Thursday, 14 March 1996
Seanad Éireann Debate
Minister of State at the Department of Health (Mr. O'Shea): An Bord Bia Act, 1994, specifies that there shall be a levy imposed by, and paid to, An Bord Bia in respect of all livestock, slaughtered or exported live, including pigs. When that legislation was enacted the levy on pigs was set at 20p per animal, an amount similar to that which applied when CBF was in existence. However, in response to the serious difficulties which pig producers had been experiencing, the levy was reduced from 20p to 1p as a temporary measure and this temporary reduction was approved by both Houses of the Oireachtas.
A serious oversupply in the European Union as a whole impacted adversely on pigmeat prices in 1995. At the same time feed costs were at extremely high levels. Given that feed represents the single most important element of production costs in the pigmeat sector, low prices and high feed costs put Irish pig farmers in a very unfavourable position at that time.
A very straightforward strategy was devised to tackle this problem — increase pig producers' margins by reducing costs. The reduction of the An Bord Bia levy from 20p to 1p which translated to a direct saving of £650,000 over 12 months to producers was only  one element of this strategy. Also, throughout the year efforts were made to reduce feed prices by releasing large quantities of intervention grain for sale on to the market. Other elements included an aids to private storage scheme as a result of which 70,000 tonnes of pigmeat was taken off the EU market for three months. An Bord Bia also undertook an intensive marketing campaign for pigmeat in 1995 at a cost of almost £2 million. Finally, a joint Teagasc-Department committee was set up to identify specific areas of research which would be of direct and significant benefit to pig producers, including improvement of the feed conversion ratio and the efficiency of feed utilisation.
Overall, these measures made a significant contribution to relieving the difficulties confronting pig farmers. Prices have now recovered and pig production is once again quite profitable. At the end of 1994 pig prices were very low with producers getting around £98 per 100 kilogrammes of pigmeat. In the first few weeks of 1995 prices dropped even further and reached a low of £93.42p per 100 kilogrammes which meant that pig producers were operating at a significant loss. By the end of 1995 prices had reached £115.59p per 100 kilogrammes. This increasing trend has continued, such that at the end of February 1996 the price stood at £130.51p per 100 kilogrammes.
There are several reasons behind my proposal to reinstate the An Bord Bia levy to its original level of 20p per animal. At the time of the reduction of the levy the Minister stated that such a reduction was purely a temporary measure to help producers cope with intense market pressures. Those pressures have now disappeared as I have demonstrated and we must now consider the need to restore the pig levy to its original level in a broader context.
An Bord Bia is built on the concept of partnership between the State, the processors and the producers. All three elements are now represented on the board — with the nomination of IFA  and ICMSA members under new legislation specifically introduced to allow for extra seats on the board. The State makes a substantial financial contribution to the board's annual budget — over £7 million in 1996. The EU contribution, through the Structural Funds, will be approximately £8 million in 1996. Producers also contribute by way of levies on cattle, sheep and pigs. This contribution, with the pig levy at its normal level, comes to about £4.3 million a year. The partnership to which I referred would be damaged if one sector was not contributing while others were.
It is important that this partnership, which brings the direct knowledge of processors and producers to bear on the activities of An Bord Bia and at the same time provides a direct feedback from the marketplace to processors and producers, is preserved. The reinstatement of the pig levy to its normal level will ensure that the spirit of partnership which underlies An Bord Bia's make-up and activities will continue.
In these circumstances and in the greatly improved market environment there is no reason to delay reintroducing the levy. Producer incomes from pigmeat have increased by some £32 per 100 kilogrammes since the levy was reduced last year. A levy of 20p per animal is not material in this context to individual producers. To Bord Bia, it is far more valuable in that it enables the board to carry out its functions in a more intensive way to the overall benefit of the sector. I submit this motion to the House for approval.
Mr. R. Kiely: While I welcome the Minister of State to the House, it is disappointing that the Minister for Agriculture, Food and Forestry or his Minister of State cannot be here to introduce this motion, of which I am not in favour. In recent weeks farmers have been asked to pay the for tests on the eradication of bovine TB, which will mean extra expense. The Minister's announcement last week about the levy on processors will be passed on to the  farmers. Now pig producers are being asked to pay. Where will it end?
We must look after farmers' interests. It is disrespectful to this House that neither the Minister nor his Minister of State is here to introduce this motion. The levy was reduced last year because pig producers were in trouble. Now farmers are being asked to pay levies, including paying for tests under the eradication of bovine TB scheme. I do not mind paying levies if they keep disease outside the farmyard gate.
Today I read in The Cork Examiner that brucellosis will be rampant in north Munster this year. Many farmers' herds will be depleted yet they are being penalised by the Minister's policy on the bovine TB eradication scheme. He is now asking us to increase the levy on pig producer from 1p to 20p. Yesterday we had a debate on the beef sector and we outlined the loses it is experiencing at present.
I might have mentioned that the attack by the Minister on Larry Goodman was unwarranted. The Minister said that some of the remarks I made about Rathkeale — I never mentioned it — were incredible given that there had been convictions in the courts. He went on to say that the speed with which Fianna Fáil seemed to defend malpractice in the beef industry never ceased to amaze him. I have never condoned malpractice and I stated this yesterday with regard to growth promoters in cattle. I would definitely oppose any malpractice in the beef industry. How dare the Minister accuse me of condoning malpractice when his Minister of State, Deputy Deenihan, employed a person who drew social welfare at the same time. Did he condone that?
Mr. R. Kiely: I am concentrating on it. This Government is putting farmers on their knees. It is putting extra expense on them by first introducing a new scheme of bovine TB eradication. It then announced that the beef processors would have to pay these levies. However, these payments will eventually be passed onto the farmers; the processors will not have to pay them. I and my party are definitely opposed to this motion.
Mr. D'Arcy: I welcome the Minister of State to the House. We know he is not directly responsible for this area but nevertheless he is capable of dealing with it. I am disappointed with Senator Kiely for not dealing with the motion as such. We must address it directly rather than deal with fringe issues. Disease eradication has nothing to do with this motion whatsoever.
Mr. D'Arcy: Apart from the direct financial contributions to the work of An Bord Bia, the farmers must be described as key players in the food industry. They provide the raw material which must meet the requirements of processors on quality, cost and time of delivery. The commercial partnership between farmers and processors must be fostered. Processors are already well represented on the board and make their own contributions, and the providers of raw materials to farmers must do the same.
With regard to the link between the farm gate processors and the main market, it will be the function of An Bord Bia to establish where markets are and what their requirements will be. Having established these facts, the next important function is to provide the necessary information to farmers to  ensure quality requirements are fulfilled by them.
I am nearly certain this Bill was introduced, as far as the reduction in the levy from 20p to 1p was concerned, in the 1994-95 session. We received full support at that time from Senator Kiely and his colleagues. The reduction was made at that time because the pig industry was in total disarray and its profits were almost gone. The price of pigmeat was £98 per kilogram in 1994 while the present price is £130 per kilogram, an increase of 35 per cent.
Senator Kiely is well aware that An Bord Bia does not alone deal with pigmeat but also with sheep meat and beef, and all these areas make their just contributions. The present increase in pigmeat prices is approximately 35 per cent and this came about in the space of a year and a half. Therefore, the Minister is well justified in asking to restore a levy that was only removed because the pig industry was in disarray and its prices were very low.
Mr. D'Arcy: Senator Kiely should not confuse what was done in the last month with this matter. This is a specific item and we must deal with it as such. We should not drag in other issues and confuse the matter.
Senator Kiely must accept that An Bord Bia is built on partnership; we are all involved. Milk, pig and sheep producers must make their contributions. We are restoring a levy which was taken away for a specific purpose. It would be a great mistake to have a division on this issue. This partnership would be damaged if one sector was not contributing. One cannot expect one sector to pay for everything. I appeal to the Fianna Fáil Senators, many of whom are good agricultural people, not to have a division on this issue. It is only reinstating a levy that already existed. They would not be serving any purpose by  doing otherwise. I commend the motion to the House.
Mr. Kelleher: I am disappointed that the Minister for Agriculture, Food and Forestry or his junior colleague is not available to come to the House. Last year, in a blaze of glory, the Minister announced that he would save our pig industry, which was almost on its knees at that stage. Many pig producers who had invested heavily over the years were finding that, due to increased feed costs and the reduction in product price, they were unable to survive. The Minister came to their rescue. He announced that he would reduce the pigmeat levy from 20p to 1p per animal slaughtered, and that was welcome.
However, the Minister will not even come into the House — he tried to slip this provision through the back door — to announce that he is putting the levy back to its original figure. The pig producers are not yet out of their difficulties. Many of them lost substantial sums of money last year and are still repaying heavy investments. For the Minister to suggest that the pig industry, its farmers and producers have recovered all the losses they incurred during the previous 12 months and that he can now increase the levy to An Bord Bia is disingenuous. If the Minister was so forthright about this, he would have announced it in the Dáil or issued a press release, but he did not. Instead he sent a junior spokesperson responsible for another Department to this House to try and slip it through the back door.
We will oppose this measure because there seems to be a philosophy in this Government that the farmers can pay for everything, such as TB eradication, marketing or beef fines incurred by irregularities in our beef industry. We must say no to this measure. That philosophy has to come to an end.
If the pig industry is to progress and find new markets, of course farmers must contribute. When we passed the An Bord Bia Bill in 1994, we talked about partnerships and focused on the  marketing that must be carried out over the next few years to ensure we had markets available for our pig, poultry, beef and dairy produce. However, when the pig industry was in crisis, the Minister at least had the decency to announce to the nation, with big press releases and a huge PR machine behind him, that he was reducing the levy to 1p per pig. We all hailed it as a great achievement. While it did get pig producers out of an initial hole, they still have not fully climbed out of it. To put this heavy burden back on them in this disingenuous way is regrettable. If the Minister was announcing extra provisions for farmers, I do not think a Minister of State from another Department would be sitting in that chair. I find it disingenuous that the Minister would push this levy through the Seanad and hope that it would not be spotted. Pig producers will find this levy difficult to cope with. If they have saved over £600,000 in 12 months, they might be able to save another £600,000 in a similar period of time and that would be direct income into farmer's pockets. They need this to get ahead of their current difficulties.
I oppose this measure because I do not agree with the philosophy that farmers, dairy farmers and pig and sheep producers are seen as soft targets when extra funds are required to increase the marketing ability of An Bord Bia, eradicate disease or deal with malpractice in the beef industry. This must stop. I oppose this measure because it is unfair to introduce at this juncture an increase in the levy contributed by farmers to An Bord Bia.
Mr. Townsend: I am glad that the Minister of State is present because he, with Deputy Joe Walsh, established An Bord Bia in 1994. The pig industry is one area where An Bord Bia has been a tremendous success. As other Members stated, the levy was reduced from 20p to 1p as a temporary measure. The Minister of State is now requesting that this be reversed. With regard to pig producers, 20p is buttons when compared  to the 32p increase they received per hundred kilograms of meat produced. Some of Senator Kelleher's statements would actually embarrass farmers if they heard them. An Bord Bia has done a good job and farmers will be satisfied if it can ensure that the price of pigs remains high while that of raw materials remains low. They will not begrudge paying the 20p levy.
Mr. O'Shea: This is a specific and narrow measure. I pointed out earlier that at the time of the establishment of An Bord Bia the levy of 20p had been in operation at the time of CBF. When there was a real crisis within the industry  a package of measures was put in place, part of which was the reduction of the levy on pigs slaughtered. That important measure was welcomed at the time. The business has returned to profit and it is important that all sectors contribute, as they are represented on An Bord Bia. The arguments put forward which tie this measure to other issues do not stand up to inspection. This issue relates to a specific production and processing sector. The Government reacted to a crisis which has now passed. This measure is totally fair and equitable.
Enright, Thomas W.
Farrelly, John V.
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