Wednesday, 27 May 1992
Dáil Éireann Debate
Minister of State at the Department of the Taoiseach (Mr. Dempsey): With reference to the debate about to take place on the reform of the Common Agricultural Policy I wish to make the following statement.
Statements to which Standing Order 41 shall not apply shall be taken now on the reform of the Common Agricultural Policy and the following arrangements shall apply: The statement of the Minister for Agriculture and Food and of the spokespersons for the Fine Gael and Labour Parties shall not exceed 20 minutes in each case; the statement of each other Member called on shall not exceed 10 minutes, the Minister, or a Minister of State at the Department of  Agriculture and Food, shall be called upon not later than 10.30 p.m. to make a statement in reply.
Minister for Agriculture and Food (Mr. Walsh): I thank you a Leas-Cheann Comhairle for the opportunity to make this statement to the House on the conclusion of what has been an historic agreement in the future orientation of the European Community's Common Agricultural Policy. As everyone here knows, the question of reform of the Common Agricultural Policy has been foremost in the minds of farmers and policy makers alike for the past 18 months. Long and difficult negotiations took place during this period culminating in last week's marathon session of the Council of Agriculture Ministers in Brussels. It is my firmly held conviction that the outcome of this Council has been very good from a national point of view and will see producers and consumers alike derive considerable benefits from it over the coming years.
From an Irish point of view the negotiations on Common Agricultural Policy reform were the most important undertaken since we joined the Community. Agriculture is a uniquely important sector in our economy. I am very pleased that our ability to get this message across in the Council of Ministers and at every other opportunity, including bilateral meetings with each of the Ministers, bore fruit when the time came for decisions to be taken. The agreement of the Council to the adoption of special measures for the beef sector will be of unique benefit to us and testifies to the success of the final outcome of the negotiations.
It was obvious that there was need for a reform of the Common Agricultural Policy. In recent years it had become clear that the policy adopted at a time when the Community had a food deficit was no longer the answer in the face of spiralling production and recurring market imbalances in major sectors such as beef, milk and cereals. The build up  of substantial stocks of goods in intervention, to which we in this country contributed very substantially, led to financial pressure on the community budget and pressure from public opinion for change. FEOGA market support expenditure was on the increase in recent years, up by 32 per cent in 1991 when compared to 1990, but it had not prevented a decline in producer incomes as much of the increase was being absorbed in the financial costs associated with intervention on a grand scale. The continuing decline in the number of producers in the Community, down 40 per cent since 1975 despite an increase in FEOGA support expenditure from 4 billion ECU to 31.5 billion ECU in the same period, bore ample testimony to the need for reflection and a carefully planned change in policy direction.
There is no doubt whatsoever but that we in Ireland benefitted greatly from the Common Agriculture Policy which has resulted in an inflow of some £11.5 billion (a) £10.7 billion under the guarantee and (b) £0.8 billion under the guidance section since we joined the Community. However, one certain way of destroying the Common Agriculture Policy would have been to ignore its deficiencies.
All those with the interests of farmers at heart knew that change was required, none more so than Commissioner Mac-Sharry who spearheaded the adoption and presentation by the Commission of its blueprint for the reorientation of the Common Agricultural Policy early last year. Our reaction to these proposals was cautious. While we sympathised with the underlying principles of what the Commission had in mind, which included the maintenance of the maximum number of farm families in rural areas, an expansion in the role of such farmers to be producers of food as well as protectors of the environment and a fairer allocation of Community expenditure, we knew that major adaptations would be required before an agreement acceptable to us could emerge.
Once the Commission had put forward its proposals for reform there were two alternatives open to us; accept the Commission's  paper as a basis for discussion while highlighting its deficiencies or adopt the negative stance of total rejection of what was on the table. Sensibly Ireland adopted the positive and what has ultimately proved to be the correct approach. What would have happened if the other approach had been taken as some in this House had advocated? Let us not beat around the bush. The only alternative policy for the Community would have been a major intensification of the recent trend of price cuts without compensation. I am convinced that no Deputy in this House seriously believes that for us to have facilitated such a policy in any way would have been in the best interests of the farming community.
Let us recall what our requirements were going into these negotiations. In general terms these included the need to ensure that the policy was modified in such a way as to give a more concrete expression to the basic principles of the Common Agricultural Policy laid down in the Rome Treaty, to potect the role of agriculture as the most important sector of the Irish economy, to safeguard the incomes of farmers, to promote policy options which would result in the maintenance of the maximum number of farm families on the land, to protect the vital commercial element of our agriculture industry, to prevent discrimination against grass based extensive methods of production, to secure adequate and lasting budgetary resources and to seek to ensure that any reform package agreed would be secure in the context of an agreement under the GATT. We accepted the need to curb production growth, with a view to bringing markets more into balance thereby leading to greater producer returns from the market rather than from intervention mechanisms.
We had particular policy objectives in each sector. As regards beef, we sought measures which would address our seasonality problem including satisfactory premia arrangements and assurances on the provision of adequate intervention arrangements well into the future. In the  case of milk, avoidance of the proposed quota cut was one of our aims, together with a much smaller price cut than the 10 per cent proposed, preferably involving some adaptations in the price of butter. On sheepmeat we wanted to maintain current eligibility limits for the purposes of qualification for the ewe premium and as regards cereals we sought less severe price cuts combined with fuller compensation.
Were these policy objectives achieved? The answer can only be a resounding yes. The agreement reached represents a really major improvement on what had initially been put forward and its conclusion will end the uncertainty which has prevailed in farming circles over the past 15 months. All involved in agriculture, farmers, processors and traders can now confidently proceed with their plans knowing the future shape of support and premium arrangements. I am confident that farm incomes will be stabilised and that the contribution of the agriculture and food industry to the well-being of our national economy will continue and even improve in the years ahead.
What has been agreed is a significant reorientation of Community support away from direct market price support towards direct payments to farmers to offset any consequential income losses. The adjusted market support measures will be accompanied by a series of socio structural actions relating to early retirement, agri enviroment and forestry.
There is no doubt that what was achieved is highly significant given the difficulties involved. The outcome is especially welcome for the beef sector where as we all know producers have been facing declining returns in recent years.
The policy switch agreed will see producers deriving a greater percentage of their incomes from direct payments. I am happy that since such payments go directly to farmers we will see a more  equitable distribution of the Community's resources amongst producers than in the recent past. As a result of the negotiations, direct payments — headage and premia — to Irish farmers will increase by £340 million to exceed £620 million per year. I am also confident that farmers will react positively in response to the new price signals by increasing their productivity and will also benefit from a much more market led approach which I am sure will be adopted by the processing sector.
I would now like to make special mention of the improvements and arrangements for those sectors of particular importance to Ireland. The main effect in the beef sector will be to completely reorient cattle price support arrangements. While the intervention price for cattle will be reduced by 15 per cent in three stages beginning in 1992, dramatically increased and specifically targeted premia will both compensate producers and at the same time tackle the long standing seasonality problem.
Beef farmers will, on full implementation of reform, benefit from a basic male bovine premium of £158 per male animal compared to the current level of £35. In addition in a development of particular importance to Ireland, a special slaughter premium of £52.75 will be payable on all male animals slaughtered between 1 January and 30 April. This provision has been included in the package specifically at our request and is designed to tackle the problem of seasonality of production in the beef industry which has long been recognised as a major impediment to its development. Furthermore, an additional premium of £26 per male animal will be payable on holdings where the stocking rate is below 1.4 livestock units per hectare. Farmers could therefore qualify for a maximum male bovine premium of £237 compared to £35 at present.
I would also like the point out that the forthcoming changes in premia arrangements will not affect producers traditional entitlement to headage payments. They will also be paid. I have given an undertaking that headage and premia  payments will be paid in the calendar year for which they are due. I was not satisfied, nor did I make any excuses, that these payments were long delayed and the only people who were seriously affected were the farmers but, now that the headage and premia payments are of far greater value, I will be insisting that payments are made smoothly and on time.
Mr. Walsh: I would like to emphasise that these arrangements were specifically designed to meet our request to tackle the seasonality of production here and I am confident that a real change in the pattern of our slaughterings can be achieved. These payments will be of particular benefit to extensive grass-based producers. It is expected that around 90,000 producers with 950,000 animals will benefit from these premia with the maximum national eligibility being confined to total stock numbers in any of the three years 1990, 1991 or 1992. The premium can optionally be operated at the level of the individual which will benefit traditional producers. We were very anxious that the traditional beef or cereal producers would be able to make a living from their particular system of farming.
As regards the suckler cow premium, the level of increase will be from the current rate of £52 to a new annual rate of IR£123 per animal in all cases and to £149 where the applicant can benefit from the £26 extensification premium. The right to the premium will be confined to the number of animals in respect of which premia were paid in 1990, 1991 or 1992.
New intervention arrangements will be introduced with a return to buying in of quantities similar to those applicable  before the BSE scare and the Gulf War. An intervention ceiling of 750,000 tonnes will be introduced in 1993 but will be reduced to 350,000 tonnes by 1997. However, safety net intervention will be retained and quantities bought in under that arrangement will not be counted in the overall ceiling. Significantly, the Council noted a declaration by the Commission that its decisions on the acceptance of offers of beef for intervention will take special account of regions with a heavy dependence on beef production with a view to avoiding the necessity of recourse in such regions to safety net intervention.
All in all the deal agreed is an excellent one for the beef sector. Direct payments will be increased by in excess of £200 million and together with input savings should more than compensate beef producers for any losses arising from the reduction in institutional prices. At the same time, the new arrangements and in particular the special premium to assist winter fatteners will enable Irish beef plants to be more competitive. I am confident that the trend of the last two years which saw 52 per cent and 56 per cent of total beef production going into intervention will be reversed.
As regards milk, I am very pleased that there will be no quota reduction this year and that the proposed cuts in quota of 1 per cent for each of the two following years can only be introduced following a review of market conditions. It was in response to arguments put forward by me and others in the Council, to the effect that the current market situation did not necessitate a quota cut, that the original proposal was dropped. The Council also agreed that there will be no price cut this year and to limit the price cut for this sector to 2.5 per cent over two years from 1993-94 which will arise from a 5 per cent adjustment in the butter price, compared to an original proposal to cut the milk price by 10 per cent. I am sure that we all recognise the need to cut the price of butter, thereby increasing its competitiveness in the market place. Another welcome development is that the milk  co-responsibility levy will be withdrawn from the beginning of the next marketing year. They are the conditions relating to milk quota and price; anything else members read in any publication is simply incorrect.
In the case of cereals the outcome represents a signficant improvement on what the Commission had originally proposed. In particular the price cut of 29 per cent is less severe than the 35 per cent originally proposed while the compensation arrangements have been improved for both the price reduction and set-aside. The position of traditional producers will be safeguarded by the facility to operate the new arrangements at individual farm level. In addition the discontinuation of all co-responsibility levies will benefit cereal producers to the tune of £16 million this year.
A further benefit will accrue to producers under the new system as compared to the existing one. At present, if the Community maximum guaranteed quantity were to be exceeded, all member states would be penalised, even those which had not contributed to the Community's over-production. Under the new scheme the Community will be divided into regional base areas and Ireland will be considered to be a region under the new arrangements. It is only if the base areas in a region exceed the maximum guaranteed quantity that producers in that region will be penalised. That is very important from Ireland's point of view because up to now if the Community exceeded the quota we were penalised even if we were under the limit. That will not happen in the future. It must also be emphasised that livestock producers will benefit by way of reduced input costs arising from the cuts in cereal prices.
In relation to the sheep sector a national quota based on a reference year of either 1989, 1990 or 1991 will be introduced in respect of the ewe premium. There will be no change in the present maximum flock sizes qualifying for the premium and 50 per cent of the premium for animals in excess of the maximum will continue to be paid under the new  arrangements. Ireland's 52,000 sheep producers have been protected in the face of a major effort to reduce the numbers of ewes eligible for premiums and to phase out the payment of any premiums in respect of numbers in excess of the eligibility limits.
The accompanying measures consist of three key elements: an agri-environment action programme, a forestry programme and an early retirement scheme. I see the operation of these schemes as complimentary to the arrangements for the various market sectors. They will offer farmers opportunities for diversification. I am confident that the smooth operation of the early retirement scheme, which will be 75 per cent funded by the European Community, will improve the rate of land transfer to younger farmers, while adequately providing for the security of those farmers willing to participate. I realise that all previous retirement schemes were unsuccessful and did not work in Ireland. I am very pleased that this one is to be put in operation and will be adequately funded. I hope that it will elicit a better response than previous schemes.
On the matter of financing for the new package, a number of spokespersons have legitimately raised questions. There is no point in making an arrangement unless it is a long term one, and I am satisfied by assurances given by Commissioner MacSharry that adequate and durable Community funding will be provided. I am equally satisfied that this agreement will not be subject to discipline under any future GATT agreement. I know that the Commission and the Community as a whole are fully determined that this will be the case.
This agreement on the reform of the Common Agricultural Policy presents us, in Ireland, with major opportunities, especially when taken in conjunction with the completion of the internal market which will give us free access to the Community's 340 million consumers. I am confident that the producers and food processors of Ireland will not simply sit around reflecting on what has been achieved. I hope that they will now make  their assessments, frame their plans and grasp their opportunities.
In the new situation, particularly reduced intervention availability, we will need to develop new markets. Regrettably we have up to now been less successful than I would have wished in penetrating markets within the Community. This situation must change or the hard-won concessions achieved last week will be undermined. An improved performance will require a major effort and a lot of hard work, but the impetus is there now for us to adopt a more market-led approach. It is time that we stopped just talking about capitalising on our image as unrivalled producers of wholesome food in a clean environment and actually went out and delivered these goods to the European consumer. It is only in this way that the gains secured last week can be copperfastened in a way that will protect the incomes of all those involved in the agriculture and food industries.
It is clear to me and I think to everyone that last week's Council agreement represents an historical turning point in the agriculture sector, not only here but throughout the European Community. What would have happened had there been no reform proposals or if, having been made, they had not been adopted by the Council? The simple answer is that the system would have broken down under the weight of surpluses and under the cost of financing them. Either that or the European Commission would have been forced to employ the many management tools at its disposal to effect a drastic and probably uncompensated reduction in the scope and impact of price supports.
These things I am glad to say did not happen. Instead we have had a reform which is balanced and thought through, not adopted suddenly in a crisis situation, one which takes proper account of Ireland's needs and one which, for the first time ever, addresses the complex and obstinate problem of excessive seasonality in Irish cattle production. This is not the disaster that some people predicted  but a package of opportunities for the future.
I want to pay tribute here to the major effort of the initiative and negotiation put in by Commissioner MacSharry who showed all the talent and skill required to meet the real needs of member states, including Ireland, and to reconcile them with the equally real needs of the Community he serves. I also salute the efforts and organisational work of Council President Cunha who succeeded in his aim of having the reform adopted during the Portuguese Presidency. I would like to put it on the record of this House that I received magnificent professional support from the senior staff of the Department of Agriculture and Food. They are an outstanding team and have built up tremendous contacts over the years which we used to very good effect in finalising this agreement for the benefit of Ireland.
If Deputies compare the original reform proposal with the final outcome they will see what has been achieved. The price reduction and the move away from price support have been moderated and made more gradual; adequate compensation for them has been provided, and a counter-cyclical cattle scheme has been adopted. These are the aims that the Government and I set out to accomplish. We have accomplished them. In doing so we have set out on the road of lower prices for consumers, without lowering the incomes of farmers, a road which should allow our food processers to advance in the construction here for a food industry to rival the best in the world. We, in the European Community, have set a headline and laid down a challenge to our competitors on the world market, especially those with high levels of internal support. We say to them “this is what we have done in the Community; can you do the same to stabilise markets internationally?”.
Many of the implementing details remain to be worked out but we have achieved the concession that the member states can have the flexibility to implement these measures. That is very  important from Ireland's point of view. As a member state, we will be able to implement these measures rather than have the Community work them out for us. They will be worked out and in ways which I will ensure will provide the maximum achievable benefits to the country. However, on Common Agricultural Policy reform itself I ask the House, would you have preferred the chaotic alternatives? Would you like to have closed your eyes and clung blindly to a system that could not and would not last, losing your chance to influence the future shape of the Common Agricultural Policy? The answer to that question has to be no. The Common Agricultural Policy reform decisions of last week were more than historic. They were necessary and good for this country. I commend them to the House.
Mr. Deasy: Only time will tell whether these negotiations have been to the benefit of the country. As I said last Thursday evening when the negotiations in Brussels concluded, the Government have adopted a high risk strategy in that we are now expected to do something which we have never done before, that is, sell our own produce. By the Minister's own admission, in his statement here today, in recent years we have been placing over 50 per cent of our beef into intervention each year. Indeed we have been placing an even greater amount of milk products into intervention. If we cannot sell those products on the open market within a short number of years, then they will have to be physically dumped.
Our record, as regards selling within the Community, has been lamentable. Given the elimination of export refunds and the eventual elimination of the intervention system, if we cannot sell products then we will just have to physically dump them. That is a daunting task. It is what renders the outcome of the negotiations  extremely high risk. Our track record proves that we are not able to sell into Europe, into the market of 340 million people. If our record is proved to be correct in the future these negotiations will turn out to have been an unmitigated disaster for agriculture here. Far from being superb or constituting a national milestone in agriculture here — as was stated by the Minister — they could well turn out to be an unmitigated disaster. That should be borne in mind.
I have always been one of the proponents of an Irish agricultural sector which could sell on the open market. I have never been one to say we should be dependent totally on intervention; it has been a very false set-up. Rather there should have been a phasing-out system under which we would have a percentage reduction on the amount of produce going into intervention each year rather than looking forward to a total phasing-out of intervention within a short number of years. Our industry is not geared for that; if they cannot sell beef into a market of 340 million people now, how could they be expected to do so next year or by 1997? Similarly, if they continue to manufacture butter and skimmed milk powder which cannot be sold on the open market, what are they going to do by 1997 and subsequent years? That is why I sound this note of warning.
We are in a very precarious position. Our track record has been abysmal. I would like to see some indication that we will have that marketing ability. I see no evidence that we can do it. I hope we can. As I said on radio and television, it is a challenge and I hope we can rise to it but indications are that we have not done so in the past and will not do so in the future.
The Minister is sidestepping the most major issue, that involves the GATT negotiations. In the GATT negotiations we will not be playing a parlour game; we will not have niceties; we will not be dealing with people who will be gentlemanly all the time, if indeed any of the time. For 30 years the large agricultural-producing countries in the world have  wanted to get into the European market. Some of these include the United States, Canada, countries of South America such as Brazil, and Argentina together with Australia and New Zealand. They perceive this round of GATT negotiations as their chance to penetrate the European market, something they have been unable to do. I take the Minister's categoric assurance obtained from the Commission in Brussels that there would be no fiddling around with or cessation of subsidies with a grain of salt. I contend it is not worth the paper on which it is written.
When one goes into the GATT negotiations, one goes in as an equal partner with all of these people; there are no guarantees, written or unwritten. It is my very definite opinion that we are going to find it extraordinarily difficult in the Community to withstand the pressure from those countries, together with a host of third countries, who want access to the EC on two fronts. First, they want to see the abolition of subsidies in any form — export refunds and intervention would go out the window; they will want the elimination of any other subsidies. Second, they will want free access to the European markets, something they have not had with the exception of the New Zealanders and the Americans; the New Zealanders with a limited amount of butter and and an unlimited amount of lamb and the Americans, apparently with an unlimited amount of cereal substitutes. Everything will be on the table.
If they get their way to a significant extent that agreement in Brussels last week will sound the death-knell of agriculture here. I do not want to sound like a person who is scaremongering but the fact is that it is all to play for at this stage. It is the world stage. We are not talking about a cosy club of Twelve; we are talking about the world stage. Even in the cosy club of Twelve, I have expressed my doubts about our ability to sell.
One of my colleagues has just expressed our ability to meet the type of payments the Minister has mentioned. The greatest scandal we have seen in agriculture in modern times here was the  lack of payment of beef premia and other forms of subsidies. If farmers are to be dependent on the payment by our Department of Agriculture and Food on these subsidies and premia for a living, then all I can say is: God help them. We have all met dozens of genuine people in our clinics over the past year who are being blackguarded by officialdom, who have not got what they are entitled to for the most nebulous reasons, perhaps because a form was not properly completed and they are difficult to complete at the best of times.
We are dependent on a system that has creaked and, in some cases, not worked. How can we expect people to believe the Minister when he says that everything will be done according to the book, that everything will be in order. Doing things according to the book can be all very fine but, when that does not take into consideration compassion, and people's entitlement to live with a certain amount of dignity then the whole thing collapses. The performance of the Department of Agriculture and Food has been seen to be dreadful in that regard. The Minister promised action, we have not seen action. Every member could cite numerous examples of people who have been victimised. The premia subsidy system may not be at all what it is being built up to be.
Mr. Deasy: Evidently the media generally seem to think that this package will constitute a bonanza for consumers. Prices of products will actually drop in the shops. In, fact, over the past two years agricultural prices and farmers' incomes have dropped by 20 per cent. In the same period the prices of those same commodities they produce have risen by 3 per cent. That is a very sobering figure. Prices and incomes have dropped by 20 per cent but the consumer has not benefited; consumer prices have gone up by 3 per cent. I contend that this talk of consumer prices coming down is a lot of hog-wash; it just does not wear.
 The biggest benefit we can get from the EC at present would be a major investment in research and development to ensure that the milk and beef we produce can be processed so that our products are saleable, getting away from the butter and skimmed milk powder syndrome. Second, the greatest service they could do us would be to heavily finance a marketing system so that we could sell those products when we produce them.
We can talk about a new era. We can talk about a market-oriented system. I wish we had it but we do not and we never had. We dumped more than half of what we produced into intervention, into storage, it has been a disgrace. I would like to see us get away from that disastrous episode in our history. I would support the Minister if I felt he would do that. I hope he can but I have grave reservations I have even graver reservations about the outcome of the GATT negotiations.
As I said at the outset, time will tell; the proof of the pudding is in the eating. There are many “ifs” and “buts” about the outcome of these negotiations. I am afraid they may blow up in our faces, that in two or three years time our agricultural sector may discover that they are worse off than they were before the MacSharry proposals. These proposals are inherently contrary to the best interests of agriculture in this country. I for one will wait and see if at the end of the day they live up to the promises that were made.
Mr. Bradford: It is quite understandable that the Minister for Agriculture and Food, Deputy Walsh appears very elated this afternoon as he outlines the benefits or otherwise of the reforms presented to us. I am sure the Minister has spent days, weeks and months working on them and he is obviously delighted they have been concluded. I suggest,  however, that it is not entirely justifiable for the Minister to present in what could be described as exaggerated terms what the proposals will and will not mean for Ireland. It is wrong to significantly downplay some of the very serious repercussions of the Brussels proposals for our agriculture and our economy.
I suggest, a Cheann Comhairle, that we must examine these measures under the following criteria: their effect on the population and way of life in rural Ireland and their effect on the consumer. Obviously, as Deputy Deasy has just done, we must examine the economic and employment prospects on and off the farm. We must look at the post reform attractiveness of farming as a way of life for young people, including young farmers and the environmental impact of changes in farm practices. There are certainly many serious doubts and worries which must be highlighted under these criteria, but we do not have time to do so in detail this afternoon. I am sure, however, we will have the opportunity to do so in the future.
I agree with those, including the Minister, who claim there were and are definite problems with the Common Agricultural Policy. I agree also that European taxpayers do not have bottomless resources to expend on the Common Agricultural Policy. I fear, however, the Irish Government appear to have caved in and accepted that the problems of agriculture in all parts of the EC are quite similar. We appear to have officially set aside now Ireland's unique dependency on agriculture. The Minister and his officials have accepted that the Irish family farm is as great a contributor to the European agricultural problem as is the factory farmer of Europe. This policy concession is disastrous for Ireland. All in all I submit that the factory farmers of Europe have won out at the expense of the family farm units.
Agriculture in Ireland, a Cheann Comhairle, has only one advantage, that is our ability to grow the best grass at the cheapest possible price. We have lost this advantage as the Irish farmer will continue to compete against the European  farmer who has easy and cheap access to imported animal feedstuffs from the United States and the Third World. The import of non EC substitute feedstuff has been a fundamental problem of European agriculture in recent years and this was not fully dealt with in the Brussels talks and proposals. This is a matter of serious concern and regret, as it puts another nail in the coffin of the family farmer and benefits the factory farmers of Europe.
Deputy Deasy referred to the cheque in the post syndrome and certainly as a result of these talks the cheque in the post will now become a norm for Irish farmers. Of course, I welcome compensatory measures in as far as they go, but they will certainly introduce a totally new dependency in Irish agriculture. The Irish farmer was renowned throughout Europe and throughout the world for his hard work, often working against the grain. As a result of this move towards direct payments with the cheque in the post, Brussels will now be seen as similar to the Department of Social Welfare as far as Irish farmers are concerned. Top class production methods and efficient farming will become secondary to filling out application forms properly for grant and headage payments and other aids. Discouraging efficient production by putting a cheque in the post is surely a very poor way to ensure we have a proper food industry.
May I refer briefly to what Deputy Deasy said in relation to consumer benefits. I agree there is a great deal of lose talk about the benefits that will accrue to the Irish consumer. It is wildly false to predict major decreases in food prices. Cattle, lamb and pig prices have all fallen dramatically over the past number of years but there has been no corresponding decrease whatsoever in the cost of these products in the weekly shopping basket. There is no guarantee that this situation will change.
In addition let me point out that the gradual phasing in of reforming measures will ensure that there will be no short term bonanza for the Irish consumer. It is vital the Government monitors this and  the Minister for Industry and Commerce will need to be extremely vigilant in this regard.
I will refer briefly to the economic costs of reform. The Government's decision to support these reform proposals officially brings to an end our hopes that the agricultural and food industries would play a significant role in solving our unemployment problem. We have now agreed to place a limit on the march of Irish agriculture. This is an extraordinary decision because it means we are fighting the unemployment battle with both hands tied behind our back. We have tied up our greatest natural resource. No matter what the Minster says fewer people, not more, will work in agriculture and in agricultural related industries as a result of the Brussels agreement. There may be some extra jobs generated in the beef industry but the lower quotas and the lower level of production in the dairy sector will certainly cause job losses in the dairy industry. No measures appear to have been enacted to halt the flight from the land. Even more significantly there appears to be no measures whatsoever which would encourage young people into farming.
All in all from the point of view of creating jobs, which is very important when there are almost 300,000 people out of work, there is very little in these proposals to keep people in farming and even less to encourage new entrants into farming. I regret this very sincerely. We are gradually moving to the stage where there will be fewer people farming land, perhaps we are even beginning to move towards the factory farms. This is very disappointing.
Mr. Bradford: I will conclude by saying a few words on the environmental aspects of the reform. I would have thought, a Cheann Comhairle, that the reform talks gave Ireland an opportunity to promote  family farming, as well as taking full advantage of our natural foodstuff, grass, and other measures to protect our environment and the EC environment, but on all these counts the Government have failed. Most EC food production will now be concentrated on factory farms where the high rates of fertiliser usage, etc., will continue. The environment will continue to suffer from these excesses and the consumer will still note with concern the non-green origin of their food.
Mr. Ferris: I want to begin by saying what I have already said in public — the fact that agreement has been reached on the Common Agricultural Policy reform at least is to be welcomed. The Minister for Agriculture and Food says that Irish farmers will benefit to the tune of some £70 million while spokespersons for farming associations say precisely the opposite, and both cannot be right. Even though few of them agree on this subject, objective commentators and journalists tend to favour the Minister's assertion rather than the assertion of the leaders of the farming organisations. Nevertheless, the entire set of proposals will need to be carefully studied and objectively appraised by all of us before it is possible to analyse the many risks and challenges which will face Irish agriculture in the years ahead as a result of the changes which will take place in the industry. It will be several months before it is possible to assess the immediate cash effects of these changes on farmers. It may even take years for some of these eventual consequences to filter through, for example, the cheque in the post or the promised payment from the Department. In the end factors which have nothing to do with Common Agricultural Policy reform but which affect farmers' incomes will make it difficult to arrive at any true figure of the benefits for farmers.
By the same token, no one should take it for granted that the benefit for consumers will not be swallowed up. This, too, will require a detailed response from the Government. It was stated last week that there would be a £100 million bonanza for Irish consumers from the  Common Agricultural Policy reform. Such talk should be treated with a large grain of salt, unless specific action is taken by the Government to make it happen. A sum of £100 million will mean roughly £25 for every member of the population. If this bonanza is spread over three years, it will mean £8 per consumer per annum in their food bill. This will not alleviate the plight of a great many families to any great extent, particularly families on social welfare who need food as a sustenance.
The real danger I see is that this bonanza will not trickle down to consumers but rather will be a bonanza for processors and middle men. Deputies on all sides of the House have a responsibility to ensure that this bonanza gets to the people who need it. If the reduction in product prices is to be passed on to where it will do the most good, it will require specific Government initiatives. During the seventies the National Prices Commission acted as a watchdog for consumers to ensure that price increases were fully justified. The time has surely come for the Government to consider the creation of a similar watchdog to ensure that consumers benefit to the maximum possible extent from price reductions and that these are not creamed off in fatter profits for already wealthy individuals.
I know several Government Ministers have already spoken about taking action to ensure that consumers benefit. With respect, I would suggest that talk is not enough. There is a readily available model in the National Prices Commission, which at several junctures in its history was of very considerable benefit to the ecomony and to consumers generally, to ensure that consumers benefit.
Consumers in this context means families, including farm families and families on social welfare. Every family in Ireland spends a high proportion of their disposable income on food — the poorer the family, the higher the proportion required. It is time farm families were given an assurance that there is now some hope of a reduction in food prices. The Government should act to ensure that that reduction is as large as possible and  act immediately to put the structures to control this in place in time.
It is also clear that there is a fundamental moral issue that has yet to be addressed by the European Community. For years, we have been paying people to produce food for deep freezing, including storage compartments on ships. Now we are going to pay people to produce a lot less food. This agreement has been reached during a month when hundreds of thousands of people may die from hunger in the Third World. Surely it is time for a Community that wants to plan for the future to begin to take hunger into account? I fully recognise that there is a danger of simplistic approaches or solutions to this issue. I do not have all the answers by any means, but I am convinced that not enough thought has been given to this issue either at home or abroad.
Ireland has probably the worst record of any of the member states in the area of Third World aid. We will undoubtedly slip further down that league when the Scandinavian countries, with their outstanding record in this area, become full members of the Community. The point must be made that this scandalous and shameful record is not the record of the Irish people. No people in the world have a prouder tradition of being willing to help and support the Third World than we have. However that record has been besmirched by the attitude of this Government and their predecessors: they have made the most savage and heartless cuts in a vulnerable budgetary subhead. This has happened in a country which produces surplus food while much of the world is starving. Clearly, if reform of the Common Agricultural Policy is to mean anything in the long run it must begin to be seen as a mechanism, among other things, for addressing the issue of world hunger.
To return to the central point of this debate, it is already clear that a great deal of the future of Irish agriculture lies in our hands and in the heads of the industry. Planning for the future, to take full and proper account of the changes now underway, must start now. For example,  the Culliton report has already called for the publication of a national food plan. This must be seen as the first priority of the Government who have accepted the recommendations of the Culliton report in principle.
For years, we have been calling for a proper plan, to include all the relevant interests, for the development of the food industry. Processing, efficiency of production, pricing of the product, quality, diversification, “green” agriculture, down stream industry and rural development are the essential ingredients of any plan for the future. We will continue to get help from the European Community in developing a more rounded approach to our main industry if we are serious ourselves. In other words, there is never the time when we should be congratulating one another, slapping each other on the back, or wasting time in abusing each other over the outcome of any negotiations. The future for Irish agriculture starts now. If all the essential interests are prepared to work together, there is no reason the future should be bleak.
It should not be forgotten that the Common Agricultural Policy, which is almost as old as the Community itself and the only policy of any signifance in the Community, is underpinned by a number of basic principles which were enshrined in the Treaty of Rome. These include such aims as sustaining family farms; ensuring a reasonable income for family farms through a guaranteed minimum price structure for produce; and ensuring an adequate supply of food for consumers at a reasonable cost. Many of these aims are incompatible but they are all aspirations of the Common Agricultural Policy.
In reforming the Common Agricultural Policy, what has been reformed essentially is the mechanisms through which these aims are intended to be realised. In examining this reform we ought not to lose sight of what happened to some of these aspirations under the old mechanisms of the Common Agricultural Policy, mechanisms which some people  wanted to remain in place but which all of us realised could not remain in place. For example, over the past 20 years we have lost thousands of people who were previously engaged in agriculture in rural Ireland. The Common Agricultural Policy in its previous form made millionaires out of intervention companies, freezer suppliers and storage and shipping operators, but it made very few millionaires out of people engaged in agriculture.
The Irish food industry became almost totally dependent on intervention for beef and milk products. Not only did those cost the European taxpayer billions, but the higher prices thus secured were borne by Irish consumers among others. Finally, under the existing Common Agricultural Policy the incentive to diversify, or to upgrade quality and marketing, was never as great as the incentive to concentrate more and more product in ways that would attract intervention support.
The new mechanisms will aim to support the producer and not the product. In itself, it is a flawed system, just as the old one was. Under the old system, farmers were paid to produce goods which had to be kept in deep freezes for years because there was no market for them. Under the new system, farmers will be paid not to proudce at all or, in the event, to produce a lot less. We are telling 300,000 unemployed people we will pay them because they have no work, while we are telling farmers we will pay them because we do not want them to work. What economic system could tolerate a continuation of that philosophy?
Many questions remain. Supporting the producer rather than the product could lead to 100 per cent of the cost of subsidisation. Is this realistic, or is it a false promise? Who will bear the cost? Is the European Commission prepared to guarantee compensation to farmers on a permanent basis for producing less and less, and will that compensation be geared to keep pace with the cost of living; will it be index-linked, so that  incomes on land stay abreast of incomes generally?
I doubt very much if the answer to all of these questions is an unequivocal yes. In reality, I believe that this Common Agricultural Policy reform package must be seen as a way of buying time for Irish agriculture. Everyone involved in the industry has known for years — even if they were not prepared to say it publicly — that the intervention system was insupportable in the long term. By the same token, everyone in the industry has known that abuses of the system were widespread and that sooner or later someone would have to cry halt.
In a sense, therefore, these reform proposals, whether we like them or not, are an opportunity to look afresh at Irish agriculture; to look at its methods of production; to look at its efficiency; to look at the range and the quality of products and to look at the marketing and selling and true export potential of the industry.
Anyone following the reports of the Beef Tribunal over the last month or so will have noticed innumerable references to the national interest as the basis for all decision-making in relation to Irish agriculture. The bottom line is this. An agricultural industry that produces no added value would be contributing very little to the national interest over the long term, because it simply could not survive as an industry.
Our job now is to stop talking about Common Agricultural Policy and Common Agricultural Policy reform as if they were the only buzzwords and start turning added value into the buzzwords of the nineties for our biggest industry. One of the other things that is clear from the Beef Tribunal is the enormous sums of money we have spent over the years — both at the level of the State and the level of the private entrepreneur — in finding markets for raw meat all around the world. That was based on a policy of developing value added. If we are serious about value added, is it not time we stopped spending so much money on freezing and shipping great lumps of raw meat to Africa and the Middle East where at times they will not pay for it, unless we  want to divert it to the Third World where need for it has already been identified. It is time we started figuring out how to get what is virtually an organically-grown product into the environmentally conscious markets of Germany and the United Kingdom. It is not time we began to develop away from a beef industry and towards a proper food industry? Value added means planning. There are many other things we need to do in the time available to us, such as the introduction of new products, market research and development, the development of agri-tourism and a total concentration on ways of import substitution.
In short, I firmly believe that instead of recriminating about Common Agricultural Policy reform, or blandly assuming that our worries are over, we should see this development as a window of opportunity which will remain open for a very short time. We should be prepared to grasp that opportunity with both hands. It is, as I have said, an opportunity to examine our major industry in a whole new light and to bring together all of the interests which are important to the industry. We should begin to plan a new future because the national interest is at stake.
Minister of State at the Department of Agriculture and Food (Mr. Browne,: Wexford): I compliment Deputy Ferris on a very positive contribution and on facing up to reality within the EC at present. I would also like to congratulate the Minister for Agriculture and Food, Deputy Joe Walsh, and his negotiating team for the enormous work they put into achieving this agreement on Common Agricultural Policy reform. There has been much hysteria over the last year to 18 months that farmers would be sold down the river and that there would be no opportunities for farmers in the future. I am glad to say that the Minister and his team have secured a very good deal for the farmers and for the country generally.
This agreement ends the uncertainty which had clouded the attempts of farmers and the food industry to plan effectively  for the new arrangements which will exist with the advent of the Single Market. While we all expect that the international food industry will become a more competitive arena in the short to medium term, it helps enormously to have this agreement on future support arrangements in place for the agricultural sector. It means, in short, that we know where we are going and can plan accordingly.
Our long term objective has always been to develop a strong indigenous food industry which can compete internationally. For this we need to maintain a vibrant domestic agricultural output and this in turn must be underpinned by a realistic, though not excessive, support system. The Common Agricultural Policy reform agreement offers such a system. It is different from that which operated in the past in that it is based on a partial redirection of support from market support towards direct payments to farmers. The compensation, which includes some really dramatic increases in cattle premiums, is aimed at offsetting any income losses arising from reduced market support.
The agreement presents both opportunities and challenges to the Irish food industry. It will prompt a trend to lower prices for inputs to the processing sector which will allow it to become more competitive. I welcome, as I am sure industry also welcomes, any cost reducing measures which allow industry to increase its competitiveness. This is the only sustainable route forward. Indeed, it is the only way forward if we are to develop our food industry in the way it should be developed in the years ahead.
Our high degree of seasonality has always been one of the key problems for our food industry. Our highly seasonal production of beef in particular has funnelled producer thinking excessively towards a commodity product range which invariably has been support led. In this, producers and processors behaved with short term rationality but with no long term focus on product or market  development. Obviously, this could not be allowed continue.
Perhaps the single most important aspect of the agreement from the point of view of the food industry is the matter of the arrangements for the beef sector. This is the first time ever that the Community has actually funded a member state to overcome a seasonality problem. The Minister, Deputy Walsh, deserves great credit for his perseverance for his ability to persuade his EC counterparts to agree to this new arrangement to offset the seasonality problem that exists here. The need for such arrangements was patently obvious. With the proposed gradual reduction in intervention, Irish producers will, of nesessity have to sell product on the commercial markets. To do this, will require not only improved quality and product innovation but also a much more even supply pattern. The counter cyclical arrangements which were agreed for the beef sector will encourage a more even supply to factories throughout the year. In turn, retail outlets and consumers can be provided with a steady flow of Irish products. The opportunities are, therefore, being created to build up retailer and, equally important, consumer loyalty. Markets can now be developed and kept much more steadily than in the past. A consistent and reliable supply of quality products is a prerequisite for processors aiming to do this.
While I have singled out the beef sector for particular mention, the other elements of the agreement will also serve to make market-led processors somewhat more competitive through reduced input prices.
In recent days there has been much debate about the impact the agreement will have on the price of food to consumers. It seems that the extent of the price fall varies depending on which and how many assumptions are made on how these measures will be translated into consumer markets. In the medium and long term perspective in which Common Agricultural Policy reform is framed, it is not only pro farmer but also pro consumer. Its intention is to shift the weight of supporting farmers away from market  supports and the eventual result should be lower consumer prices.
I hope and expect that this move to lower consumer prices will be a powerful help in restoring and increasing consumption of our main consumer products, especially beef and butter. We all know of the major decline in the butter area over the past number of years, which in turn has severe consequences for farming generally and for the return to farmers. Increased domestic demand should be a valuable and welcome outcome of this price movement.
As Deputy Ferris said, it is very important that these lower prices are passed on to the consumers. Independent economists suggest that the benefits to the consumer should amount to £100,000 million. We in the House have a duty to ensure that these benefits will arise. I must admit that they have not happened too often in the past. For example, at present, lamb prices to the farmers are reasonably low but it is certainly not reflected in the price of lamb to our housewives who are very angry and who feel ripped off, because reduction in lamb prices to farmers has not been passed on to them. This is an area that we must monitor. We must ensure that consumers will benefit as is their entitlement.
I welcome the fact that the Minister for Agriculture and Food and the Minister for Trade and Marketing are to tackle this problem together. I understand that they are meeting on Friday to have discussions and to put in place a proper system of monitoring to ensure that the benefits to which the consumers are entitled will be passed on, and that there will be no sidetracking or no major profits accruing to processors or to other individuals. It is essential that a monitoring committee or a monitoring board will be set up to ensure that this happens.
For our part, we are now looking to the future of the food industry. In this regard, the Minister, as recommended in the Culliton report, has set up a group of experts headed by the Secretary of his Department. The group will be drawing up a plan of action which will take all  the new features into consideration. The group which is widely based has been asked to draw up such a plan within six months. In the past, we had too many plans and too many analyses of the food industry, but nothing happened. The Minister and the Department are now putting a time limit on it, and saying that within six months we want a proper national food plan, and that many of the suggestions that have been made for the development of the food industry will be taken into account and action taken immediately. To the forefront will be the opportunities offered by the Common Agricultural Policy agreement. We will need to develop new markets. We have top quality raw materials produced by the farmers in a clean environment. Obviously, it is an opportunity for our processors within the food industry to develop further, to expand, and for new processors to come on to the market and to develop our top-class raw material into value-added products and make them available to the 350 million people in the EC.
I welcome this agreement as a means for the Irish food industry to develop further so that it can continue to contribute in the future even more substantially than in recent years, to the economic wellbeing of the country. I welcome the fact that the Minister has got a good deal for this country. It is up to all of us to ensure that this deal is reflected over the next number of years in the betterment of this country and particularly in the creation of jobs for our young people.
Proinsias De Rossa: I welcome the sense of realism that has been pervading this House with regard to the Common Agricultural Policy in recent weeks. The decision by EC Farm Ministers last week on a reform of the Common Agricultural Policy represents the most fundamental change in the 30 year history of the Common Agricultural Policy. The changes introduced were long overdue and have been advocated by myself in the Dáil and in public statements for many years.
 The Common Agricultural Policy had deviated a long way from its initial objectives. The consequences of guaranteed high prices had become a chronic tendency to over-production at a very high cost to the taxpayer. Butter prices, for instance, had reached over four times world market prices, beef prices almost five times greater than on the world market. This was a particularly heavy burden for families on low incomes.
The agreement falls far short of the radical surgery proposed by Commissioner MacSharry in his first set of proposals made last year; but it represents a significant advance. Given the statistics I just quoted about butter being four times the world price and beef five times the world price, it is not surprising that there would be no market for the quantities produced. A policy which added up to £15 per week to consumer food bills, which soaked up 60 per cent of the total EC budget and which channelled 80 per cent of all price supports to the 20 per cent richest farmers was always a liability that the Community would have to face up to and deal with. This agreement opens up new possibilities for the future.
I note that while the Irish Farmers Association initially lodged the strongest of objections to any substantial reform of the Common Agricultural Policy, they have more recently accepted the necessity for tackling the inequities and inadequacies of that policy. The agreement reached allows for reductions in cereal, milk and sheep quotas, and a substantial lowering of intervention levels for Irish farmers. It has been predicted that Irish consumers stand to gain £100 million annually from the reforms. However, how these changes will work out in practice remains to be seen.
I note for instance that up to 72 per cent of Irish land is being classified as disadvantaged. I hope that this may not become a new mechanism by which some farmers who manipulated the Common Agricultural Policy scheme will now be able to exploit the disadvantaged areas payments, to the detriment of truly needy  farmers. This issue will need to be monitored closely as I have no doubt that those who made easy profits under the old Common Agricultural Policy will seek to find new ways to earn easy subsidies.
I have many doubts over the impact of Common Agricultural Policy effort on food prices. Commissioner MacSharry has said he hopes it will lead to food prices cuts. There is no clearcut mechanism for ensuring that reductions at farm gate level are passed on to the consumer. The Minister responsible for trade and marketing, Deputy O'Rourke, expressed considerable optimism that food prices will fall if the decreases are to occur; more than optimism will be required; the Minister should establish a formal mechanism for monitoring and controlling food price changes arising from Common Agricultural Policy reform.
The reductions will not come into effect immediately, but will be phased in over a number of years. In addition the first reductions, according to the Minister for Agriculture and Food, will not be coming on stream for at least nine months. When the effect of inflation is taken into account, then it may be impossible to determine or challenge just where, how and if prices are being reduced.
The most important aspect of reform of Common Agricultural Policy, of course, is the effect it will have on the overall farming sector, on the related food processing industry and on the general economy. I note that the Minister intends to establish a review body to include several groups involved in the Irish food sector to assess and plan marketing and expansion of the Irish food industry. This is a welcome concession to the fact that the Irish food sector has failed abysmally to establish a worth-while niche in the European market, despite two decades of EC membership.
I hope the Minister, Deputy Walsh, will refuse to listen to those who attempt to explain away the failure of the Irish food sector to market and sell successfully on the international market.  The cold facts are that year after year the Irish food sector not just relied but actively geared itself to the intervention market only to the extent that many shoppers in Paris, Brussels, Amsterdam and other EC cities, were more accustomed to New Zealand lamb than to Irish lamb. The television advertisement of the French tourist who has actually heard of Kerrygold butter is more a parody of the inadequacy of our marketing strategy than a mark of its success.
This failure was pointed out recently in the Culliton report where it highlighted that the continued dependence on intervention was entirely unrealistic. I would therefore urge the Minister to do more than set up a review group. Such reviews have a habit of gathering dust. What is required is an agricultural and food authority, which would bring together State agencies and interest groups involved in the sector to compile and implement a long term development plan for Irish agriculture and rural development.
The Minister should seek a substantial proportion of the savings at EC level from the reform of Common Agricultural Policy to fund such an authority. Adequately funded, it should ensure creation of a vibrant and self-sufficient farm sector requiring less long term funding from EC sources, whether from the reformed Common Agricultural Policy, disadvantaged areas scheme or wherever.
Such an authority would also seek to expand the range of agricultural foods available such as fresh dairy produce, specialised cheeses and boneless meat, cooked and convenience meat products, all of which are taking an increasing share of the consumer market.
It has been estimated that the latter approach alone would add £200 million to the value of our meat and dairy exports. The Common Agricultural Policy reform package is in fact an added incentive for the Irish food industry to move along the added value path.
The Common Agricultural Policy reform proposals also identified a considerable trade deficit in wood and wood products. The EC Commission has  already committed itself to higher grants for both public and private sector expansion in this area. Greater efforts should be made by the Government to develop the economy in this area. The aim should be to win more than piecemeal improvements in funding, but to press for realistic assistance, both financial and industrial policy related, for Ireland as a peripheral region of the Community. Greater emphasis than heretofore should also be placed on use of low interest loans from the European Investment Bank for development of our agricultural, food and forestry sectors.
Finally, there is a need for the implementation of a comprehensive rural development policy by the Government. Recent years have seen the departure of thousands of people from Irish farming. This process will continue following the reform of Common Agricultural Policy. Indeed throughout the developed world the tendency has been towards greater economies of scale. However, I do not accept that small farmers, no more than workers in any industry, should be simply left to the mercy of the marketplace in recession. Farmers in difficulty should be either assisted to become commercial, through diversification to new crops and agri-tourism, or they should be assisted to leave farming in an orderly way, rather than hanging on in poverty indefinitely.
If these developments follow on from the Common Agricultural Policy reform agreement, then there will be real hope for a vibrant Irish agricultural and food processing sector before the end of this century. In that event the Minister for Agriculture and Food will deserve all the praise he gets.
Mr. Power: The farmers in Ireland and indeed throughout Europe heaved a great sigh of relief at the successful conclusion to the negotiations on Common Agricultural Policy reform. When the  Agriculture Commissioner, Ray MacSharry, made his proposals there was widespread hysteria. This was not helped by very misleading statements by people who should have known better. The major fear was that Common Agricultural Policy reform would result in Common Agricultural Policy destruction. Farmers felt that no matter what the outcome, it could not be good for Ireland. The Minister has not only managed to execute a major limitation exercise but has brought home a package which will be of great benefit to farmers and consumers. As the President of the ICOS, Billy Nagle, aptly put it, the Minister was handed a poisoned chalice and has succeeded admirably in minimising the damage.
The package agreed is a major improvement on what had originally been proposed. Now that it has been agreed, it removes all the uncertainty that had been hanging over farmers for the past two yars. Everyone knows where they are going for the next three to four years, which is probably the longest level of certainty farmers ever had. It is important that the Minister succeeds in persuading the Commission to make sure that the £620 million in direct payments and premia which are now available to Irish farmers should be exempted from erosion under any GATT agreement. Given the circumstances under which the Minister successfully negotiated this package, I am confident that our vital national interests will be protected.
By any standards this package was a major achievement in a very difficult situation. Nowhere more so than in the beef sector where for the first time in 20 years there has been an acknowledgment by the EC of the fact that the beef industry was vital to Ireland's national economy. It must be noted that the contribution of beef production is nine times more important in Ireland's economy than in the overall EC. Milk production in Ireland is seven times more important. The special spring slaughter premium secured by the Minister will be a major  incentive for the beef sector to become more market oriented. It will lead to a more even distribution of beef production. It will create more permanent jobs in meat factories and will focus the minds of beef exporters on the vital necessity to become widely established by lucrative Community markets of over 340 million consumers.
Similarly in the dairy sector the Minister is to be congratulated on the fact that there will not be any reduction in quota or prices this year. Milk prices have already increased by 8.4 pence per gallon over this time last year. Butter will be more competitive because of the price cuts which take effect next year and the year after. It is significant that any quota reduction in milk proposed for the next year and year after will only be made after the council assesses the market situation before the beginning of these years. It is not a fait accompli.
The outcome in the cereal sector is also far better than what the Commissioner had originally proposed. The price cuts are less severe and the compensation measures had been significantly improved for both price cuts and set aside. I am delighted that the Minister, Deputy Walsh, has also protected the position of established grain producers by negotiating an option to have arrangements implemented at an individual farm level as well as at regional level. The scrapping of the co-responsibility levy is also to be welcomed.
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