputy J. Brady: If I ask a farmer neighbour to buy ten cattle for me at a mart next Friday is he classed as a dealer?

Mr. Healy: It depends on whether-----

Chairman: Given the provision, it would appear that ever farmer is going to be classed as a dealer.

Mr. Healy: A dealer means any natural or legal person who buys and sells animals commercially, either directly or indirectly, who has a regular turnover of animals and who, within a maximum of 30 days of purchasing, resells or relocates them. A farmer who buys would not normally do that.

Chairman: The provision continues by stipulating from the first premises to other premises not within the farmer's ownership and provided he meets the condition laid down in Article 13. That means that if a farmer has two or three farms, he will have to be registered as a dealer. Otherwise, if he moves from one farm to another he will have to notify the Department. It may be one holding and one herd number, but there could be two or three separate holdings which are 20 miles apart. Will he have to ---

Mr. Healy: It concerns other premises not within his ownership.

Deputy Connaughton: Another important provision says that “no person shall buy an animal from or sell an animal to a dealer unless the dealer is approved”. What happens if people buy animals from dealers who are not approved? What is the sanction?

Mr. Healy: It is an offence under regulation 11 of the draft text, but it would also raise a question about the authenticity of the animal when it is being slaughtered.

Deputy Connaughton: Is it likely that the sanction might be that premia to be drawn on the animal might be withdrawn?

Mr. Healy: There are ongoing discussions at community level regarding penalties for failure to identify, register or give information on where farm animals come from.

Deputy Connaughton: Therefore, the farmer must first look at the dealer certificate rather than ask the price of the cattle, which will be a secondary issue.

Mr. Healy: That provision may or may not remain in the final text - I have a little difficulty with it myself.

Deputy Connaughton: I know that. I also have much difficulty with it.

Mr. Healy: It may be unworkable. Ideally this should happen.

Senator O'Brien: I still have some difficulty with dealers being registered and not having a herd number. I would like a greater explanation of this. I do not think it is possible for a dealer to be registered without a herd number.

Chairman: An end result of a register of people with specific numbers, something proposed by the Department, is that, for example, Joe Bloggs of No. 11 Saint Street, can register under that name and address and have a reference number.

Mr. Healy: The intention is to be in a position to identify an individual by a registered number. “Herd number” is a misnomer: there will be a series of numbers. Those who have herd numbers will almost certainly keep them, but those who have never been registered will have to be given a registered number, almost certainly in the herd number sequence as it provides information on the DED, etc. The number, from the herd number sequence, will be used in a way whereby it will be readily identifiable. The first digits of herd numbers identify the DED while the subsequent series of digits identifies the farm. Rarely are there numbers in the 900s for farms and the intention is to use high numbers.

Deputy Connaughton: Is it intended to meet the livestock dealers' association again before ----

Mr. Healy: Yes.

Chairman: Perhaps the final draft could be sent to Members of the committee in order that they can examine it to see what can be done. We do not want to see people's livelihoods been taken away or the free movement of cattle coming under certain conditions. Everybody is now responsible for a register and if they are maintained and tracibility is introduced through computerisation, it will not be as big a problem as people might think. Computerisation is the key element. I do not know whether it is possible to seek a derogation from Europe until such time as computerisation is introduced.

Mr. Healy: Without being in a position to get information we will not have a computer system. We must have traceability and that means for every stage of the process.

Chairman: I totally accept that, as does everybody else. I will not buy something when I am unsure of the origin and I do not think any farmer will as we have seen the effects of doing so. Common sense must prevail on all sides and people must be allowed continue their legitimate business. People who break the rules must be severely censored but people want to ensure that those who live within the rules are not harassed. The biggest fear is that they will be harassed by paperwork. Some of the provisions in the directive, such as knowing the number of the trailer which transported the animal to the mart, could cause major problems. A farmer who buys 30 cattle in single lots at a sale could end up with 30 different sets of paperwork.

We want to allot 15 minutes to discussing brucellosis and the 30 day test. Is that agreed? Agreed.

Deputy Connaughton: The 30 day test is the law. Many farmers rang me about the fact that the blood is not being returned quickly, an issue I researched yesterday. I received a phone call from a man today who told me it took 21 days, the first time I heard of such a period. Several farmers rang me during the week and told me of delays of 14, 15, 16 and 17 days.

This scheme was well signalled. We spoke about it for at least one year before it was introduced. It was obvious that private testing would result in a huge volume of work at the laboratory in Cork. We cannot blame the EU in this context. Neither can we blame computers, etc. It is an organisational matter. As far as farmers are concerned they are paying for it and have every right to be given every opportunity to sell their cattle. The man who waited 21 days had only one sale at his disposal. People who are waiting to sell bulls are ringing and sending faxes all over the place. The system is not working.

It is an organisational matter within the Department of Agriculture and Food. Somebody must have an answer to the problem, be it more people, more vets or more laboratory space. It is not my business how it can be solved, but the current arrangements are not working. The Department must be aware of this problem as I am sure people are ringing it every day about it. I do not know whether the problem can be solved quickly, but if I, as a farmer, pay my vet to take a blood sample I expect to get the results within seven to ten days. This is reasonable. I hope vets send the sample to the laboratory quickly enough. In this age of technology and fax machines I do not know why farmers are not communicated with inside seven to ten days. This period of time was more or less agreed with farm organisations when the deal was being done.

There is a huge question concerning dealers and the issue of heifers which are females over 18 months old. Many dealers are asked to buy specific types of animals. They might spend all day at a mart and only buy five of the 50 animals they want. This means they have to return to the mart to buy more until they get the numbers required by the person buying from them or whom they are buying for. Under the brucellosis scheme, once the animal is brought to the dealers place, it comes under the 30 day test before it is allowed move on. I ask the officials of the Department of seriously examine this to see if the requirement can be moderated in some manner. I am aware from what has been said and from discussions with a number of people, including Mr. Healy, that a question must be asked regarding the disease status of the existing herd if an animal is brought in, mixed with it and subsequently sold on without the 30 day test. I do not know how the on-farm business with the dealer would work. All I know is if there was some sort of compromise which could be reached there, under certain conditions the dealer could bring the animal to a premises which would have to be inspected by the Department due to the other business to which we referred and the animals could be passed on as long as they did not mix with the rest of the herd. I do not know how practical it is to do that, but it is a central matter for everyone. For example, blue-grey heifers are taken to Scotland and particular types of heifers are taken for mating. There is a huge amount of that going on at present. If the dealer must retest the animal maybe three days after it has been tested, there will be a great deal of retesting to be done. I am sure Mr. Healy and his colleagues have looked at this in great detail, but that will create havoc within the trade.

Chairman: On that point, the 30 day test, which has been threshed out in several forums already, is turning out to be only a 14 day test on average. Because every move must be recorded, is it possible that the life of the test should be 30 days until it runs out and that there should be free movement within the 30 days, the balance of the time that is left? Deputy Connaughton referred to one element of the trade affected. The reason I say that is that there was considerable business in the purchase of heifers in the west and their being shown in the midlands by dealers. They are not able to do that now because once a dealer buys an animal and it moves into the herd after the sale, the test is nul and void unless the animal is under 18 months old and one must retest before one can move on. This is not in the best interests of anybody. The life of the test should be a full 30 days. What puzzles me about all of this is that three or four years ago the number of herds with brucellosis had been reduced to 12. What was the lowest number reached?

Mr. Healy: There were 429 in 1989; there were 301 in 1992 because we only did a half round of testing; there were 434 in 1994; and 432 in 1995. Between 1988 and 1995, there were between 350 and 450 depending on the number of tests carried out.

Chairman: I suppose this question is for another day. When we saw the number starting to increase, why did we not immediately reintroduce the premovement test? My county has one reactor herd at present. The same restrictions are imposed on us as in County Limerick or some of the other counties which have major problems. We accept that. However, it is unfair that the parts of the country which experience small instances of it are being penalised. I would be appealing for a 30 day test which would expire after 30 days.

It was pointed out earlier that records are being kept of all movements of animals. One cannot bring in anything without filling out a herd register and if an animal moves on, one must fill out the register again. What is the reason for the test not having a 30 day life?

Mr. Fitzgerald: It is a legal requirement under Directive 64/432, which states that the test runs 30 days from when the blood is taken.

Chairman: That is accepted. We know that. If I buy something from Mr. John Brady which has ten or 14 days left on its test, I cannot move it again without another test.

Mr. Fitzgerald: We are tackling brucellosis in two ways. First, we are testing all of the eligible animals in the country this year. They will be blood-tested, irrespective of whether or not they are dairy cows under the milk ring. Therefore, there is an unprecedented volume of blood being dealt with currently. Second, the other strategy on disease control is to restrict movement and that is what we are doing.

Hopefully, we will not have to maintain that regime forever and a day. Ideally, we need to pin down the disease quickly, keep it down around the present level and get it back down to the level of some years ago because that is putting us in difficulty with customers and consumers. That is why we have taken that approach. Animals under 18 months old have unlimited movement status within the 30 day testing period.

Chairman: Would it be possible to extend that?

Mr. Fitzgerald: It is tighter for animals over 18 months old because they are the animals which are considered by veterinary experts as those most vulnerable to brucellosis.

Chairman: There is a section here, the maiden heifer trade to which Deputy Connaughton referred. I have my beliefs with regard to cul cows, etc. They should be tested automatically no matter from where they move because they have always been seen as among the main sources of the spread of the disease. What happens now is that they are killed in the factories without being tested whereas in some other jurisdictions they are blood-tested on the way there.

Mr. Healy: I do not need to go into the background of the problems.

Chairman: Nobody needs to do so.

Mr. Healy: There was a major problem and we tabled proposals many months ago to address it. We started off on the basis that once eligible cattle are moved, they should be subjected to a blood test. It was a determined attempt to get on top of the problem quickly. In the course of negotiations we were told that if there was a test for every animal over 12 months old, each time it move, it would create chaos in the trade. To take account of that and because the 12-18 month old female cattle do not present a major problem in the spread of the disease, we agreed to restrict the one move regime to females over 18 months old and bulls over 12 months old, but the veterinary advice was that the one move regime should apply across the board. That is from where we started. It was in the course of negotiations and in the context of getting approval from all concerned - because in this area we need backing for the regime - that we attempted to provide for the most serious elements - the 12-18 months only females and we did not require that the farmer who might not sell on the day to retest.

You mentioned numbers, Chairman. The number of cases had been reduced to four in County Kerry in 1992 but is has risen to 100 now - it is the second worst county affected. We want to ensure there is not the escalation as occurred in County Kerry. I suppose part of the reason we did not have measures earlier, even though we did introduce measures fairly quickly after the escalation, is because it did not receive recognition and we did not get backing for the sort of measures which were necessary. We introduced some measures in the middle of 1997 which clearly did not work. We want to avoid an explosion in other counties, such as that which occurred in County Kerry. It had been suggested that we regionalise measures. However, on careful consideration, we did not see how that could operate.

The committee can see in this illustrated map the area which is above the 0.2 per cent level. Several other counties are close to that level. There is a problem in the middle of the country. Even some of the western non-beef counties have problems.

Deputy Connaughton: That is the law now. That is what is being done and we only hope it will reduce the incidence of brucellosis so Ireland's OBF status will be returned.

Let us look at the organisation of the matter. The real irritant is the laboratory in Cork. Can anything be done to ensure that the results are back in a reasonable time to give farmers an opportunity to go to the sales?

Mr. Healy: We have had a huge volume of blood samples. We had 40,000 blood samples on some days which amounted to approximately 200,000 samples a week. Three additional staff were sent there recently - two last Tuesday and one on Wednesday - and three more were sent today. One more will be sent on Monday. We want to get the results of the blood samples back within seven to nine days.

Chairman: There are a number of regional laboratories throughout the country, including one in Sligo. Could some blood samples not be sent there instead of sending them all to Cork?

Deputy Connaughton: There is a regional laboratory in Athlone. Could the blood samples not be tested there?

Mr. Healy: No and we hope it will not be necessary to do so. The blood laboratory in Sligo has a throughout of 1,000 per week, which is minimal. However, it provides a useful service.

Chairman: Could its capacity not be doubled or trebled which would help to take some of the pressure off Cork?

Mr. Healy: We hope this is a short term problem.

Senator T. Hayes: Would extra staff help to solve the problem?

Mr. Healy: Yes. I am surprised at the delays.

Deputy Connaughton: They are the facts.

Mr. Healy: The delays in the laboratory have only been for days. We do not have full control as the vet takes the blood and if he holds it an extra day, there will be a delay.

Deputy Connaughton: Is it possible to prioritise the cattle for sale?

Mr. Healy: We are up to date. I received a note yesterday from the head of the laboratory that there is no backlog in the pre-movement private tests.

Deputy Connaughton: Mr. Healy would not believe the trouble we had to get the results back yesterday of a blood sample for a pre-movement test which was taken last Tuesday week from three bulls due to be shown in Carrick-on-Shannon tomorrow.

Mr. Healy: In some cases the vet does not identify it.

Chairman: It can cause a problem if it is not identified.

Deputy Connaughton: Mr. Healy is officially saying that the pre-movement test is given priority. Are those results coming back within ten days?

Mr. Healy: There was a backlog but we sent three additional staff there last week, three more will be sent today and another will be sent on Monday.

Deputy Connaughton: Will we see a change within a week?

Mr. Healy: I hope so.

Chairman: We all accept the problem with the blood samples.

The 30 day movement test is causing major problems for dealers, particularly those in the west, who are sending maiden heifers to the midlands. They cannot trade because they must retain them on the farm for ten to 14 days to get them retested before they can show them. The Department should consider allowing a 30 day test for maiden heifers from the day the blood is taken. Some 12 to 18 months may be considered leeway, but many of the maiden heifers, especially in the west, are in excess of 18 months. The trade in bulls and heifers in the North of Ireland and Scotland is totally impaired. The problem is that if I am a dealer and I take in a certain number of heifers and retest them and one happens to be inconclusive or is rejected, my herd will be locked up. This is particularly serious if I have other livestock. I appeal to the Department to look at the 30 day test. This should not be extended to culled cows because they have traditionally been a major source of infection.

I also ask the Department to look at blood testing all female stock sent for slaughter. Technicians, who were trained a number of years ago by the Department and who are now working as inspectors in meat factories, are capable of doing that. That would be a quick way of finding the person who is taking the easy way out. If he suspects an animal is a reactor, he could have it slaughtered.

Mr. Healy: If I had realised we were going to discuss brucellosis, I would have brought my veterinary colleagues with me to explain why the 18 month cut-off represents a lower risk.

Chairman: Marginally lower.

Mr. Healy: It is better to save as many cases as we can. Heifers can be pregnant and the farmer will not necessarily know that at 18 months and they can abort at that stage. It was an attempt to have a short sharp attack on the disease which I hope we will get rid of quickly.

As regards the cows and heifers going to the factory, we accept there is a gap there. We are in the process of devising a system which will ensure that we take blood from at least some of the cattle going through the plant - not on the farm.

Chairman: I suggest the blood should be taken at the plant as a means of identifying from where it is coming. There will be more success with that than with some of the other methods.

Deputy Connaughton: I thank Mr. Healy and his delegation for the good discussion this morning. I do not know if anything will come of it as there are always two sides to every story. I hope that some of the things mentioned will be implemented.

Chairman: I thank Mr. Healy, Ms Cannon and Mr. Fitzgerald for giving us an hour and a half of their time and I apologise for keeping them here so long. The discussion this morning was useful as a means of explaining the problems we meet every day. As some of us might be politicians and farmers while others come from a trading background, we are able to see the problems more easily than others.

The Joint Committee adjourned at 11.10 a.m.

AN COMHCHOISTE UM THALMHAÍOCHT, BIA AGUS AN MHUIR

JOINT COMMITTEE ON AGRICULTURE, FOOD AND THE MARINE

___________

Dé Céadaoin,13 Bealtaine1998.

Wednesday,13 May1998.

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The Joint Committee met at 4.10 p.m.

MEMBERS PRESENT:

Deputy John Ellis (in the Chair)

Apologies received from Deputy John Browne (Wexford) and Senator Francis O'Brien

Presentation by Irish Cattle Traders and Stockowners' Association.

Chairman: I welcome the Irish Cattle Traders and Stockowners' Association representatives. There will be a ten minute formal submission and than a question and answer session. Perhaps the members of the delegation will introduce themselves.

Mr. Collins-Hughes: I am accompanied by Mr. Charles Reilly, vice-chairperson of the association and Mr. Jimmy Cosgrave, past president of the association. I am general secretary of the association.

We forwarded our document, “Towards a Viable Future for Drystock Farming Families in Ireland” to the committee. This encapsulates the key issues from our perspective as drystock farmers. Drystock farmers produce cattle and sheep and have the lowest income of all farm groups, as found by Teagasc consistently over a number of years. I will take the committee through the key summary points of the document and then deal with any questions. Before we prepared this document we commissioned two independent research studies, by Professor Alan Matthews of the Department of Economics, Trinity College and Dr. John O'Connell of the Department of Food and Agribusiness, UCD.

Their briefs were somewhat similar. The first report by Professor Matthews looked at the current operation of the EU support system for beef and sheepmeat, with a view to determining exactly who gets the benefit of funding. We have put forward the argument over the years that those who were intended to benefit from the funding do not. Having ascertained who receives the money, we asked Dr. O'Connell to carry out research on the implications of a different system of distribution based on some of the policies put forward by our organisation. We then produced this document and presented it to the Minister for Agriculture and Food, his officials, this committee and Commissioner Fischler.

There are approximately 64,000 applicants with 20 suckler cows or less. The Santer proposals include a package to reduce the national suckler cow herd by about nine per cent. The agreed suckler cow level is approximately 1.2 million. Our experience suggests there are about 1.4 million suckler cows in Ireland. Rather than having a reduction we would like to see the national quota increased because the suckler cow herd is the basis of the quality beef industry. Those who produce suckler cows produce a particular type of quality breed animal. It is an industry which has huge economic and social benefits. Although it may not be terribly successful economically, as a social enterprise, it sustains over 65,000 families.

A small increase in the rate of the suckler cow premium is proposed. Given the importance of the premium, we want to see the basic rate premium trebled to £342. We do not want the intended abolition of the £30 Objective One payment.

Given the uneconomic nature of drystock farming, there is a question mark over whether it is worth it to the Commission and the Irish Government to support people living in rural Ireland. There are some cases where farms are overmanned and the labour input is too high. At the other end of the scale there are farms where the labour input is too low. We want a system of support which recognises the important employment aspect of drystock farming. Strictly speaking, that is not an economic enterprise but is a case of judging where the money should best be spent.

The crucial issue for us is that we should be able to devise a system which identifies people who need the money most and to find some mechanism of targeting that money. The two independent research studies identified three problems. First, there is no equity or fairness in the present system as those who are already well supported and primed to benefit from EU supports are in a position to receive more support where smaller weaker farmers are not. Second, there is a great deal of administrative inefficiency in the system. The administrative delays and the penalty system for simple administrative errors made by applicants means that the system is inefficient to the degree that Ireland returns funds to Europe every year which could go to farmers. Third, the system is not effective. Its stated intentions are good - to protect the environment and to encourage quality production. However, most of the beef support is targeted at low quality animals. We received a recent report from Europe which suggests that the grade of beef animals has fallen.

We would like a system to monitor who is doing well from beef supports and if necessary, those people should no longer be able to qualify, considering they already receive high levels of support through guaranteed quotas etc. The system is also being abused, as is recognised by the commissioner. People in the corporate and processing sectors can manipulate the system and siphon off supports intended for producers through various methods. This needs to be addressed.

There should be support for the farmers who have built up a special expertise in the production of quality livestock over many generations. The current pricing system in meat factories means there is a flat rate regardless of the quality of the animal, which means there is no incentive to produce quality.

We are fully in favour of environmental protection. There are inequities in REPS. One of the principal problems is that there is no particular capital contribution. One holding may have large fields which need little fencing but a smaller holding may have a number of small fields which require the maintenance of walls and drains. There is no recognition of the fact that some people can get the money quite easily while the majority of people have to put in a great deal of work. The cost benefit analysis shows they do not bother.

The system tends to operate on a penalty rather than encouragement basis. We would like a system which gives a certain amount for the basic requirements and then additional payments as an incentive to do better and to make an investment.

There is little or no evidence that consumers have benefited in any way through price reductions of beef and sheepmeat at retail level in the wake of the last reform of the CAP.

We all draw a distinction between the price that producers get per lb. and the price that people pay in retail outlets and in restaurants and so on. We do of course recognise that the people in retail, food and processing business are not charitable institutions and that they have to make a profit. There seems to be an extraordinary gap between the producer price and the consumer price. If there was an intention that the consumer would benefit somebody must be acting as police person on that to make sure that that happens.

Our key proposal in relation to area-based support is that we would like to see the present system of premia based on heads of animals done away with because farmers and others, produce animals as premium harvesters rather than anything else. Dr. Liam Dunne from Teagasc has published an independent report from our report which clearly demonstrates that the majority of animals in this country are not farmed for their commercial value or anything to do with producing meat but in fact they are farmed to produce premia. A premia based system distorts the market place and if people are encouraged to produce animals to collect the premium then naturally enough that is the system they will use. We have had further confirmation from our discussions with the meat factories where they make it quite clear to us that “as long as it has four legs it qualifies for European support”. That is an interesting comment. We would like to see a system devised where those two premia called the ten and 22 month premia would be abolished and the same amount of money paid but on an acre based system. The Department of Agriculture's informed us that they could not count the number of acres in Ireland and we had to get our own people to count the acres. We now know how many acres of land there are in Ireland. We know how much money comes into the country. We can divide one by the other and we arrive at a figure of £187 per acre. We would never foster the notion that you can stay in bed all day and be paid so much an acre for not farming. A minimum stocking level, i.e. the current stocking level for Ireland would have to be produced and people could produce more than that if the market place requires it. At the moment we are prevented from producing extra animals because of the premium system. We do acknowledge there is a temporary over supply of beef. Now that the act has been cleaned up in relation to BSE and various abuses in the industry the Commission does intend as part of CAP to spend a considerable amount of money on promoting beef particularly in the lucrative EU market.

On the point of modulation, we would agree with the principle that there should be a limit to what any one person would be able to get from CAP regardless of how much acreage of land they have. We feel if that is capped, more money will be available to those people who need the money most. Given that the Teagasc figures show that our sector has an average income of £99 per week we feel if there is to be a fair system of distribution that somebody else some place has to accept a limit to what they can get.

There is an unfair competitive advantage to Continental European farmers in that the Commission proposes to pay approximately £115 an acre forage support for maize. We are simply unable to produce maize commercially in this country. We think it is a very unfair advantage to continental farmers that they would be able to collect this sort of money as an aid to producing basically what is a feedstuff for their stock. Everybody pays lip service to the quality of the Irish feed, the natural grass, clean environment, silage and so on and yet Irish farmers are going to be placed at a huge disadvantage unless there is a similar support for them. So either take it off the Europeans or give it to us. It has got to be a level playing pitch.

The notion of consultation review in this sector seems to be a little bit airy fairy in that - and casting no aspersions on this group - there has not been a tradition in agriculture of genuine consultation. We have to recognise the reality that there are relationships and understandings and that for organisations like ours which are seen to be peripheral, we are very concerned that the last time the CAP was reformed that our sector simply did not have its voice represented at the table. Our organisation represent somewhere in the region of 75% to 80% of all of the beef and sheep that is processed or for live export. So while our number of members are low, there are approximately 5,000 individual members of the organisation, and who because of their specialist nature do represent a very significant section and percentage of the producer group. There was a mid term review promised on the last CAP in that the intention was that it would be reviewed if there were difficulties and that those difficulties could be corrected. We are not aware when that review was carried out or the findings of the review even though we had made these points we did not have an opportunity for an input. We would like to see a regular review mechanism built in to the next round of CAP. We are suggesting that there should be some kind of national monitoring on an annual basis and on an EU wide basis. There must be linkages between the real world and the real market place because there have been cases where money which was intended to compensate for price cuts was still paid over in the absence of price cuts. That is not right so there has to been some balancing mechanism. If there are genuine falls and money is meant to be there to help get over that problem it should be there but if people are doing well and the prices do not fall then why pay people on the double?

As regards marketing we are very critical of the fact that the meat processors have not operated in anything resembling the real market place in that the system of intervention, aids to private storage and export refunds have created an unreal artificial EU subsidised market. The processors must be obliged if they are to continue to get the benefit of export refunds and other supports to create and service real market places for beef and sheep meat.

Finally, there is no mention of sheep in CAP. We are told that the sheep regime is separate from the CAP but we do not consider that you can look at the CAP in isolation. If as is proposed beef will fall in price then as a complimentary product to beef, sheep meat will fall. There are problems in the existing system. The issue of extensification is major. The extensification payment is intended to encourage extensive, almost organic type production. At the moment we have difficulty for people who have cattle and sheep: the sheep are counted into the overall equation but they are not paid extensification. That problem is going to be exacerbated where all livestock in the future will be counted in for extensification purposes and as a consequence the ratios will fall and we feel it is quite possible that a lot of extensification will be lost to Ireland in the new system. Presently we have the problem in that sheep in particular do not qualify for extensification payments. Our argument is if you count them pay on them. If you do not want to pay on them, do not count them in. It has to be one or the other. In relation to the ewe premium, this is based on the market price so when you take the premium and price together you should get a particular flat return. Apart from the problem that if the prices go up, you lose on the premium, the basket of prices that it is based on has been shifted. It use to be based on the local prices within the islands of Britain and Ireland. We would like to see a return to that because that is more realistic for our market place than to include all of the EU countries.

Those are our key points and we would be very pleased to elaborate on those for you. Thank you very much.

Chairman: Thank you. I would like to ask a few questions. It has been suggested that the suckler cow premium be trebled to £342. Is that realistic in EU terms? Reference was also made to the payment of a quality production aid of £50 per hectare; who would decide on the quality of the production or would that be based on the actual output from the farm being examined at the point of slaughter? I do not want to sound negative but some of the measures outlined in the document would seem to be very difficult to police from an EU point of view. The per acre and per hectare payments have a certain element of realism but, in regard to the quality production support, would it not be much more beneficial if that were paid on the production of the carcass rather than at £50 per hectare?

Mr. Collins-Hughes: Research has shown that payment on the head of an animal results in the distortion of the marketplace price. Moreover, the people to whom the premium cheques are paid are not, by and large, the people who benefit from them.

In regard to the quality issue, some people receive as much for an animal which is the by-product of another industry and not bred for beef purposes. An animal's mother may have been bred for milk but, if the animal cannot be milked, it ends up going into the human food chain. We feel that a fair degree of difference exists between that type of animal and one specifically bred for quality beef purposes and we are seeking the recognition of such difference in a tangible way.

Chairman: Is Mr. Collins-Hughes basically suggesting that no premium should be paid on a Holstein bullock at any stage?

Mr. Collins-Hughes: Our organisation has never said that.

Chairman: Is a Holstein bullock not the by-product of the dairy industry?

Mr. Collins-Hughes: We are not concerned whether premiums are paid in respect of such animals. However, we are concerned that a higher premium would be paid in respect of better quality animals.

Chairman: How would one devise a system which would be able to grade the quality of the animals in question? Such a system existed in Ireland 20 years ago where people either passed or failed the VP.

I am in total agreement that the fact that a PA is worth the same as a U3 is totally wrong and should not be tolerated. It is obvious that meat factories have taken a decision to pay flat rates at the bottom, take the premium quality carcasses out, move them into the more lucrative European markets and put the rest into APS or third country contracts. There is no incentive to produce what is known as “the article”. How do you envisage this problem being dealt with?

Mr. Cosgrave: Four or five years ago, nobody knew what a P category was. In recent years, the number of U categories has decreased and P categories have increased. The situation is worsening. Most of the animals which require export refunds, especially live ones, are not really beef animals at all. When the retention periods have been served, the animals which arrive at the meat factories are disgraceful. A factory worker to whom I spoke said that if he did not kill them, a farmer would find someone else who would. I do not think it would be beyond the bounds of possibility to decide on the quality issue; we should not get hung up on that.

Chairman: Because of PAs, there is minimal live export of animals at the lower end of the market. Perhaps that is where the problem is coming from. Cattle which traditionally left the country live are now coming into the beef chain. That is disastrous from the point of view of those producing top quality products and the fact that the carcasses are taking up processing space in the factories.

Mr. Cosgrave: The Hereford and Angus societies have found markets for quality cattle at 10 pence per pound more so it is obvious that a market exists although it may be dragged down by inferior animals.

Mr. Reilly: The premia system, as constructed in the CAP of 1992, has contributed to the situation in regard to the animals we are discussing. As premium harvesters, they have the same capacity to draw down premia as the U3 animals.

Mr. Cosgrave: That is particularly relevant in view of the fact that a dairy farmer is not putting up any other units when it comes to extensification and so on.

Mr. Reilly: In regard to quality production, one must identify a starting point. The introduction of the CAP in the cereal sector for the production years 1987-91 was such a point. If a farmer's grades over a number of years were calculated, they would determine the premium he or she could draw down. However, if a premium is based on an animal - the system which we are trying to move away from - the premium becomes capitalised in the price of the animal.

Chairman: We could debate this issue for a long time. If one is going to introduce a quality bonus system, should that not be paid on particular grades of animal rather than at the point of slaughter?

Mr. Cosgrave: That would recognise the quality of the animals. Would the Chairman envisage the factories paying it?

Chairman: No, it would have to be paid by the EU, the Department or some other independent body.

Mr. Collins-Hughes: One would have to put a mechanism in place in the market place which would prevent the meat factories discounting such a system.

Chairman: The Minister has discounted it already.

Mr. Cosgrave: It all comes down to breeding. We support getting rid of scrub bulls and paying farmers to buy better bulls. Dairy farmers will not breed Charolais for milk and a beef farmer will only breed beef breeds. A suckler farmer will not get it unless he is breeding a beef breed. Stopping would bring about a big improvement

Mr. Collins-Hughes: We must recognise that there are different grades of animals and within grades there are different qualities. If there is a market for a low grade animal, in north Africa for example, we have no problem with people producing animals for that market. We all have to make a living. We do object to the EU subsidising low grade and low quality production when people who are in the quality and grade business are disappearing. The market for these unwanted animals is the EU cold stores. They are then sold cheaply in Russia or given away. I ask who is paying for this?

Chairman: We are all paying.

Deputy Connaughton: I welcome the delegation. I do not propose asking too many questions because I had a long and very successful discussion with this organisation last week. In that previous discussion we did not mention the question of breeding. I would not like to see factories in a position to claw back any sort of bonus. I agree entirely with the overall breeding programme. It is remarkable that we do not encourage farmers, inside their own farm gates, to use the best possible breeding system. The last thing a farmer should wish to do is to let out a scrub bull. We have been discussing this matter since the 1980s.

Chairman: We have a famous Act from the early 1980s which covers this matter.

Deputy Connaughton: That is right, Chairman. If a system is not geared towards encouraging farmers to inseminate cows with the best possible bull it is not a good system. Base payments by factories for animals with almost no grading is a bad practice. If nothing is done about that system scrub bulls will continue to be used. Some years ago I thought we had reached the stage where no-one who was in farming for a living would want to see a scrub bull anywhere near his farm. That is obviously not the case. One sees cattle at sales throughout the country which are not examples of good breeding.

We now know, more or less, how much land every farmer owns. We know the number of cattle in the country and we know the amount of premium which comes into the country. With regard to the payment of 22 month and ten month premia on a per acre basis, what mechanism will be put in place to ensure that a farmer is not too lowly stocked? For example, a farmer with 60 acres knows he will get so much premium per acre. What mechanism will ensure that he is not a minimalist farmer with five or ten cattle? This is a core issue.

The other important issue is the transfer of resources but we will not go into that today.

Mr. Cosgrave: It is in the nature of farmers to plough to the last sod to produce as much as possible from their land. That is clear from our experience with set aside of cereal producing land. There are more arguments for reducing set aside than for increasing it. A farmer will go to any length to produce all he can. We mention a minimum stocking rate for Ireland in our document. We would expect a farmer to be at that rate.

Deputy Connaughton: What sanctions would be imposed on a farmer who fell below that rate?

Mr. Collins-Hughes: We are talking about a national figure. A variety of circumstances could cause a producer to fall below the minimum rate in any one year. We would need to be careful with a penalty system. We are trying to devise a national system. This is happening in other areas where some people have decided to get out of production of a product and have sold out or leased their production rights to someone else. People cannot be paid to do nothing. There is no question of that. We do not like to suggest penalties. There must be a national minimum but an inidvidual producer's minimum could vary slightly, within reason, from year to year. Some producers might be overstocked and if one person is overstocked another must be understocked. We do not anticipate a significant number of people who would be stocked down almost to zero while receiving money. We would never advocate that. We are open to discussion on that question.

Mr. Cosgrave: Suckler cows will be producing calves so that if one farmer does not have stock another will.

Mr. Reilly: The present system does not ensure that an individual farmer who has eligibility for 90 in one year will, of right, have 90 the following year. He might not have 90 eligible cattle. He might switch to heifers rather than bullocks.

Deputy Connaughton: Such a farmer, however, will not be paid if he does not have sufficient units.

Mr. Reilly: I appreciate that.

Chairman: If one takes an area based payment and sets a minimum, the minimums for county Meath and Leitrim will be very different. Such a system would have to be done applied an area basis with a soil survey. A minimum of 1.4 would be absolutely unrealistic in some parts of the country. Problems could arise if the payment were made at the same level in all areas.

Mr. Collins-Hughes: I will clarify that. We do not propose that every acre in the country be paid at the same level. Let me give a quick overview. A farmer with suckler cows takes out the land he needs for the cows. If he has sheep he takes out the land he needs for his ewe premium. Area aid can be drawn on whatever land is remaining. Within that system there will be small holdings and more per acre must be paid on a smaller holding than on a bigger one.

Chairman: You are talking the bottom end of a tiered system.

Mr. Collins-Hughes: Land quality would have to be taken into account. The concept of forage acre then becomes significant. Our forage acre proposal is a much higher figure. We have held to what the Department refers to as UAA. This includes all land minus rivers, roads and buildings. Rivers may even be included in UAA.

Mr. Cosgrave: There would be much more suckling in a county such as Leitrim. Suckling is a specialised job. One cannot look at sucklers once a week or once a day. It is hard and specialised work. I cannot foresee any problems in that area.

Mr. Collins-Hughes: The question was posed as to whether increasing the suckler cow premium is unrealistic. It is not. We did an analysis of the proposals, page 25 of our document, was published a week before the last CAP proposal but it is not much different from the final ones. To be consistent with our system everything was converted onto a per acre basis at the standard extensification stocking rates to see who is getting what. Under our system when the proposals are translated from the Commission ten or 22 months works out at almost £500 a hectare. The bull premium works out at £586 a hectare. The suckler cow premium works out at only £306 and the dairy cow premium at approximately £360. When one looks at that one will see there is a huge disadvantage to the suckler cow farmer. How can the suckler cow industry, which is a quality industry, be supported? When people look at the figures they say why should they continue.

Chairman: That will mean the suckler farmer will have reduced the number of suckler cows and will keep and draw the payment.

Mr. Collins-Hughes: In addition, if they are allowed to take 20 per cent of the dry heifers into suckler cow quota it will not be long-----

Chairman: I have already raised that matter because the top 20 per cent of quality product would be gone.

Mr. Collins-Hughes: This type of figure is needed for the suckler cow farmer to enable he or she to have some kind of return. The average number of suckler cows is approximately 11. There is nobody making a living from suckler cows. They are making money at present from the price they are getting for calves in the marketplace. If the price of beef is to be cut who will buy the calves? If farmers are to lose on the one hand they have to get it on the other.

Mr. Reilly: To address the trebling of the suckler cow premium the EU in their wisdom decided to triple the bull premium. If they can find the resources to do that surely they can find the resources to triple the suckler cow premium.

Deputy J. Brady: I welcome the delegation. I think the organisation was founded only a couple of years ago and I welcome Mr. Charles O'Reilly, a neighbour of mine, from County Meath. I know the amount of work he has put into that area - I am sure the other members of the organisation have done likewise - and I compliment him.

As a dry stock and suckling farmer until I came into the Dáil I agree and fully support that the suckling premium must be increased enormously. Like many farmers the cost of feeding a cow to rear a calf, particularly a female calf, is enormous. Excluding dairy farmers with quotas of under 40,000 gallons from beef support do you think it is a bit small for a family farm?

Mr. Collins-Hughes: It is more than 40,000.

Deputy J. Brady: Do you think it should be more than 60,000?

Mr. Collins-Hughes: They are not our figures. Dr. John O'Connell looked at that. We included that as an option from his report. Perhaps the Deputy is right. Our main business is to try to get increases for our people. The question is where does it come from? Unless the Germans are prepared to pay a lot more into the budget it has to come from somewhere else.

Deputy J. Brady: What do you think of the factory owners who are feeding between 5,000 and 6,000 cattle a week. They qualify for the same premium rights as farmers who solely depend on agriculture for their livelihood as do big businessmen - there are many in county Meath - buying swipes of land. In all fairness I do not agree with that and we should examine such matters. Those depending on agriculture for their livelihood should be treated better than those who are feeding 2,000 cattle. Such people should not get the same treatment and premiums as full time farmers.

I fully support the £50 per hectare for dry stock farmers. Penalties have been given where there have been minor divergences from plans and when people fill up premiums and make minor errors they are disqualified. This is a matter that, irrespective of what side of the House we are on, there have been arguments with Departmental officials and is something which I totally agree. Abolishing the ten and 22 months and £187 per acre would help many people. The small farmer and the bachelor farmer find it an awful scourge when filling up these forms. Those are the unfortunate people who make mistakes and are then disqualified.

Mr. Cosgrave: The Deputy mentioned factory owners. The way they are manipulating the beef price is even worse.

Deputy J. Brady: They can come up for a week to supply them if they wish.

Mr. Cosgrave: No one can get them over a barrel any more.

Chairman: They collect the slaughter premium also.

Mr. Cosgrave: They collect everything. They are taking farmers' yards, buying the cattle for the farmer in the farmer's name and collecting the premium. It has gone to that and we are continuously slipping.

Deputy Connaughton: It appears to have become a way of life for farmers.

Mr. Cosgrave: It is and will get worse.

Mr. Reilly: I will address Deputy Brady's difficulty with the possible exclusion of dairy farmers with more than 40,000 or perhaps 60,000 gallons. It is generally accepted that the production costs of milk is in the region of 40p per gallon and the return is £1 plus per gallon. This gives an income of 60p per gallon. On a quota of anything between 40,000 and 60,000 gallons gives them an income in the region of £30,000. I suggest they are in a far better position to bear any cut on that position rather than a dry stock farmer who may have 90 eligibility and draw 90 90s which is £8,100 and is all he will get in a year.

Deputy J. Brady: I thought the figure was low but understand the situation.

Deputy Penrose: I welcome the delegation. They come from the heart of my homeland, where many of the farmers are involved. I congratulate the organisation for their bravery in tackling a topic where there is a marked reticence on behalf of a number of farm organisations to tackle and inequities within the system which are clear and apparent to anyone on the ground who deals with small farmers who are getting hammered. The position is that the ICSA favour the retention of the national envelope. Within that, they favour the availability of the maximum amount of discretion in terms of the allocation of the sums to ensure that sectors of the beef industry which were excluded in 1992 are now included. Beef heifer producers were excluded from the system at that time. Such producers are extremely important to County Westmeath and other areas.

The Department, the EU and beef processors have forgotten that suckler cow production provides the genesis for the beef industry. I am glad the group has placed this matter at the top of the agenda because that sector is the kernel of the beef industry. It was washed away in the flood and beef heifer producers were ignored. Given the horrendous three or four beef production winter seasons that have been encountered, it is lucky that there are still 90,000 dry stock farmers in production. However, they are being lost at a rate of 100 a week despite the objective set in 1992 to retain the maximum number of farm families on the land.

The delegation is correct that the premia have been capitalised as part of the price of the calf. The people for whom the premia were intended have not received the benefit of the payments. The capitalisation has tied up the money. Farmers bought in anticipation and built in the capitalised value of the calves. The system proposed by the delegation is not perfect but it could be refined. From a reply to a parliamentary question, I understand it costs £23 million to administer the current system. However, an unfortunate farmer who makes a simple mistake is excluded.

The current appeals system does not work. It is clogged up and there are long delays. The results of appeals are the same in general. If a farmer makes a mistake regarding one animal, he should lose out for that animal but he should not face the threat of losing everything on the basis of one mistake. This is the problem at present and the delegation's proposal would be simple to administer. It would be targeted effectively and ensure equity in the system. It would also mean the system would no longer be a bureaucratic nightmare for farmers. A person needs a basic degree in agriculture to deal effectively with the system. I am aware from my brother's experience what is required. People are now nervous of forms.

The delegation is correct to face up to the problems which exist. It is also correct in calling a spade a spade. Is it right that farmers who produce crosses of suckler cows receive the same amount of money as producers of Holstein crosses? This is the point. Should quality and efficiency be rewarded? If the system does not change, there will only be 35,000 or 40,000 full-time farmers in a decade and few of them will be beef producers. Change must take place. Many people do not like the prospect of change but if action is not taken, beef and dry stock farmers will become extinct. Change is necessary for survival and I compliment the delegation for introducing fresh ideas to this important debate.

Chairman: This discussion could continue at length because this issue affects everybody. I compliment the delegation on the quality of its submission regarding Agenda 2000. It is the best and most detailed submission the committee has received.

Mr. Cosgrave: Is it the only submission the committee has received?

Chairman: No. The committee received others. If the delegation wishes to make further presentations in the future, it should not be reluctant to approach the committee. Our objective is to listen to people and make recommendations. We aim to help rather than hinder those actively involved in the area. We want to ensure that producers of calves and beef receive the maximum return. It is most important that all those involved can earn a living.

If a farmer goes to a mart to buy an animal, there no point in him paying two premia and hoping he will live to collect them only to discover subsequently that the level of profit may not match the value of the premia. This aspect frightens everybody. Unrealistic prices are being paid with regard to store cattle because farmers have a tradition of allowing the grass to grow over the hedges. They buy animals but do not think of the economic finishing point. I thank the delegation for its submission.

Mr. Cosgrave: Many people depend on this area. I am a former chairman of the organisation and people ask me if anything can be done for them. We only had a short time today to make our presentation on this important matter and we would welcome another meeting with the committee. Many people depend on this area but they have lost hope and this is not good for the country.

Mr. Reilly: When the 1992 CAP reforms were introduced, one element of production was taken into account in terms of how benefit could be drawn from it. The sheep sector and the cereal area were taken into account previously in terms of quotas. Although I do not produce calves, I am a heifer beef producer and I did not benefit from the 1992 CAP changes. They positively discriminated in favour of other sectors and it is now incumbent on us to ensure there is positive discrimination in favour of dry stock farmers next time round. I hope this committee and others will help achieve that end.

Chairman: We do not want discrimination but we want equitable distribution. Every sector should get a fair share because some sectors, particularly the beef sector and final producers, have suffered more than others in the past. This is due in the main to the fact that no premium is paid for a quality product. The same price is paid to different producers and that is unrealistic. It does not make sense because both animals qualify for the two premia and other payments but farmers are penalised for producing a superior product.

Mr. Collins-Hughes: I compliment the committee and thank all the members. We received a fair hearing. The members posed some tough questions but in a positive and non-aggressive manner. We appreciate that the members listened to the answers and we look forward to doing business with the committee in the future.

The representatives withdrew.

Presentation by Irish Creamery Milk Suppliers' Association.

Chairman: I welcome Mr. Frank Allen, President of the ICMSA. I apologise for starting late but we must finish at 6 p.m. Perhaps you could introduce your delegation. The format will be a ten minute presentation and then questions and answers.

Mr. Allen: With me are Mr. Pat O'Rourke, Deputy President of the ICMSA, Mr. Kieran Dolan, our chief economist, and Mr. Liam Heveran, chairman of our beef and cattle committee. I thank you, Chairman, for the opportunity to talk to the committee. I will restate points from our original submission and make a few additional ones.

Dairy policy is a key point for the future of Irish agriculture because dairying accounts for 31 per cent of our output and £1.7 billion in exports out of a total of £4,9 billion in exports from the food and drink sector. The development which will have the main impact on us is Agenda 2000 and we have concerns about Ireland being discriminated against in the overall package. For example, we will only get a 1 per cent quota increase, although when quotas were set up in 1983 a commitment was given that, in the event of extra quotas being made available, Ireland would have priority. When we put that point to Commissioner Fischler he accepted the commitment had been made but only said he would have to look at it again. Our view is that this is a vital matter and we should be looking for a 10 per cent increase, given the importance of dairying to the economy.

We also need to prepare for a time when there may be no quotas. We believe quotas ought to be retained with greater flexibility but by 2006 who knows what the position might be? Eventually, if quotas are no longer in being, the budgetary allocation to dairying should continue so that a payment is still made, which could be called a decoupling payment. Unless that happens there will be no dairying in many parts of Ireland and Europe. In the west, costs of production on-farm, collection costs and processing costs are higher because of the nature of the territory, etc. If there is a free for all, milk production will be concentrated in the areas where it can be most cheaply produced and collected, and that is not socially desirable. Dairying is a key sector in terms of defending our interests in Europe and it is incumbent on legislators, and on all of us, to ensure we get a proper deal, both in terms of quota allocations and income to farmers. No matter what happens, if there is no income people will not stay in the sector, and dairy farmers have been leaving the sector at the rate of 2,000 per year. Inevitably a certain number will remain but we want to ensure that those who wish to stay are given every facility to do so, and that is a vital consideration.

The Santer proposals on the beef sector are horrendous, to say the least. The end result will be that market returns are less than the costs of production, and that is not acceptable. As regards the proposal to do away with intervention in the longer term, we must have a floor price. This country is dependent on beef and the gap has widened between ourselves and the rest of Europe in terms of our prices and market returns. Some 90 per cent of our beef production is exported and in the current year 60 per cent of those exports are going to third countries. That is unsustainable because export refunds are restricted as part of the GATT agreement and the next world trade agreement will restrict them further.

As a result of BSE we have lost out significantly in the UK and European markets because of the re-nationalisation of the beef industry. We have done badly in France and Germany, although we have held on fairly well in Italy, Holland and Denmark and made some impact in Sweden. In the UK our exports are back to 90,000 tonnes a year but that should be pushed up to 100,000 tonnes. Our big problems there are the new labelling requirements and the lack of a marketing identity for Irish beef, because it was never sold as such. A major campaign will be necessary not only to expand our trade but to hold our UK market share.

There is need for radical reform in the beef sector at farmer level, processor level and in marketing and promotions. For farmers we must consider grass land management, efficient production, etc.; for processors we must encourage contacts between farmers and processors and contract supplies. In other words, we must get closer to the dairy industry model to be efficient in the future. The days when we could trade animals up to six times and expect each owner to make a profit from the same animal are over, and we must face that reality. We should have a target of two movements for each animal in its lifetime to achieve an efficient industry. Breeding must also be examined and Teagasc has a role to play in providing advice and research. All these policy areas must be considered.

The major issue is live exports, which is in some difficulty. Even Commissioner Fischler accepts that this is a key element for competition in the Irish trade. With cattle numbers increasing we need more markets, which have been identified, yet we will not be able to bring our animals to those markets on mainland Europe. This is our home market, the so-called “single market” which we were supposed to have access to, but neither the Government nor the EU is sufficiently determined to enable us to export all our products to this marketplace. Will we become an offshore island in the Atlantic, isolated from our markets? We cannot accept that, it is against the spirit of the EU, but it is about time people put their shoulders to the wheel and implemented what we voted for. It is a key demand on our side that we have a permanent, guaranteed facility to ship out all our production, whatever it might be, while we have markets in the member states.

We also have concerns about family income supplement, which is only available to the PAYE sector. I do not attack those people because they are perfectly entitled to it but so are people with low incomes in rural areas, particularly farming families who need extra income so that farming can continue to be sustainable.

The Governments has walked away from farm investment. It is doing a reasonable job in Brussels but it has neglected the home front; there seems to be two attitudes towards agriculture. There is a lack of commitment to invest in the future of agriculture, to enable people with potential to prepare for the more competitive future we face in the next century.

We need to upgrade. Our facilities are good, let us be honest about it. We are a major exporter: 80 per cent of dairy production, 90 per cent of beef. Therefore, we must be better than everybody else to make sure we can compete effectively. Now is the time to do that sort of work because it will be too late in the future. We must keep on changing and advancing. That is the key to our future. If we are serious about developing and maintaining our presence in the marketplace, those sort of schemes are absolutely essential and grant aid in those schemes is essential.

We want to make sure that there are reasonable numbers. People are leaving agriculture and they will continue to do so, but those who want to stay and are committed to staying must we given every encouragement and facility, whether it be free Teagasc advice, Government help, LEADER, partnerships, etc.. There are a range of bodies which can do this sort of work and everybody needs to get together and work on it.

There is the question of Structural Funds and their impact on rural areas. There is the fact that there are three sub-regions the income averages of which are less than 75 per cent: the income average of the west is 64 per cent, and that of the Border region and the midlands are both under 75 per cent. There is the fact that the disparities in the general sense of agricultural income versus non-agricultural income are widening. With regard to the economic well-being of the country, in particular, widening gaps have opened up between some parts of the country. The Dublin region is at 111 per cent. I wish it every success. It is not a question of begrudgery or anything like that. If Europe is committed to anything, it is committed to bridging the disparities in economic development between the different areas. There are glaring examples in this country of disparities between different regions and areas. Even in the so-called prosperous regions, there are pockets, such as west Cork and Kerry, where there is no investment, no jobs are being created and there is no help to build the local economy. If we have learned anything, we can look at the American situation and see a desert in rural areas. It can be seen in France also, where villages have closed down. Do we want that future? If so, fair enough; let us throw our hat at it. Do we want a more socially acceptable equitable society? Do we want Dublin to become overburdened with people? These are key issues on which there is need for decision and implementation. I am afraid many legislators and policy makers are just dealing with the issue on a day to day basis without a long-term strategy. Above all else, that is necessary.

On the area of animal health, food safety, etc., we need as an urgent priority the full computerisation of the national herd so that tracability can be put in place. Furthermore, the quality assurance schemes which are put in place must be effective and cost efficient. Under no circumstances must they add extra unnecessary cost on farmers because with the single currency there is no opportunity to recover any extra unnecessary cost. In the old days, there were green pound devaluations, etc., which could be used to recover costs. With the euro, everybody can see the situation as it is. The euro will be the same in France, German or Ireland, and we will not be able to recover our costs. It will be easy to compare prices throughout the Community. In the past there were currency differences and one could not accurately compare prices and costs. Now we will be able to do so without any difficulty. Clearly, to compete and remain competitive, we must control costs taking into account our distance from the marketplace and our small domestic population.

That is an outline of the ICMSA position.

Chairman: Mr. Allen, you stated that milk prices will reduce by 17p per gallon between now and 2003 for which farmers will only receive compensation of 9p. That leaves an 8p deficit.

Mr. Allen: That is correct. That would be with the full implementation of the Santer Proposals.

Chairman: World dairy markets are rising again, are they not? They have risen considerably in the past couple of years. Maybe some of the change is currency related also because of the present position of the Irish currency. Will farmers still be vulnerable to rising or falling world market prices irrespective of the level of compensation?

Mr. Allen: Some 70 per cent of production is skim powder milk and butter which are the two intervention products. The support price is the floor price. If one drops the floor price, the price always follows it down because the buyers say that that is the floor price and it pulls the price down. Our dependence on those two products would tend to make us suffer the greatest drop.

Needless to say, there will be fluctuations if world prices rise suddenly. Nobody denies that prices are pretty reasonable at present. In terms of future projections and an average over a period, the price tends to come down to the intervention level. There will be exceptions. If there is a massive sudden demand, like when Russia bought significant quantities of butter, for example, dairy prices increase. That can happen but one must look at the longer-term view. In general the floor price conditions the price. Here one is talking about a 15 per cent drop in the floor price.

Chairman: Is the processing end of the market over concentrating on skim milk powder and butter rather than on higher margin products? Last week I attended a conference of chairpersons of agriculture committees in Rome. We all heard about the 1 per cent increase. I stated that an increase of 1 per cent in an Irish context was totally unrealistic. Italy has a 40 deficit in processed dairy products. That showed me that the Irish processing industry, as a major exporter, should no longer be concentrating on skim milk powder and butter but should be trying to move towards the processing end of it and consumer products. Is there any co-ordination of that type of policy between the ICMSA and the processors? Are the processors too interested in dealing with their multinational businesses - in most cases the dairy sector is only part of their business - rather than in concentrating on going after those markets which are much more lucrative both to producers and processors?

Mr. Allen: That is a complex question in many respects. There are a number of aspects to it: Ireland's location, the size of the domestic market, the distance from the marketplace and the shelf life of many value-added products. There is a move towards producing more value-added products and that is desirable. However, whatever way we go about it, just as in the case of New Zealand butter and skim milk powder will be our stable products because of the seasonal nature of production and the distance from the marketplace. We will not get away from that.

I accept the point that there is a need to develop the value-added side. Much work is being done in that area. As you stated, Chairman, the dairy sector is not central to the activities of some processors. However, in fairness it is in the case of the vast majority. The dairy board is doing excellent work in marketing butter, for example. We do not have a problem with export licences for butter because there is an adequate supply of them. Skim milk powder is a different matter.

We have made major impacts on the cheese side, although we are dependent on the UK market in that regard. We are exporting small quantities of cheese without the aid of export refunds, for example, but the amount is marginal.

Much work is being done. The ICMSA input is in terms of membership of advisory committees in Morepark, advising, research programmes and members of ICMSA are board members. However, while people are well aware of it, to immediately switch from one to the other is not was simple as it sounds.

Some of my colleagues may want to comment on that because some of them would have more direct experience of it.

Mr. Dolan: Twenty years ago there was a clear divide between butter and skim milk powders, which are basic commodities, and more consumer products. However, there has been a change due to technology. Even within the skim milk powder sector, many of the powders are specified by the large multinational customer. It is still a correct strategy for Ireland to focus on the production of specified commodity products to tie in with customers so that we produce milk in the most efficient way. Technology is added and a product is produced, for example, skimmed milk powder, that will be used as a food ingredient. That will still take 60 or 70 per cent of the milk we produce. It is wrong to suggest that to follow that road is foolish. From the point of view of strategy and not to be totally dependent on one market, all reports tend to suggest in terms of the investment required to grow and maintain a market in consumer products where there is a tax on them, the additional return would probably equal the cost involved. If one looks at the way we have used national milk output over the past 20 years, between 64 and 73 per cent of output went to butter and skimmed milk powder. The impending changes in terms of not supporting the market to the extent it was supported previously, where world prices will tend to dominate will mean there will be greater variation in Ireland on milk prices because we are dependent on commodities.

The Chairman referred to Italy. It is unlikely consumer prices will come under pressure there because of a collapse in the world market since the producer price will be a smaller proportion of the consumer price there. A greater move towards less reliance on butter and skimmed milk powder may be seen from the point of view of security but I would be very surprised if we fell below 60 per cent of output on a long-term basis.

Senator Quinn: I welcome the group. There are some problems which Government can be asked to solve and others which it should not attempt to solve. I agree Government should get involved in access to the European market and supply such access in whatever form but we can only sell products because customers want to buy them and I am not sure to what extent Government can be asked to do a great deal about that. I met an American supermarket chain owner a few years ago following the BSE crisis along with a number of European owners. The Frenchman and the German said they did not sell Irish beef anymore and I said we did not have a problem. As I tried to defend our position, they said they could only sell their own beef. I agree it was inexcusable when Irish beef was deliberately taken off supermarket shelves but one must recall that if customers come into a supermarket and say they want a certain product, we must find a way of putting their minds at rest so that they ask for it, whether it is a beef or dairy product. The questions they ask now are about taste, health, animal welfare and tenderness. We have not done a good job establishing in the minds of the consumers that we are different from everybody else.

Will Mr. Allen respond to the comments made about An Bord Bia in the presentation? I want to believe customers would buy products not necessarily because they are Irish but because it is a product they want. A product called cheez strings is selling well currently. It is on every British supermarket shelf and nobody knows where it comes from. Consumers like the product and its taste and they buy it because of that.

I refer to the ICMSA's proposal to establish a semi-State body to administer and run the TB and brucellosis scheme. I got a little worried when it said the board should comprise farmer and Department of Agriculture and Food representatives. How would the ICMSA respond to the setting up of a body that contained only customers? It should think of the credibility that would have. Will it consider what would happen if such a body existed? The organisation should picture the strength and credibility that would have because we have gone so long without solving the TB crisis that if we do not grab hold of some new way of doing it, it will continue. Will Mr. Allen comment on concerns about veterinarians in the presentation.

Mr. Allen: The problem with TB is a technology one in so far that which is available currently will never eradicate the disease fully. There is a great deal of research going into it world wide but we do not want to exaggerate the problem as it involves a tiny minority of animals. However, in terms of efficiency the reason for suggesting the categories mentioned earlier is that they contain the “shareholders”, those with financial interest. The Minister represents the taxpayer and the farmer represents the other major shareholder. The consumer is satisfied by the veterinarian, who is independent, carrying out the examination, test and inspection. It is a case of the shareholders taking control rather than saying it is a Government problem and blaming the Department.

The role of veterinary people must be one of professional competence but they must also be conscious of the need to the cost efficient and effective in terms of their dealings with farmers. There is a suspicion they may be in some instances inclined to take advantage of the current situation. Since the BSE crisis, a veterinary certificate has become a much more important document and has a greater status than previously. One hopes they recognise the fact that it is in all our interest that the financial cost involved in such a procedure is reasonable and fair. However, there is a doubt about that.

We have always treated beef as a commodity product and it was never identified as Irish beef anywhere. The only reason it must be identified as such now is because of the new labelling requirements. An Bord Bia is getting a plan ready, particularly for the UK market. It is a key market to which we exported 90,000 tonnes of beef last year. This needs to be increased to 100,000 tonnes to wean us away from our dependence on third country commodities markets which will not be sustainable into the future at their current levels.

Obviously, when everything was going fine people did not bother much about this but now they realise the consumer has a totally new focus and we must respond to that. We did so in the dairy industry 20 years ago and now we need to do it in the beef sector. That includes full computerisation of the national herd and traceability. However, once computerisation is attained, most other factors will fall into place. Unfortunately, the Department has been slow in that area. We have a quality product and it is a question of modelling the beef industry on the dairy set up.

Since the beginning of the century the two diverged. If one looks at the previous two hundred years, beef farmers were better off than their dairy counterparts. At the beginning of this century the co-operative movement was set up and dairy people organised themselves and over time, together with the processing sector, etc., they introduced good management practices and technology at farm level and it was a similar case in the processing and marketing sectors. The beef sector remained a commodity market where people put cattle out to grass and forgot about them. This must be changed and there is a need for radical reform in that area. We can do it but there is work to be done. It comes back to the fact that the consumer has a new attitude. In that sense, I feel confident that we can do a good job now that we all realise and are facing the reality of what needs to be done. I would be confident that we, as a producer of quality food, can do good things in the future.

We certainly admire the efforts of Senator Quinn and his supermarket's attitude to beef in particular. It has been second to none.

Mr. O'Rourke: With regard to the Senator's experience of the French, the Germans and the Italians, it was not that there was anything wrong with Irish beef but that there was a nationalist reaction to the problem. As producers and consumers, we would say that we must address that difficulty. However, the producer will not be able to do that alone. We need the Department of Agriculture and Food with us on that matter. For example, unless there is tracability, which is the responsibility of the Department of Agriculture and Food, we will not be able to make progress. The producer will not be found wanting, but he will need the partnership of everyone involved - the processor, the Department and the producer. If we decide to do it on our own, it will not work because each one of those elements is essential in the chain of success as far as tracability and satisfying the customer are concerned.

We would have no difficulty sitting down and working with what the consumer wants because that is the key to our success. That is where we will be able to make progress. We are identifying areas in which we see need for progress. Tracability and computerised records of movements are essential. We do not have it and we need it.

Senator Quinn: I am delighted to hear Mr. Allen speak about the co-operative movement. There is a great similarity between him and Sir Horace Plunkett.

Deputy Connaughton: To move away from beef, will Mr. Allen give the committee his views on the future of quotas? There are those in favour and those against. My view is that if there was no quota system, many areas of the country would not produce milk. On the other hand, the argument of the good dairy farming areas is that if the world price of milk bottomed out at about 80p, many efficient producers would be able to live with it. The argument is that quotas would curb their ability to farm if that was the world price. What is the ICMSA view on it? I know it is divisive in the sense that it is difficult to know what will happen. How does Mr. Allen see the overall situation in the next ten years?

Mr. Allen: I will give a personal opinion. Some of my colleagues might have different opinions. My view is that the quotas will remain until 2006, when they will be removed. The trick of it is that the funding will remain. In other words, the milk will be trading at the world price eventually and one can produce what one wants, but there will be a fixed payment in addition to make sure that production can continue in those areas where it would not otherwise continue. Such a payment might well be related to what was the quota at the time it was abolished. I think that is the direction in which things will go, although Commissioner Fischler, who is not likely to be the Commissioner in 2006, is in favour of quotas. His argument would be that there will not be production throughout Europe if one does away with the quotas because they will only produce milk in the key areas, such as the south rather than the west of Ireland.

The other advantage which we might have in the case of the abolition of quotas would be that if we can control our costs and produce more cheaply than the other member states, then that will give us a competitive advantage. We will never produce more cheaply than New Zealand no matter what we do and there is no good in pretending we will.

Do we want to go down that road because the other key element in Europe of course is environment and animal welfare? That could be the means or vehicle for the payment because there is no comparison between what is being talked about and what is being implemented in terms of animal welfare in Europe as compared to New Zealand or, indeed, environment as compared to the US.

Europe wants an environmentally friendly and animal welfare friendly society. That is a good thing. We fully support that. They want nice landscapes and good rural communities. Again, these are wonderful ideas and we all support them. What I want to make sure is that they are prepared to provide the money to achieve those things, which are good for the social cohesion of society. They are a means of eliminating some of the suburban problems, for instance, which will become worse if we do not tackle them. Therefore, there are many good things going for it but it has a cost. If Europe, as a well developed post-capitalist society, can see the good in that and provide the money so that we can have an ideal society, that should be our objective. Some of my colleagues may have different views.

Mr. O'Rourke: The quota debate seems to go on and on with no definite decision on it. It will certainly remain until 2006. From the point of view of ICMSA, if quotas were to be removed the opportunity available to the farmers which the association represents, that is the farmers with small and medium-sized holdings, would be limited. In other words, a farmer who has 30 cows and 50 acres at present would not be able to expand to avail of new opportunities which may arise if quotas were to be removed and if the price was 80p. Therefore, the farmer would be at a disadvantage. It is on that basis that we would formulate the view that, whatever that changes on quotas, it would be essential that the income of the family farmer we represent would be maintained. Not a day goes by without somebody contacting us to ask “Should I avail of additional quota if it becomes available?” and “Will quotas continue?”. One thing we are quite clear on from a European point of view is that, irrespective of whether support measures exist in the future, the quota system will be the means by which they will direct income supports to particular family farmers. Therefore, if a farmer has a 15,000 gallon milk quota today, the best advice would be to increase that quota because between now and 2006 it gives the farmer an opportunity to increase his or her income. Thereafter, those increases will qualify the farmer for additional supports. I hope that helps answer the Deputy's question. We would be in favour of it because of the advantages to the smaller producer.

Chairman: Mr. Heveran and Mr. Dolan have indicated that they want to contribute, but there are a few members of the committee who want to put questions and there are only about ten minutes left.

Deputy Penrose: I welcome the ICMSA delegation. I met them before so I will not labour too many points.

One of the critical issues is the need to increase the level of quota allocation. I know a farmer, who has a quota of 16,000 or 17,000 gallons, who produced up to 20,000 gallons and was hit for the 3,000 gallons. No milk restructuring is available to him. The fleximilk is at an all-time low; it is exhausted. Once there is a quota system, everyone is trying to gain the greatest advantage. Therefore the fleximilk pool is no longer what it was. Now that particular farmer, who has three children, has been hit with a levy bill of £2,500 or £3,000. What is the ICMSA policy in that regard?

There is a great debate in the media about the future of quotas. However, for the small to medium producer, which Mr. O'Rourke rightly stated is represented by ICMSA, there are not many smaller than 16,000 gallons. What hope does the ICMSA offer somebody like that? The farmer is down £2,500. It would have been more only he took corrective action, but the harm was done.

What is the ICMSA policy on trying to secure quota allocations for young farmers? Often those are people who cannot get into farming. The delegation will be aware that only 11 per cent of the farming population is under 35. The profession is lopsided from a demographic point of view. It is essential that the ICMSA focus on those two types of farmers who are certainly suffering with the current quota situation.

On re-nationalisation, the ICMSA has been involved in a number of legal cases and it does not want anymore.

Chairman: Could the Deputy arrange free legal aid?

Deputy Penrose: I will say nothing. Re-nationalisation is rampant and defeats the concept of the free movement of goods and people which underpin articles 36, 48 and 86. Some strong statements have been made but we need action. I have encouraged the Government to pursue a case against article 86 in this context, otherwise the concept of equality of access to markets is defeated. It is only pie in the sky. Let us call a spade a spade. We are only fooling one another. One cannot play the game on two different pitches with two different sets of rules. Is there any way this can be tackled at European level? Has Mr. Fischler any views or has the ICMSA expressed views on this matter? I would like to hear them. Santer is only half the matter. The other half is whether we are going to get back to playing on level pitches.

Deputy Sheehan: I welcome the ICMSA deputation. Mr. Allen has given a comprehensive statement and outlined the procedure we should take if there is to be a future for the farming community. We should get preferential treatment in Europe. We are the only island nation in the Union since the UK was joined to mainland Europe by the channel tunnel. Islands always got preferential treatment from successive Irish Governments. Why should we not now be treated as an island nation in Europe and receive preferential treatment?

No farmer with a quota below 40,000 gallons should be penalised if they exceed that quota. I know of farmers with quotas of 9,000, 11, 000, 13,000 and 17,000 gallons. These farmers are crippled by payments for overproduction. We should get an assurance from the EU that no farmer producing less than 40,000 gallons will be penalised for overproduction. This is a simple way of keeping farmers in rural Ireland. It will not cost the Exchequer much and would be recoupable from European sources.

I do not want to see the west of Ireland being turned into a wildlife park for wealthy Europeans to come on safari trips over the next ten or 20 years. That is all we will have left in the west. Farmers are leaving milk production daily. Twenty years ago I collected milk from 13 people for my local creamery. Not one of those 13 farmers is now a milk supplier. That is a sad reflection of the situation. This is where we are as a result of successive European policies.

Europe has served Ireland well and we have milked Europe. However, the small producer was completely ignored. We are going to have a nation of ranchers. There will shortly be parochial ranchers where previously there may have been a cluster of farmers making a decent living. The same can be said of the fishing communities along the western seaboard. There should be no ban on our beef or milk products. We are Europeans and we should be treated as such. We have been good Europeans. The Italians railroad through every EU regulation yet have received huge increases in their milk quotas in the latest proposals whereas we are offered a paltry 1 per cent. There is some ray of hope as long as we have the likes of the ICMSA fighting our case in Europe. However, the Government and the Minister must fight for the retention of the small farmer in rural Ireland.

Deputy Moynihan: I wish to refer to the example of quotas going in the year 2006 and payments relating to the quota held at that stage. Is that ICMSA policy or is there an indication from the EU that that is what will happen?

Mr. O'Rourke: Some farmers with 16,000 and 17,000 gallons are encountering a superlevy problem. Previously the association was successful in getting rules and regulations in place that if there was an additional quota available it went to those farmers. That has worked relatively well. We now find that there are a number of difficulties associated with that and we are putting forward proposals at EU level. The temporary leasing system was only a 12 month arrangement. We are suggesting that it should be a three year arrangement so that there would be more consistency.

A question was asked about what we could do for young farmers. The important thing is that there are a number of initiatives in place. The key is that an industry will only attract young people if it offers an income which justifies the competition elsewhere. If we want to do something about this issue besides paying lip service to it, we should immediately introduce the installation aid which helped young farmers coming into the business.

Whatever happens to quotas after 2006 we will defend small and medium-sized producers. There will be a need for support for those farmers. The quota system will be the means of measurement. If one has a farmer with 20,000 or 30,000 gallons that will be the means by which the support system would be measured. We would support bringing everyone up to the level of 40,000. Instead of the 1 per cent being offered, we are suggesting that 10 per cent is more in line with what we are entitled to.

Chairman: Ten per cent to someone with a 100,000 gallon quota is 10,000 gallons or to someone with 16,000 is 1,600. Should you not be seeking a tiered system? This would gear people to a realistic quota.

Mr. O'Rourke: We would argue for a 10 per cent increase nationally. This would then be allocated on the basis of previous allocations. Our basic principle is that we look after the needy rather than the greedy. That principle would follow through.

Mr. Dolan: In any discussion on the future of quotas it is important to bear three figures in mind. Given the surplus of milk and milk products, a 1 per cent increase in the quota will lead to a 4 per cent increase in the amount of product placed on the world market. This will result in a 10 per cent reduction in milk prices. This fundamental ratio of 1:4:10 is ignored. If the EU increases its milk production by 2 per cent and cannot find a home for that production, it is put on the world market which increases supply in that market by 8 per cent. The best assessment of the US Department of Agriculture is that one could be faced with a 20 per cent reduction in the price. We ignore these fundamental marketing realities at our peril.

Mr. Heveran: The abolition of milk quotas would be disastrous from a west of Ireland point of view. From the meetings I have attended over the past years, it is obvious that it is big farmers and not small ones who want quotas abolished. The day the quota is abolished, the small producer will be put out of business.

Unless we obtain transport for our cattle to Europe on a permanent basis soon, we will lose that market. Europe is a valuable market for calves, weanlings and light stores cattle and anyone in the business will say that. If there is no permanent route to Europe for livestock, that market will be lost. As time goes on, we will become more dependent on the European market, so I would like the matter of transport for livestock to Europe to be taken as a priority.

Chairman: That last issue is a priority for every farmer in the country, regardless of whether he comes from the west or the south. If a farmer does not have access to markets for live products, beef, etc., he will suffer. The Government invested £1 million to maintain the market but there is now a need for it to be set up on a permanent basis so that people do not suffer the problems which arose in the past six to eight weeks. Farmers did not know whether to buy cattle for export because they were uncertain whether there would be transport for them. Uncertainty destroys any market and I support Mr. Heveran about the need for a permanent roll-on/roll-off service to Europe for all our products. Some 80 per cent of our products are exported. Competition is about being able to export and being able to do so in a free market.

The Joint Committee adjourned at 6.00 p.m.

An Comhchoiste um Thalmhaíocht, Bia agus an Mhuir

Joint Committee on Agriculture, Food and the Marine

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Dé Céadaoin, 27 Bealtaine 1998.

Wednesday, 27 May 1998.

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The Committee met at 4.15 p.m.

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Members Present

Deputy John Ellis (in the Chair)

Apologies received from Senator F. Quinn Senator Enda Bonner also in attendance

Chairman: Are the minutes of the meeting of 13 May agreed? Agreed.

Presentation by the Irish Fishermen's Organisation

Chairman: Mr. Doyle and Mr. Maddock have sent a submission to the committee. They will have ten minutes to make their presentation and there will be a question and answer session for about 50 minutes.

Senator Callanan: Would it be possible to have a monitor showing the proceedings of the Seanad as some of us may be listed to speak in the House?

Chairman: Normally, a member's secretary would let them know when they are due to speak. The monitor shows the committee's proceedings for the benefit of members.

Senator Callanan: Is it possible to have an extra monitor?

Chairman: I will request it on the Senator's behalf but I would not hold out too much hope.

Mr. Maddock: In view of the rapidly changing commercial environment it is opportune to examine how Irish fish producers can best remain competitive in the market and derive maximum economic value from their product. The issue is important for the future of every vessel in the fleet. As world trade becomes more liberalised the result will be greatly increased competition in the market place, not just from other fish products but from a wide range of alternative foodstuffs. Furthermore, consumers in the EU have become much more selective and demanding in their requirements. They have little tolerance, par ticularly with foodstuffs, with any product they perceive to be below top quality. Consumer legislation has evolved rapidly and will continue to do so, driving standards higher. As a result, suppliers of goods and services who do not measure up to the standards expected will not just lose business but, more likely, go out of business. the consumer will continue to set the pace.

How are Irish fishermen positioned to compete and to benefit from this changing situation? What are our strengths and weaknesses? Our strengths are as follows. Ireland is surrounded by unpolluted water in the Atlantic and has the substantial benefit of a green image. Irish fish is uncontaminated by antibiotics, growth promoters, chemicals or feeding compounds of any kind. It is totally safe. From a dietary point of view fish rates highly. About 50 to 60 per cent of EU requirements come from third countries. The weaknesses are a fragmented and localised sales effort which results in a lack of critical mass in trade terms, a poorly organised market structure compared to other commodities and a limited supply of most species because of low national quotas.

Despite the fact that fish is a prime quality foodstuff and is in scarce supply, Ireland has not made an attempt at producer level to devise or implement a national strategy which will maximise the economic value of the product. We have failed to harness the factors which are favourable to us. At producer level we have gone backwards in our approach to the market over the past 20 years.

The marketing of Irish fish needs urgent review. There are numerous fish sales mechanisms, either fishermen's co-operatives or companies, dotted around the coastline. Generally, these operations are conducted independently of and often in competition with each other. There are few economies of scale. There is often an inability to provide a regular supply of fish, yet in 1995 almost 28,000 fish were withdrawn from the market unsold. This unsold fish was sent to fishmeal or covered in dye and dumped back into the sea.

The market situation in the fishing industry is in sharp contrast to the dairy sector where co-operatives combine to exert greater influence in the market and can now compete with the multinationals. Sadly, fishermen have gone in the opposite direction. Their situation is characterised by an ever increasing number of sale outlets, practically all of which are under capitalised and under supplied. The situation urgently needs thorough rationalisation to improve returns on investments and, therefore, fishermen's incomes.

In devising future marketing policy it is necessary to recognise a number of critical elements. Competition and standards are likely to increase. Irish fish quotas are not going to change until at least 2002 and the position thereafter is unclear at this stage. As a result, maximum value must be extracted from the resource in order to reinvest in vessels and to remunerate crews. Market co-ordination and adaptability are essential. In light of these considerations it is reasonable to propose that Ireland adopt an approach whereby catches are sold through or co-ordinated by a single dedicated national sales structure. The long-term merits of such an approach would seem significant. It would harness the current dispersed selling power of the producers into a meaningful co-ordinated commercial force. It would create the critical supply mass required to generate and fill orders on a more consistent and guaranteed basis. By doing so it would be in a position to improve margins and, therefore, fishermen's incomes. It would establish common handling and grading standards and procedures which would facilitate remote purchasing and sales by specification. It should reduce administrative overheads at local level releasing financial resources for other uses. It will reduce and probably remove the risk of a scarce high-quality foodstuff being withdrawn and sent to fishmeal or dumped.

Mr. Doyle: The market at this stage is probably the single most important practical issue facing us. While there are other bigger political issues, such as the review of the common fisheries policy in 2002, on the horizon, we are dealing at present with what is in place. It is a question of how best to extract the maximum value from what we have so that people can generate better incomes and, thereby, generate better cash flow and enough money to reinvest in newer and better vessels. The quality of the fleet has often been mentioned as being particularly deficient in terms of its age and condition. However, it is a catch 22 situation. If one does not have the money to invest, improvements cannot be carried out and the situation gets worse. We must look seriously at how to derive maximum economic value from our resources and from our quotas. The marketing of fish needs a lot of improvement.

It is also true that cohesion and co-ordination over the last 25 years have not improved. I remember working on fish for the co-operative movement and the level of trade co-operation then was probably higher then between competing parties than it is now. Given that world trade liberalisation on all commodities is advancing with GATT and the World Trade Organisation, we will face stiff competition both from within the EU and from outside. At present 60 per cent of the EU market must be supplied from outside and it is extraordinary that we should be dealing with such issues when the market is so poorly supplied. There are periods of the year when fish cannot be sold, despite the existence of this supply shortage, and must be withdrawn from the market. It is an extraordinary situation given the normal operation of supply and demand. It brings us back to the central question: how are we dealing with a national resource to get the maximum value from it?

In future we will have to deal with remote selling, which means selling by computer and by specification. Somebody in Paris or Madrid may want to buy a certain amount of a particular grade of cod. It may well happen that no one individual agent here can supply that market on his own, but if the market here was rationalised and agencies combined, that order could be filled to the correct standard. This is where we differ enormously from the milk sector, which is similar in that one is dealing with a very dispersed commodity in collection and is difficult to deal with. The milk sector went in one direction and is now a very potent player on the world market, being able to handle itself anywhere. It is still looking at further rationalisation to become more competitive. The fishing industry has gone the opposite way. Instead of coming together to form more efficient sales units, there has been a tendency to break up and operate individually. We do not think the industry can survive like that. If we cannot sell the product well we cannot get the maximum return for the fishermen. As a result they leave the industry or cannot invest in the type of vessels needed, hence the negative cycle.

Chairman: What are the prospects of all the fishing bodies coming together to operate as one? There are three or four sea fishing groups in operation at the moment; is there any prospect of them working out an agreement to allow one organisation to represent fishermen? It is clear from the delegation's submission that fishermen are the big losers because they are divided amongst themselves and there is a divided approach.

Mr. Maddock: There are horses for courses. My association was set up in 1974 to enable fishermen to speak politically with a single voice. The other three organisations mentioned were set up by the EU Commission under marketing regulations to manage fish for the market. That is their job, and according to our view they are failing badly at it.

Chairman: I am talking about the Killybegs Fishermen's Organisation, the Southwest Coast Fishermen's Association and your organisation. Those bodies represent sea fishermen. Is there any prospect of those bodies merging in order that one body represents the fishing industry? There is a need for a unified approach at the fisherman and marketing levels. There are other, smaller groups in addition to the organisations in Northern Ireland. Is there any prospect of all of these bodies merging?

Mr Maddock: We do not want to go backwards. I could say there are four political parties, why not have one? If I proposed that we have a dictator, people might not take too kindly to it. We have been set up by fishermen to do something specific and we are a national organisation. The others, such as the Killybegs organisation, are producer organisations set up by an EU market regulation. The Irish Southwest and the Irish Fish Producers' organisations are set up by the same regulation. The KFO and the Irish Southwest split from the IFPO. We (IFO) had one producer organisation and those two left it. If they would like to get together as a beginning it might improve the situation. We have not split from anyone and are open to all fishermen. Other organisations have specific rules that keep people out.

Chairman: While fishermen remain divided, they will be conquered and exploited. However, there are obviously internal politics involved between the various groups.

Mr. Doyle: This is a question of definition of functions. The Chairman is referring to a situation where confusion has been created as to what functions are in existence. Our organisation was set up to act as a socio-economic organisation for fishermen, and we have operated in that way for 25 years. Producer organisations were set up subsequently to stabilise the market, to improve the conditions in which members' produce is presented and sold and to generally streamline the sales procedure. It is fair to say that in Ireland, POs have refused to get involved in the market, which is what they were set up to do. It is made very clear in an EU report on producer organisations that they have concentrated on taking fish off the market in times of glut when it could not be sold and then making money on the withdrawn fish. In other words, the organisations whose job it was to improve the conditions under which fish are sold and to improve the price have a vested interest in keeping the price down, because the more fish that are withdrawn the more money they make. That is not our view on where we should be going. If POs have a problem, it is an internal one and nothing to do with us.

Deputy Sheehan: I welcome Joe Maddock and Frank Doyle, whom I have known for quite a long time, to the meeting. Their organisation has made a very valuable contribution to the fishing industry. However, I would like them to clarify whether they want to create a one centre market to handle all the fish landed in Ireland. The greater portion of fish caught off the south west coast is exported to Spain, France and Germany, sometimes at very lucrative prices.

I remember when every fish landed in Castletownbere, Schull, Baltimore and Union Hall ended up in the Dublin fish market at almost rock bottom prices. The fish left west Cork at 11 p.m. or 12 a.m. and was in Dublin at 8 a.m.. There was not a great deal of ice available at that time, which was 20 or 25 years ago. In desperation, fishermen set up their own groups throughout the country to ensure they could capitalise on the European market when we became members of the EEC. At that time, fish was being brought to Dublin from every fishing port in the country, including Killybegs. Fish was not available in any provincial town until the co-operatives set up their own auction houses where buyers from Cork, Fermoy, Mallow and Limerick could buy fish in prime condition. Do you wish us to revert to a situation where that business will be stifled and a monster will be created in the capital?

Mr. Maddock: There are roughly 50 first salesmen of fish. It would be great progress to halve that number. Norway, which is outside the EU, is the best market for pelagic species in the world - some of our boats steam to Norway to land their pelagic species. Norway has one sales outlet for pelagic species. If we are to compete and learn from what others do, we should look to Norway on the pelagic side and to Spain or Holland on the demersal side. We do not disagree that prices have gone up for white fish. However, there are three main players in Castletownbere selling to Spain, all of which could be transported on one lorry. We would make progress if we could break that down by even one in Castletownbere and the other ports. We are competing with ourselves which is illogical. Other people are doing it differently and cornering the markets.

Deputy Sheehan: Although the Norwegians have one centre for pelagic fish, Norway has a very high production of canned fish and smoked fish. However, on the Continent the emphasis is on fresh fish.

Mr. Maddock: I have no doubt about that. However, what is the point of 50 people sending small amounts of fish to Spain and Holland when there could be one central sales outlet? A manager running a firm is paid £40,000, which must be multiplied by 50.

Deputy Sheehan: Do you agree that competition is the life blood of trade? What will happen if all the business is handed to one organisation?

Mr. Maddock: It depends with whom we are competing. We should not be competing with ourselves. We are competing against Norway, Holland, France and others who fish in our waters. People talk a great deal about flags of convenience. The complaint is that such ships land directly to Spain and give nothing to this country. We have 50 outlets trying to compete with people who supply the market directly. If we do not wake up we will go out of business.

Deputy Sheehan: Fishermen seem quite happy with the present situation for selling demersal fish to the Continent. They receive a good price on the Continent and the quicker they get the fish there the better. They will never be in a position to put all their eggs in one basket. Fishermen on the south west coast regard competition in the Spanish market as vital and do not want to have only one agency for the European market. There must also be several outlets in Spain because if there were no opposition the price could drop dramatically overnight.

It might suit big trawler owners in the pelagic industry to take their fish directly to Norway but I would hate to see us revert to a situation whereby Irish fishermen would have to rely on one agency. It is better to have buyers from provincial towns coming to the fish auctions in ports such as Castletownbere and Union Hall with the remainder going to Spain, France and Germany. Perhaps I am wrong.

Mr. Doyle: What the Deputy said is a fair comment and needs to be examined. However, we see a situation where the pressures, structures and efficiencies of foreign industries, particularly those outside the EU, are likely to send them towards the bigger trading units. We are not suggesting the small man should disappear; we are saying that, like the dairy co-operatives, the small men should band together to add extra weight in their commercial area. We do not want to return to the position of the dairy co-operatives 35 or 40 years ago when there was one at every crossroads. The farmers saw the light at the end of the 1960s and got into bigger units, simply because they saw they could get a better return and a better price from a more efficient structure. They could exert more pressure on the market, whether it was in Spain, France or wherever.

While I accept the Deputy's concerns about one sales organisation, we are not necessarily saying there should be only one - we are saying there are too many sales organisations. With regard to the one national sales organisation the dairy industry is moving towards that end objective. As big as they are they are still amalgamating and getting bigger. Recently, Avonmore and Waterford merged. They would be enormous commercial operations in their own right but they still felt the need to merge together. If at that level of turnover you need to have that kind of strength and structure supporting you how much more relevant is that argument in relation to the fish turnover which is relatively small in terms of first sale values? It behoves the fishing industry to examine its structures and at the end of it we might discover that the present one is correct. My organisation does not think it is but it is good to check if it is and we will be glad to be proved wrong.

Deputy Sheehan: Dairy co-op amalgamations were mentioned. Drinagh, Lisavaird and Bandon co-ops are thriving in south-west Cork and their excellent products are in so much demand that they cannot produce enough for the market.

The herring market collapsed earlier this year because the Japanese forgot about the Irish and bought it cheaper somewhere else. Can your organisation provide a solution to the herring market that would benefit the fishing industry?

Mr. Maddock: The roe market collapsed because the far eastern economies collapsed. The same thing happened to the whelk market, which is a shellfish variety, when its market declined by 40 per cent. Fishermen on the east coast sell whelk to the South Korean and Japanese markets. We needed to set up a task force to examine and provide a solution for the herring market. First, if a market is over supplied then it will result in prices being cut and in a market collapse. We are not all lily white when it comes to doing things the right way. The 40 per cent reduction in the far eastern fish market for our produce had a huge effect on the specialised roe herring industry, which is about half our herring potential. We produce 20,000 tonnes of roe herring. A further 30,000 tonnes of herring, mainly fillets, are sent to German and other markets. The fillet price did not fluctuate because it is also a very over supplied market, as Norway supplies the Community with a huge amount of fish. Norway appears to be the wealthiest country in the world because it remains outside the Community yet sells all its produce in the Community without suffering any penalties.

Senator Ryan: I am an interested observer but I am not extremely knowledgeable about the industry. When you mention that fish is withdrawn from the market unsold does that mean there is no market in Europe or Ireland for that fish? Is it a failure on Ireland's part to identify markets and to be able to respond to them or is there no market anywhere in the EU?

Mr. Doyle: There is an EU market support structure in place called withdrawal which is similar to the intervention system used by agriculture. In order words, the fish is not stockpiled but taken off the market and either sold as fishmeal or dumped. In theory it can be given to charity but that has never happened. If the first sale price does not reach the withdrawal price set by the EU then it has to be taken off the market by one of the three producer organisations we mentioned earlier. The relevant producer organisation is then compensated by EU guarantee funds. This system was originally set up in the early 1970s to act as a stopgap to cope with sudden substantial collapses in price. It was not meant to be a long-term solution. The present structure and market of the fishing industry is completely different from the early 1970s. The support structure has not fundamentally changed and that is where the producer organisations come in. When a producer organisation discovers the first-sale price of fish is below the withdrawal price set by the EU POs are obliged to withdraw the fish and claim compensation from the Commission. Producer organisations make a lot of money out of this situation.

Senator Ryan: Is there no incentive to look for other markets if the first price is below the EU withdrawal price?

Mr. Doyle: No, not by those organisations.

Senator Ryan: The world-wide view is that fish stocks are declining. Therefore, the idea of surplus in markets where the stock of the raw material is declining does not make any sense to an external observer like myself.

The last figures I obtained stated that the Irish fish catch was worth £800 million, of which £660 million or 75 per cent of the fish caught in our zone of economic interest was caught by trawlers that were not registered here. Does that mean that our catch is so small that we do not have the critical mass to set up the national structures you are talking about?

Mr. Doyle: No. Each year the Council of Ministers approve limits for almost all species, called pressure stocks, for each area and it is called a total allowable catch. This is then split by a predetermined formula which is the basis of the common fisheries policy. Each species will have a different percentage ratio. For example, in Celtic Sea Herring we get 86 per cent of that stock. For hake we get about 7 per cent and we get everything in between depending on the fishery and our track record at the time the agreement was put in place in 1983. Celtic Sea Herring has a total allowable catch of 20,000 tonnes set for the year and supplies three companies with fish. As we have by far the biggest share we receive 86 per cent of the catch and one or two other countries get the remainder.

All fishing ceases when the total allowable catch or the individual national quotas have been reached. When you reach the national quota all vessels flying that flag have to stop that type of fishing. The others nations can continue because their quotas are still open. In theory when the total allowable catch is reached then everyone is supposed to stop. In reality there are problems with control and who is catching what. Clearly, if fish is being supplied by another country then it will impact on our market. These are operational factors rather than legal ones. The fact that other countries are catching fish should not greatly affect our situation because the Community market is currently only about 40 per cent self-sufficient and, therefore, supply and demand should force prices up. But we should take into account a couple of factors. Firstly, there is the EEA agreement with Norway, Iceland, the Scandinavian countries and the Faeroes. This allows Norway to have almost free access to the Community market without any obligations. The ACP agreements with developing countries go back to the Lomé Convention of 1976. There is the generalised system of preferences which is in existence for 15 or 20 years. This is another international arrangement which allows certain countries who are supposedly taking action against drugs to have preferential access to the market. Korea, for example, falls into the GSP category. However, I do not think Korea could be regarded as a developing country. We are facing into the dismantling of GATT and tariff arrangements and world trade liberalisation. We are looking at this from the perspective of where we will we be in five or ten years if we do not set up structures in good time. There is another interesting development of remote buying and selling by computer. Clearly in this situation one is buying on trust and on specification. If a transaction such as this goes wrong no one will ever trust it again, so we will be into a situation where the local sales structure could be by-passed because technology has moved around it. Someone in Ireland could easily buy fish in New Zealand by computer and vice versa without necessarily worrying about the structure behind it. Purchasers will be happy if the goods can be dispatched and the quality and specifications are correct. The pace of movement in this area is considerable. By and large the current structures are unlikely to be able to take the strain and the losers in the end will be the crewmen. If the maximum value is not extracted from the commodity this will be reflected in earnings on the vessel, and if earnings are not sufficient people will either leave to take up other jobs - this is happening at the moment - or the owner will not be able to generate enough cash to re-invest in a better vessel or maintain the current vessel. A better structure is required to extract more from the product.

Senator B. Ryan: Before we go into the merits of the Ireland Limited approach, EU rules mean the State cannot set up an Ireland Limited - it would have to be either private or co-operative. This begs the question why you do not have a co-operative structure similar to Bord Bainne or Bord Bia. This comes back to the fact that fishermen seem to be reluctant participants in co-operatives. The real problem is the ethos of fishing which the State cannot change, it is up to fishermen to change it.

Mr. Doyle: That is correct. Someone must give the lead. If anyone is in a position to do this it is the existing fishermen's co-operatives companies. In some cases there is a fishermen-owned company instead of a co-op - Union Hall is a case in point. There is another example in Castletownbere of a company which is owned by fishermen. This is a company structure rather than a co-operative structure but it is a fishermen-owned enterprise. We believe that too many people are competing with one another. If two people try to sell fish to one customer, the customer will buy the fish from the person who offers it at the cheapest price. This is the weakness in the present system. We must try to have a more streamlined structure whereby a bigger supply will go through fewer units. This will enable us to respond to the market, handle the specifications involved to the best advantage and try to extract the best price. Having been in the business for a long time, we feel that rather than going the same route as the dairy farmers we have gone another route which we are worried is not the right route.

Deputy Finnucane: I welcome Frank and Joe. The issue of flagships was brought to attention recently because of the £1 million fines in the courts in Wales. The Irish Naval Service was involved in detecting the 13 ships. The most pertinent factor in this case was the amount of over-fishing done by the these vessels. It is worth bearing in mind that the over-quota of monk fish was almost 250,000 kilos and the illegal hake and anglerfish catch amounted to 361,000 kilos. That amounts to approximately 700,000 kilos of fish and a small number of vessels with repeated offences. If there are 150 flagships operating, this is only the tip of the iceberg in terms of illegal fishing. Some of these vessels are registered in the UK and operating out of Spain where there are no controls worth talking about within fishing ports. In spite of this there are still 12 flagships based in Irish ports where it can be proved there is no economic linkage with those ports vis-a-vis their contribution to the local economy. The objective of the Government in their Programme for the Millennium was to seek the banning of flagships. During Question Time after Question Time in the Dáil there has been no direct response as to whether this goal has been achieved. My first question is whether this was laudable and sustainable objective or an unrealistic objective? My second question concerns Norway's free access to the market. Joe was on the herring task force which made many recommendations. The task force put much emphasis on marketing but the collapse of the German and Japanese markets led to a lot of problems. Norway is outside the European Union, nevertheless, they have free access to European markets. Part of the collapse of herring prices resulted from Norwegian input to the German market in particular. There seems to be a contradiction in Norway having free access to these markets which results in depressing prices for those who fish in the Celtic Sea. Traditionally fishing in the Celtic Sea operates from October to March.

We are being talked over in the near future. The graph is going to move upwards as compared to downwards in recent times. Do you see any optimism in that direction? Finally, are we serious in our attitude to safety of fishing vessels. We had a very comprehensive review in 1996 with regard to the fishing vessel safety review. We all know the hazards of an unsafe vessel. A decision was made in 1993 with regard to European Union council regulation on health and safety on board vessels. But last October the European Union took the Irish to court for lack of implementation of this decision. Is there a problem with regard to implementation on the basis of financial constraints, or due to a shortage of marine surveyors. If that is the case surely there is room for surveyors from the private community.

Mr. Doyle: First, I know there has been a lot of discussion both here and the UK on flagship policy. Mr. Tony Blair received a letter from Mr. Jacques Santer last Summer reassuring him on the issue but I do not think anybody saw the contents of the letter or if it meant anything. The trouble with flagships is that they are availing of illegal weakness in community law. It is particularly the case in the UK where it is very easy to get on the register. It is not just the Spanish who are heavily involved in the UK, the Dutch have now taken up a large chunk of the North Sea beam trawler operations and based them in Hull. In the meantime brand new boats are bought to operate from their hom ports. It is difficult to deal with, particularly in the context of UK legislation and this is where most of the problem arises because most of those boats are in fact fishing off the Irish south coast. It is added to by the fact that they spend very little time in UK ports. They will add one trip out of several into the UK and then they will land into La Caruna or Vigo or some of the northern Basque ports.

Once a vessel has a number and a flag displayed it is entitled to any of the rights that any other vessel in a similar situation has. If a member state gives a vessel a registration and the right to fish, and allows it to fly the flag then it is deemed to be a vessel of that state and entitled to do exactly what the other vessel of that state can do. It is exceedingly difficult to deal with that in legal terms because they have the right. How do you take it away except you buy it away from them and that is a very expensive business. The flagship issue, for all the political positions that were taken on it both here and in the UK, remains as difficult now as it was five years ago. I do not think it has changed. There has been an attempt to try and create an economic link between the vessel and the state but to my knowledge so far an economic link has not been satisfactorily defined. Even if it was defined there is a considerable risk that it would be taken to the court and challenged because it is very hard to define what constitutes an economic link that holds up in law. Given the vagueness of all of these parameters it is not easily to see how the flagship issue is not going to be resolved. It is a very difficult legal issue. It is a real problem but it is an exceedingly difficult one to sort out. The only real way of sorting it out is having tight control right across the system so that they cannot operate with the freedom and latitude that currently exists.

Deputy Finucane: Can you expand on the issue of tight control? Inspectors within the European Union have admitted it is not possible for the European Union to do that type of policing and monitoring you talk about. It would appear it is down to individual inspectors in individual countries including Ireland to carry out inspections on various ports. In Spain there is no similar type of inspection. How can you control it?

Mr. Doyle: I agree. The Spanish situation is particularly bad. Everybody tends to point the finger at the next lot. That is a natural thing to do in the business. The question of control comes up at practically every meeting that takes place to do with fishing. There is a tendency to point the finger over the horizon at the other guy and say we are all in favour of control but not for me. The issue has to be grasped at some point. There is some movement on it in so far as agreement has been reached to put satellite monitoring systems on vessels which would at least show where a vessel over 24 metres is located. Some of these systems are already in place. Certainly third country vessels operating in Community waters currently have to have them. The intention is to have these on all vessels over a certain size. These continuous monitoring systems work via a unique satellite signal for each boat which means that there is a continuous record being kept of where each boat is at a given time of the day so that a vessel which is fishing at a certain position cannot be logging fish caught into another place because his position on the computer would clearly show his exact location. That is one loophole narrowed down. There is also the intention to have a continuous logging system where there would be period ie logging by satellite of what is on board so that there would be a running up date of what the vessel is catching. A vessel would always be subject to being checked and if it was found to be in breach of any of the regulations it runs the risk of detention and prosecution.

There are a couple of problems. One being that the jurisdiction of each control system is limited to its own waters except in times of hot pursuit. In other words a French boat cannot come in to patrol Irish waters or an Irish boat cannot go in to patrol French waters except in a situation of hot pursuit where you are actually chasing somebody. As a general rule the competence for control of a member state's waters lies with that particular member state. So that there might be rigid and efficient control in one area and then across the line in another state things might be a good bit different. That is a complication. The level of systems developed in each of the states differs enormously for example the amount of aircraft, patrol vessels and hardware and back up systems differ quite enormously and disproportionately. There can be quite considerable differences of efficiency and application from one jurisdiction to another. This is where life gets difficult as well in terms of dealing with it. There is constant movement nevertheless at Commission and Council level to try to improve matters. There is a new amendment to the current control regulations on the agenda for the next Council meeting on 8th June to try to tighten up some of the loopholes. It is a gradual process but eventually it will get to a stage where there will be reasonably adequate control. How long it will take I do not know. Some member states clearly have no interest in control at all and I do not think they want to know what the word control even means. How to deal with the political reluctance to tackle the problem is another matter. It is a huge issue. It is better now than it was. I think they do not want to know what the word control means. Dealing with political reluctance to tackle a problem is another matter. This is a huge issue. All we can say is that it is better now than it was and it will probably get better as systems develop and as computerisation begins to have an impact. Nevertheless it will continue to be difficult to deal with people who set out to evade the system.

May I deal with the question of free access for Norway. The European Economic Area Agreement is a pre-accession agreement going back six or eight years. It was a sort of sweetener offered by the Community to certain outside, mainly Scandinavian, states to encourage them to take a favourable view of membership. Norway took the opposite view and remained outside. Nevertheless, Norway retains the benefits of market accessibility.

Deputy Finucane: Were there not restrictions?

Mr. Doyle: There are some restrictions. I cannot recall them exactly but as a general rule Norway has, more or less, free access to the EU market.

I was asked if the Celtic Sea stocks are up or down. That depends on the level of fishing effort to a large extent.

Deputy Finucane: I was talking about the market. Is the IFO optimistic about prices. The report of the Task Force on the Management and Marketing of Herring makes several recommendations including the appointment of a pelagic marketing person, finding new markets and so on.

Mr. Maddock: I am afraid things are not very hopeful. Countries like Norway have stockpiled quite a lot of herring from the last season and unless they can develop a market in China or somewhere similar the Community market will continue to be over supplied. The roe herring market is largely dependent on what happens in Canada. Canada's season is before ours and if they over supply we have difficulty in selling our roes. There is a knock-on effect.

There have been huge landings of herring. The Atlanto-Scandian herring has been introduced in the last two years. This goes mostly for fish meal. Denmark withdrew about 300,000 tonnes of pelagic species last year. Countries such as Denmark and Norway advocate the use of herring for fish meal. Other member states, including ourselves, oppose the practice of fishing certain species such as herring and mackerel directly for fish meal. Denmark and Norway argue that putting several hundred thousand tons of herring into fish meal would improve the market. We advocate that these species should go for human consumption. The outlook for the sale of herring is not very good.

Senator Bonner: I listened with interest and I do not dispute any facts quoted because I know that Mr. Doyle and Mr. Maddock have many years experience of the fishing industry.

The white fish fleet has declined in Donegal. I know many in the pelagic fleet are also members of the Irish Fishermen's Organisation. The representatives of that organisation tell us that the incomes of fishermen are dropping while, in fact, the incomes of pelagic fleet fishermen have quadrupled in the last two or three years. Producers on land, the factories, have experienced a lack of supply of fish in the months of February and March. Do fishermen have a responsibility to maintain the supply to factories at home and not simply sell their catches at high prices in Norway?

From 5 April last the Revenue Commission and the Department of Social Community and Family Affairs insist that share fishermen pay the normal PRSI rate. The Irish Fishermen's Organisation opposed this measure but I understand that further discussions have taken place. What is the current situation?

Mr. Maddock: It is the responsibility of the Killybegs boats to bring fish back. I suppose this would be a great responsibilty if a catch can get three times the price in Norway. They also make sure they fulfil their local orders. Many of the biggest factory owners have interests in the trawlers. If they can make good profits in Norway and in their factories in Killybegs they will take a practical view of things.

Senator Bonner: I act as an accountant for many of these people and I have heard many complaints this year. I am more concerned about the employees. The fish factories are substantial employers in north-west Donegal.

Mr. Maddock: Donegal people are very practical people.

Chairman: Necessity is the mother of invention.

Mr. Doyle: The long saga of PRSI goes back more than 30 years. It has all the appearance of lasting another 30 years. Share fishermen are self-employed. This arises from a High Court judgment of 1986. The Revenue Commissioners accepted this judgment but it was not accepted by the Department of Social Welfare. Subsequently, I had frequent discussions with officials of that Department and the matter was referred to the Attorney General. It took about two years for the Attorney General to give a view. The Attorney General advised that the High Court Judgement did not apply to PRSI.

On Holy Thursday, 1991, our organisation met Dr. Woods, Minister for Social Welfare. The Minister argued that share fishermen were in the PRSI system and we argued that the High Court had judged they were not and that the matter would have to be resolved again in court.

In 1992, in ruling on the Griffith case, the original judgment was upheld by the High Court, that share fishermen are self-employed. Almost all share fishermen came out of the PRSI employee system. Two years ago we attended a meeting chaired by Deputy Durkan, then Minister of State at the Department of Social Welfare. It was made quite clear by him that the Department could not continue to deduct employee PRSI payments because to do so would be to act illegally. Not only that, but payments already deducted would have to be refunded.

The Department asked us to come up with ideas for improving the self-employed PRSI scheme which had been introduced by Dr. Woods, Minister for Social Welfare in 1994 and which operated an optional scheme for fishermen. In return for payment of an extra percentage of their earnings, they receive limited additional benefits.

In January of last year we had another meeting with the then Minister for Social Welfare, Deputy De Rossa, who said the ball game had totally changed and that everything that had gone before was reversed 100 per cent due to a European Court judgment which would be enforced immediately, which stated that share fishermen are employees. The problem was that the European court judgment he referred to had nothing to do with social welfare but rather involved the free movement of labour and the right of Spanish fishermen to work on a UK vessel. It did not state what conditions they would have to observe when on that vessel.

We have taken legal opinion on this and as far as we are concerned, there is no change to the previous situation. If the Department is now deducting subscriptions, it is doing what it said it could not do two years ago.

Chairman: We are five minutes over time.

Senator Bonner: Perhaps we should discuss this. I understand most of the pelagic fleet are paying full PRSI.

Chairman: I have no problem with whatever the Senator wishes to do outside the committee and I am sure Mr. Maddock and Mr. Doyle do not either. I thank them for making their presentation to the committee. It is important that the committee hear the views of all parties, which is why I threw in the hot potato at the start. The contribution of the delegation will be of enormous benefit to the committee when we prepare our report on the fishing industry.

Fishermen have been divided and conquered by certain elements in fish trading organisations outside Ireland. There is an obvious lack of co-ordination as regards sales. If there are 50 individuals trading, as well as Europeans trading through third parties, it will not help the long term development of the fishing industry. However, it should not be the responsibility of one or two individuals. There must be a happy medium and perhaps we may see a rationalisation, as happened with co-operatives, where some of these traders will sell out to each other. If the delegation wishes to make any further submissions to any Members of the committee, they should feel free to do so.

Deputy Connaughton: Animal breeding legislation dealing with the new artificial insemination service for livestock will be introduced shortly. We should invite officials from the Department to the committee to discuss their proposals.

Chairman: I support that. We should ask the AI stations to make written submissions prior to us meeting Departmental officials. Pedigree breeders are worried about liberalisation of certain sections of the AI industry.

Deputy Connaughton: The legislation is imminent.

Chairman: We will see how early we can arrange that. The Select Committee will meet on 10 June at 9.30 a.m. to discuss the Marine Estimates and at 4 p.m. to discuss the Agriculture Estimate.

Deputy Finucane: In the interest of witnesses, the nameplates for each Member should be displayed.

Chairman: We will deal with that. Following discussion of the Agriculture and Marine Estimates, the next meeting is 17 June at 9.30 a.m. with An Bord Bia. That is the only time we can get the chairman, the chief executive and the secretary together. We will deal with the Plant Varieties Bill at 2.30 p.m. on 24 June.

The Joint Committee adjourned at 5.30 p.m.

* Deputies Coughlan and Kirk in substitution for Deputies Ellis and Kelleher respectively.

** Senators Chambers and Moylan in substitution for Senator Callanan and O'Brien respectively.

* Deputies Coughlan and McGinley in substitution for Deputies Kitt and Ring respectively

* Deputy Moloney in substitution for Deputy Moynihan

* In substitution for Deputy M. Ring.

* In substitution for Senator F. Quinn.