Wednesday, 7 December 2005
Seanad Eireann Debate
Minister for Agriculture and Food (Mary Coughlan): I have noticed an increase in security since my last visit to the Seanad. I thought the Members of this House were all kept in the highest regard. I welcome this opportunity to address the House on the WTO negotiations on agriculture.
Agriculture continues to make an important economic and social contribution to Irish society, and the outcome of negotiation of the new WTO agreement on agriculture will be crucial for us. Agriculture will have a critical role in determining the final outcome of the round. While agriculture is only one element of a broad trade liberalisation agenda, it has a crucial bearing on the outcome of the negotiations for developed and developing countries alike.
Negotiations on trade liberalisation, or rounds as they are called, have been with us for many years. Up until 1995, the rules were largely ineffective in controlling trade in agricultural products. However, the current Uruguay Round changed this and agriculture trade is now firmly within the multilateral trading system. The Uruguay Round, which distinguished between the forms of support on the basis of domestic support, export subsidies and market access, and committed member states to specific reductions in each, was a significant first step in disciplining agriculture in a meaningful way. Concurrently, the Uruguay Round struck a balance between agricultural trade liberalisation and member countries’ desire to pursue legitimate agricultural policy goals.
The current negotiations are a continuation of the process of trade liberalisation. The outcome of the current negotiations will determine the levels of protection and support which will apply to the agriculture sector in future and, given that the process of liberalisation will be significantly more advanced, the negotiations represent a real challenge to the future of the Common Agricultural Policy.
The negotiations were launched at the WTO Doha ministerial conference in November 2001 under a very ambitious mandate for trade liberalisation. In so far as agriculture is concerned, the Doha mandate provides for substantial reductions in trade distorting domestic support, with a view to phasing out all forms of export subsidy and substantial improvements in market access. Substantial reductions in tariffs, domestic support and export subsidies are therefore prominent issues in the negotiations. The Doha mandate also provides that non-trade concerns will be taken into account and, most importantly, that special and differential treatment for developing countries will be an integral part of the new agreement.
The European Union has prepared responsibly for these negotiations and has participated constructively at every stage. Recent reforms of the Common Agricultural Policy were deliberately designed to position the EU to contribute to a successful outcome of the round. The Agenda 2000 reform, which continued the process of reform launched by Commissioner MacSharry in 1992, provided for further cuts in institutional prices with compensation for farmers through direct payments. Further progress in reducing expenditure on domestic support and in reducing trade-distorting payments were made in the radical reform of the mid-term review of the Common Agricultural Policy agreed in June 2003.
The decision to decouple payments was a further step in fulfilling the Doha target of substantially reducing trade-distorting domestic supports. Decoupled payments, which by their nature are not linked in any way to production, are considered non-trade distorting by the WTO and qualify for the so-called green box category of payments. The EU move away from coupled payments and the gradual reduction in the more conventional market support measures, such as intervention, have reduced substantially our levels of trade-distorting supports, thereby enabling the EU to face into the negotiation from a position of strength.
I will briefly review the progress of negotiations since the launch in Doha. Little progress was made until the conclusion of a framework agreement in August 2004. Prior to this, negotiations were marked by failure to achieve consensus, as in, for example, the collapse of the WTO ministerial conference in Cancún. The framework agreement in August 2004, which set out the structure and content of the new agreement, represented a significant breakthrough. The intention was that the negotiations would concentrate on the details with a view to concluding the negotiations at the ministerial conference next week in Hong Kong.
It is no secret that I have been dissatisfied with the direction of the negotiations and with the negotiating strategy adopted by the Commission. There has been an insistence by the negotiating partners that they would not engage in meaningful negotiations on other issues until substantive progress has been made in agriculture. As I have stated, the Doha mandate covers a broad trade agenda and it is not acceptable that concessions in agriculture should be a precondition for movement elsewhere. Agriculture is vitally important to the livelihoods of millions of farm families in developed and developing countries and they should not be sacrificed for the sake of an overall WTO agreement. I am disappointed that the same commitment to securing an agreement has not been shown by many of the other developed countries among the negotiating partners who continue to put the EU under pressure on agriculture. In contrast, the efforts made by the EU in preparation for the negotiations and the constructive approach has clearly shown its commitment to achieving an ambitious outcome.
I have also been concerned that the Commission has been adopting an unnecessarily concessionary approach to the negotiations. The Commission negotiates in the WTO on behalf of the member states on the basis of a mandate which was agreed in the Council of Ministers. The mandate is designed to defend the CAP as it has evolved under successive reforms, including Agenda 2000 and the mid-term review, both of which were agreed with a view to positioning the EU in the WTO negotiations. The mandate aims to protect the European model of agriculture as an economic sector and a basis for sustainable development based on the multifunctional nature of agriculture and the part it plays in the economy, the environment and society generally.
My concerns are shared by a number of ministerial colleagues in the Council. In recent months, we have been active in indicating concerns to the Commission both in the Council of Ministers and in bilateral contact. Together with colleagues, I have urged the Commissioner to defend vigorously the EU position on agriculture in accordance with the mandate as agreed by the Council. As a result of our efforts, as recently as 18 October, the General Affairs and External Relations Council fully endorsed the negotiating mandate and concluded that CAP reforms are the EU’s important contribution to the current negotiations and constitute the limit of the Commission’s negotiating mandate.
Following a further round of negotiations with other key WTO negotiating partners, the Commission tabled an improved EU offer on agriculture on 28 October. I have a number of concerns about this latest offer. First, with regard to domestic support, I believe that the Commission’s offer has reached the limit of the EU’s bargaining position on trade-distorting payments. Protection of the green box is a fundamental priority for me. The green box is the category of payments which includes the EU’s system of decoupled direct payments, which are classified as non-trade-distorting. I am extremely concerned that the Commission’s latest statement with regard to defending the EU’s direct payments is rather weak. These payments have been exempt from reduction commitments in the past and the Commission’s latest statement accepts the notion of a review of the green box qualifying criteria, which is a cause of great concern for me. The protection of the decoupled payments in the green box is a red line which must not be crossed.
On export subsidies, I feel that the Commission has already gone as far as it possibly can at this stage and it is now vital that the parallel elimination of other forms of export subsidy used by other negotiating partners are adequately addressed. The critical issue in the round, however, is market access. The Commission has offered very high tariff cuts, especially in the higher tariffs, which I believe have the potential to open EU markets to increased competition from lower priced imports. The Commission will be seeking to protect the Internal Market through a sensitive product mechanism, the details of which have to be negotiated. This mechanism will be crucial if EU markets are to be protected adequately.
While the Commission has pointed out that the latest proposal is the EU’s final offer on agriculture, extreme vigilance is needed to protect our interests. The offer is conditional and the Commission points out that the EU is not prepared to contribute to a new agreement at any price. The offer sets out the need for balance in other elements of the negotiations and within the negotiations on agriculture. It also identifies the contributions which others must now make in all areas of the negotiations, including agriculture, if progress towards a final agreement is to be achieved in Hong Kong.
The EU offer has been made by the Commission on the basis that it is within the terms of the negotiating mandate. While I have reservations in this regard, the offer has been made and cannot realistically be withdrawn. I am satisfied, however, that the actions which I, and other ministerial colleagues, have taken in recent weeks have succeeded in ensuring no further concessions have been made by the Commission and have clearly demonstrated to the negotiating partners that the EU has made a very substantial contribution to the agriculture negotiations and is not prepared to go further. The reaction of these negotiating partners to our offer has been disappointing, if not predictable, and they have not engaged in a meaningful way in any of the areas of interest to the EU. I firmly believe that we must not allow this reaction to force the EU into any further concessions on agriculture.
I will comment briefly on the development aspect of the negotiations. Special and differential treatment for developing countries in the form of longer timescales and lower reduction commitments is an integral part of the negotiations. The conventional wisdom is that integration into the world’s trading economy will assist developing countries to prosper and address the problems of poverty and disadvantage. While I believe that trade liberalisation is only one element in an overall solution, I am fully committed and supportive of efforts to assist developing countries through the WTO process. The EU already provides substantial preferential trade access to developing countries and has made offers for further preferential treatment under the new round which I fully support.
The treatment of the least-developed countries, in particular, is critical to the success of the Doha Round. The objective of the round of promoting development through trade can be a powerful means of allowing the least-developed countries to expand their trade in agricultural products and so improve their integration into the global economy. However, we must also be realistic and recognise that there is a growing need for differentiation between developing countries. The needs of countries like Brazil, as a major world exporter of agricultural products, are fundamentally different than those of countries in sub-Saharan Africa, which have virtually no access to international trade channels. This reality must be recognised in the next WTO round.
As we enter the crucial Hong Kong ministerial conference next week, my overall objective remains to ensure that any new WTO agreement can be accommodated within the terms of the 2003 CAP reforms and that further reform will not be required. There should be balance in the negotiations as between the various elements and also as between the pillars of the agriculture negotiations. I do not accept, for example, that there should be an undue focus on market access issues. I will also insist that agriculture must not, under any circumstances, be sacrificed for the sake of an overall agreement. Concessions in agriculture should not be a precondition for movement for progress in other aspects of the negotiations. There are also a number of specific points that I will be pursuing in the negotiations.
In so far as domestic support is concerned, I want to ensure that the system of decoupled direct payments continues to qualify as non-trade-distorting payments under the green box and so remain exempt from reductions under the new round. As the House is aware, the EU system of direct payments, which are issued by my Department under the single farm payment system for the first time last week, makes a major contribution to farm incomes in Ireland. During the past week, payments amounting to €1.007 billion have been made to 113,000 farmers. My Department is continuing to process the remaining applications with a view to completing all payments. Remarkable progress has been made in introducing the new system and I am determined that all remaining cases will be dealt with as quickly as possible.
On export subsidies, I will be insisting on full parallel treatment of all forms of export subsidy and aim to ensure that the phasing out which has been agreed, is carried out over the longest possible period and in a manner least damaging to our interests. Ireland has substantial exports of milk products and beef to third countries which will require the longest possible elimination period.
On market access, I want to retain the maximum possible level of protection through a combination of tariff cuts and other mechanisms, including the designation of products of particular interest as “sensitive products”, in order to protect our major EU markets from increased competition from imports from third countries. I am particularly concerned about milk and beef products and, depending on the outcome of the negotiations on tariff cuts, I will decide whether our interests are best served by seeking sensitive products status for those products.
It now appears that there will be no final conclusion to the negotiations next week and that it may be necessary to hold a further ministerial conference in the first half of 2006 to finalise all of the details. There is no doubt, however, that the negotiations in Hong Kong will be a very significant step on the road to a final agreement. I will attend these negotiations and I can assure the House that I will be taking a very active role in defending the benefits of the CAP to Irish and EU farmers and in pursuing an outcome which is the most beneficial for the Irish agrifood sector.
Mr. Coonan: I welcome the Minister back to the House. I am sorry she has concerns about the security in the House but I assure her the glass was not placed between this side and the Minister’s side of the House.
Mr. Coonan: I can vouch for the Minister’s safety today. I thank her for briefing us on this issue which is of major concern particularly to Irish farmers, and for Irish agriculture. There were many words in the Minister’s statement but she did not use two words that cause me considerable concern, namely, “sugar beet”. This indicates the present crisis in agriculture.
Last year, the malt and barley contracts were taken away which practically eliminated the growing of those crops in my part of the country. This year it is the turn of the sugar industry, on which the State was founded. Towns such as Tuam and Thurles, with which I am familiar, were devastated by the closure of the sugar processing factories. Thurles has not recovered from this blow. Carlow followed quickly last year and this year Mallow is under threat. There is a crisis in agriculture and I am disappointed she did not deal with that issue.
Mr. Coonan: I refer to the impact of the Minister’s negotiating skills on Irish agriculture. She can see that it is disintegrating all around her. In a few years there will be no farmers. A recent report stated that in 15 years time when the regulations and WTO agreements take effect, only 10,000, or fewer, of the 40,000 present full-time farmers will be in business. Who can blame young farmers running a mile from farms, given the attitude of the Government and the European Union towards farming? This is an agricultural country. Like it or not, we depend on agriculture. The economy depends significantly on agricultural exports.
There was a saying in my part of the country that when the farm was going well, the country was going well. Towns such as Roscrea and Thurles now know that to their cost because the closure of factories in both towns, as a result of the decline in agriculture, make it clear to everybody there.
European, and particularly Irish, agriculture is being sacrificed to win benefits for other sectors. It is interesting that the negotiations are spearheaded by the EU Trade Commissioner, Mr. Mandelson, from Britain. Everyone, particularly in Ireland, knows to their cost, that British policy was always to get cheap food. That will continue to be the British policy and Mr. Mandelson will achieve it in these talks.
It is somewhat ironic that, although his negotiating skills are so questionable, as the Minister admitted in her speech, the first to applaud and congratulate Mr. Mandelson was our Minister for Foreign Affairs, Deputy Dermot Ahern.
Mr. Coonan: He congratulated Mr. Mandelson and hailed his work and the great deal he achieved. It makes me wonder. These policies, and the importing of foods from South America, especially Brazil, and other countries, will put the health of future generations here at risk. They will have sub-standard, cheap, untraceable, unlabelled, imported foodstuffs.
The Minister’s text reads that the EU already provides substantial preferential trade “assess” to developing countries. The Minister is making asses of the Irish farmers. It is a misprint in the text but it is a fortunate one because it describes aptly what is happening. These proposals make an ass of the farming community.
Mr. Coonan: Mr. Mandelson is rowing back. The Minister accepts that these trade talks in Hong Kong are unlikely to bear fruit and it may be necessary to meet again in mid-summer. Last week in the European Parliament Mr. Mandelson stated:
He emphasised the word “further”, admitting that the current talks are unbalanced because EU agriculture is carrying too much of the weight of the negotiations. It is being used as a negotiating tool. I ask the Minister to revoke this process and not to allow European, and particularly Irish agriculture be used as a tool in the further negotiations. We must take a firm stand on behalf of the farming community.
The Minister mentioned the CAP reforms. In 2003, farmers coming from a background of 30 years’ protection through quotas, tariffs, export refunds and whatever, bit the bullet by agreeing to the reform of CAP. This was a mid-term review, it was not due until 2007. They took the pain and accepted reform in 2003 which included single farm payments. As the Minister said, those payments ruled out trade distortion because they were decoupled from production. That was helpful.
Less than two years later, before the first cheques were issued, the Minister is asking the farmers again to renegotiate CAP and these payments. Many of the farmers have not yet received their cheques. She said she is concerned about the single farm payments and the future ability of the European Union to allow those payments.
This is terrible news for the Irish farming community. Farmers have accepted reform as it has been put to them but in future reform it is important that they have a level and equal playing pitch. They do not have that now because the cost of production is constantly increasing and is being pushed up by regulations, traceability, cross-compliance, the nitrates directive, animal transport regulations and the introduction of prescription only medicines. These procedures are laudable if there is fair trade on a level playing pitch.
There is no traceability on the imports from South America. Out of a stock of 200 million cattle only 16.5 million are registered in Brazil. They are registered only six weeks before slaughter yet that meat comes freely in here. We were told that part of the CAP reforms were based on the theory that because of decoupling production in Europe would fall. As a result, we were told, prices would increase. They have not increased.
The vacuum has been filled with cheap imports from third world countries, particularly Brazil and, to a lesser extent, Argentina. There is no traceability record on the meat from Brazil, which reeks with foot and mouth disease. We must be concerned about the health and safety of the consumer. If one eats a nice steak with blood dripping out of it but it has no traceability record, God only knows what can happen to one’s health and that of the next generation. What a shame this will be in replacement of the fine quality product produced by the Irish farmer. We speak about developing countries and fair production. In Brazil, for example, growth hormones, such as clenbuterol, are used in the beef industry. Is this fair trade, particularly when one considers Irish farmers went to jail for using such products? One can say rightly so as it was banned in the EU. Why is its use acceptable in Brazil and other countries? Why is there an unfair playing pitch? US beef producers are allowed to use hormone growth regulators and steroids to boost milk production but the US has not withdrawn supports to its farmers. It has announced it intends to do this if the same happens but the EU has made legislation and implemented regulations in this area. Again, Irish farmers must compete with an unfair system.
The Minister must take a stand on this issue on behalf of Irish farmers, otherwise they will be wiped out. European consumers are entitled to the same level of traceability and biosecurity. Why are these imports allowed in on this basis? Why are these trade regulations accepted by the Minister and then imposed on Irish farmers?
There is an inequality of scale with approximately six large ranches in Brazil devoted to beef production. Much of it is produced by slave labour which is of no benefit to Third World countries. Those working on them are poorly paid. How does this improve the lot of the Third World countries?
Last year, the World Bank wrote off a debt of $20 million for Ghana but imposed regulations on sugar production there that cost it $26 million, meaning Ghana was worse off by $6 million. Peter Mandelson and company would lead us to believe that these reforms at EU level at the WTO talks are to the benefit of poorer nations. That is nonsense. He would be better off taking the example of those who established Bóthar which exports live animals to teach people in developing countries about sustainable food production.
These trade talks present a glorious opportunity for Ireland to enhance the clean and green image of its agricultural produce. It is an opportunity to highlight research and development in quality agricultural produce. The message must be sent to Europe that our products are what it demands and are of a high and safe quality.
However, we will see this afternoon what the Government really thinks of Irish agriculture. The Government also has the opportunity to give effect to farmers producing crops that can provide clean energy. We will see if the Government is prepared to reduce taxes that are preventing this from happening. The bureaucratic regulations that prevent the establishment of farmers’ markets must be done away with.
Mr. Coonan: That is nonsense. Last Friday, the story was that 85% of farmers were paid. It is a disgrace the way farmers are being treated. If one telephones the Department, one cannot get through or the call is not answered. When I telephoned, I eventually got through but nobody could tell me anything. The officials promised to telephone me back but never did. Farmers late in applying are to be penalised by 1% per day. Will the Minister penalise the Department by 1% for not paying farmers on time?
Mr. Callanan: I welcome the Minister for Agriculture and Food, Deputy Coughlan, to the House. I will attempt to keep the same spirit that prevailed on the Order of Business. It was fascinating to say the least that we had an excellent morning of co-operation across the House. There was no need for the glass barriers. Senator Coonan may be stirring the pot in straying away from what he should have addressed. That is a matter for another day and another discussion.
The word “boasting” was used this morning but I know Senator O’Toole has addressed the issue that there should be an alternative to what is happening with land use. We cannot deal with this topic when debating the WTO talks. However, I congratulate the Minister and the Department officials on having 85% of single farm payments made on the first day they were legally entitled to be made. Those farmers who missed out on the first day have plenty of opportunities to have the issue corrected. As on many other occasions, farmers tend to neglect what they ought to do.
Mr. Callanan: Some 12 months ago, I warned the Minister she was facing into her most difficult task to date, the negotiations on the future of sugar beet growing and the sugar industry. Greencore, through closing the Carlow sugar plant, divided sugar beet growers, leaving the Minister in the invidious position of trying to please everybody but nobody.
Mr. Callanan: The Minister did well in those talks and I congratulate her on the results she achieved. However, what of the €144.5 million compensation payment for Greencore? It does not deserve it. It is morally wrong that such a payment should be in the package.
Mr. Callanan: Irish Sugar has been paying debts incurred in other businesses, many unsuccessful, and has asked the sugar beet growers to pick up the bill from the profits made in sugar processing. It happened again this year, when it dropped €47 million. It is unjust and immoral that Greencore could get its hands on €145 million, less the 10% referred to by the Minister. Farmers are entitled to 50% of the €145 million, while Greencore and other parties with legitimate claims should receive the remainder. The Minister could not have returned from Brussels with anything other than a bag of money. Beet growing can continue for a further two years and I appeal to beet farmers and the last remaining sugar factory to give the industry at least another two years. The sector can be profitable to both sides and the Minister should use a small stick and carrot to persuade them to come together.
Serious matters arise regarding the world trade talks. My views on globalisation are well known at the Oireachtas Joint Committee on Agriculture and Food. While the process has the potential to be wonderful and beneficial to the peoples of the world, on the basis of the structure adopted for the forthcoming talks in Hong Kong, globalisation will not benefit the population of the world. Multinational companies — nowadays the term “transcontinental” would be more appropriate as these firms span all continents — will not take the action needed to assist the poor of the world. Unless political leadership is given at the highest level of the western world, the only region able to provide substantial aid and assistance, globalisation will only benefit the few and practices such as slave labour, to which Senator Coonan referred, will continue. If globalisation and free trade result in the decimation of the multitudes for the benefit of the few, no one wants them. For this reason, no agreement is better than a bad agreement, and not only from the point of view of Irish agriculture.
The purpose of the World Trade Organisation should be to raise all boats. It was the late Seán Lemass who coined the phrase that a rising tide lifts all boats. That should be the outcome of the Hong Kong talks but under the current structure, no such outcome will be achieved.
I listened carefully to the Minister’s extraordinarily strong contribution, which I appreciate and on which I compliment her. If she had not used such a tone, her position could have been misrepresented. Her address was exemplary in that it indicated clearly and honestly that there is a point beyond which she will not allow the negotiators to go. The proposals Commissioner Mandelson has placed on the table cross the line and it may be necessary to ask him to step aside.
If we in Ireland and the rest of Europe are serious about protecting farmers, we must recognise that our agricultural sector is different from that of other continents. We do not have a ranch structure and most of the ranch-type estates we once had were, thankfully, broken up a long time ago. The continents with which we compete have ranches, some of which cover tracts of land larger than this island. They do not produce goods of the standard we in Europe expect. In addition, community preference is essential to ensure that Europe has a constant supply of home-produced food. It is equally important, however, that we engage in some degree of trade for the benefit of Europe and mankind as a whole. Commissioner Mandelson and his policies are no good for Europe or the poor of the world. While they may satisfy British interests, the only permanent item on Britain’s agenda is to pursue its own interests.
Subsidies in place here and elsewhere include preferential credit terms offered to exporters of agricultural products. The United States also examines such subsidies but, having examined the list of subsidies available to US agriculture, I have been unable to find the subsidy for transport to the port of export which is available to US agriculture. To meet the stated objective of full parallelism, all export credits with terms of more than 180 days must be fully eliminated. It will be critical to ensure that officially supported agriculture export credit agencies are able to demonstrate on an annual basis that they charge adequate premia to be self-financing and have not received government subsidies to support their arrangements. With regard to state trading enterprises — government owned monopolies or companies which control all exports of certain agricultural products, for example, the Canadian Wheat Board and the New Zealand Dairy Board — the statutory privileges and regulatory benefits enjoyed by these government funded companies must be eliminated. Rather than pushing Europe any further, we must take this action to ensure the trade distorting effects of these companies’ practices, including price pooling, anti-trust immunity, direct and indirect preferential financial conditions, preferential transport services and exclusive utilisation of preferential market access quotas, are eliminated.
The Minister will negotiate with the United States and others. The US Government has publicly stated it will legislate to introduce any changes agreed at the talks by 2007. I do not trust the United States on this matter or other issues discussed frequently in the House, including on this morning’s Order of Business. No US President or Congress will impose a reduction in subsidies to American farmers in the year preceding an election. Our bottom line should be that we will introduce measures only when the United States has done so.
Mr. Callanan: The framework agreement objective is to phase out food aid leading to commercial displacement. There is no reason this should not lead to a lowering of developed countries’ commitment to adequate food aid levels. The European Union has already decided to move to a cash only system. While the merits of such a system are debatable, it has certain advantages. If the primary motivation of food aid is humanitarian rather than commercial, it is difficult to understand the reason this objective should not be acceptable to others. We should, therefore, commit to gradually moving towards untied and cash food aid. I understand the reason we opted to promote in-kind food aid was the US practice of dumping surplus produce. This must stop because it is disrupting legitimate trading activities between poorer trading nations and Europe.
If all these forms of export subsidy are eliminated, as provided for in the current negotiations, our exports of beef and dairy products will not be competing with subsidised imports in the internal EU market and third country markets. There can be no question of the EU ending export refunds while other countries continue to subsidise their exports.
Ireland’s beef and dairy industries cannot be allowed to disappear because we simply cannot do without them. The importance of agriculture to the rural economy and social fabric of our society cannot be underestimated. I do not accept the report from Maynooth. I know Dr. Liam Downey personally and he was very good on Monday’s “Questions and Answers” television programme. I hope all other Senators will agree with me. I do not think Dr. Downey’s report is the gospel according to St. John or St. Peter. Did he write a gospel? I think he did.
Mr. Callanan: I urge the Minister to stand firm in the face of pressures that will inevitably be placed on her in Hong Kong, and not to agree in any circumstances to any further concessions on agriculture. We must resist further concessions. The EU has already contributed enormously to the current negotiations by reforming the Common Agricultural Policy——
Mr. Callanan: We must resist the elimination of export refunds in offering high levels of tariffs. The onus is clearly on the other countries to join in the world community. They either want to be in the world community or they do not. Commissioner Mandelson should take a walk.
Mr. Quinn: I welcome the Minister to the House and join with Senator Callanan in congratulating her on her performance on television the other night, which was very good. I must criticise Senator Callanan, however, for referring to the gospel according to St. Peter — unless he was referring to himself — because St. Peter did not write a gospel.
I would like the Government to take a balanced approach in the forthcoming WTO negotiations, but from where I am standing, I am not sure that will happen. A balanced approach should reflect all the interests of the nation. We have three distinct interests and the Government’s challenge is to reconcile all three in the stance it takes. I know the Minister is here to talk about agriculture, but there are three interests concerned as we are a trading, agricultural and compassionate nation.
Of these three distinct interests, the most important in purely material terms is our position as a trading nation. I am not saying that we should be driven by purely material considerations, but that will be the only aspect taken into account by many people in the negotiations. It is almost a cliché nowadays to describe Ireland as a trading nation, but I often wonder if we fully realise just how true it is. More than any other developed country, we depend on trading with the outside world. It is certainly the fuel that has driven the Celtic tiger over the last 20 years. The kind of trading nation we are fast becoming gives us a particular interest in the successful outcome of these negotiations. We are in the process of becoming mainly a service-driven society, at a pace with which many people in this country find it difficult to come to terms.
Senator Coonan talked about us being an agricultural nation and I recall that, way back in the 1950s, when I was studying international economics at university, that was what we were. The economy was mainly based on the land then and our wealth was largely created by agricultural production. In the years that followed, that gave way to an economy driven by manufacturing, although that era is already beginning to fade. We are now rapidly moving towards a situation where the commanding heights of our economy will be in internationally-traded services. In the context of a wider world, we have become very much involved in what is now called the knowledge society.
Just as we rode the wave of increased free trade in manufacturing — and did very well in that because it gave great impetus to the economy — we will now have to rely for future growth on the next wave. As a nation, we have strong, vested interests in promoting free trade in services. Without it, we will certainly not thrive or even survive in the future world that is fast becoming a reality.
That is the first and perhaps the most important stand in the position we should take on the WTO negotiations. If we leave aside issues of sentimentality or morality and consider merely issues of national self-interest, we should drive our approach to the negotiations on our future position as a trader of international services. Of course, we cannot and should not leave such issues aside. That is why my argument is for a balanced approach, although I am not sure I am hearing that from the Government. I realise that Deputy Coughlan is the Minister for Agriculture and Food and perhaps I am not expecting a balanced approached from her, but I am seeking a balanced approach by the Government to the WTO talks.
The second interest we have in these negotiations is as an agricultural nation. We must be careful not to get things out of proportion. I am being careful in my comments because most of the views expressed in the House will be solely from the agricultural viewpoint. The importance of agriculture to this country has dwindled. Once it was the main driver, but it currently accounts for only a tiny portion of the national economy. Although one would not believe it from what we hear sometimes, we must remind ourselves that tourism is far more important to the economy than agriculture. Paradoxically, however, as agriculture has dwindled in economic importance, its political clout has increased, rather than fading away as one might expect. Today, there are far fewer farmers, but they have a much louder voice. The interest in the current election for the post of IFA president is getting far more prominence than elections which occur in many other sectors.
One result of this political stranglehold is that successive Governments have tended to focus on answering farmers’ short-term demands, rather than facing up to the much tougher task of addressing their longer-term needs. Farmers, more than most of us, have to cope with revolutionary changes in their environment and particularly in the marketplace. We heard some references to that earlier. In general, however, our Governments have not served the farming community well. They have not provided the strategic leadership that would prepare them for change and equip them to succeed in a totally new situation.
Farmers have an interest in the WTO negotiations and the Government owes it to them to represent their position effectively, but in doing so I hope the Government will not go overboard as it has done in the past. I hope the Government will not make the mistake of equating the interests of farmers with the much wider national interest. To do so would be to sell Ireland short and I hope that will not happen. In seeking a balanced approach, therefore, we must reflect our interests both as a trading and agricultural nation.
There is a third strand to our interests that must not be forgotten. Recently, I was in southern Africa and was reminded of the huge gap and sense of unfairness that exists between the Third World and those living in Europe and the United States. It is a gap between poor and wealthy people, but I am not sure that the need to strike a balance in this regard has been or is being recognised. We appear to be on one side.
In a highly competitive world we are taught to cheer for our own team and to rejoice in our victories over others. In these particular negotiations, however, I do not believe that we can take that approach. What unites both sides is our common humanity. What should unite us is not a desire to pursue our own selfish interests, but a desire to work for a better outcome for all. In the past, rich countries thrived partly at the expense of poorer countries and the present situation is not much different.
Some years ago, I became involved with the Fairtrade products that were being launched in Ireland and I realised that the case for fair trade had to be made. Senators Coonan and Callanan referred to Ghana and Brazil in this respect, but the solution is not a simple one because if we are not careful the wealth may not go to the right people. We should regard these negotiations as part of an attempt to build a better world for all of us — a world that will be fairer than it is now in terms of access to our markets. I would like to commend the word “fairness” to our negotiators as they go into the WTO talks. Instead of simply asking whether this is what we want, I would like them also to ask if it is fair to everyone concerned.
I wish the Government well in what will be difficult negotiations and ask it to take into account not only the interests of the farming or agriculture community but those of Ireland as a whole. In particular, it should wear that third hat, asking whether it is fair, compassionate and moral.
Mr. O’Toole: I thank Senator Quinn for allowing me the opportunity to contribute to the debate and welcome the Minister for Agriculture and Food, Deputy Coughlan. Since being elected to this House 18 years ago, I have spent most of my time defending Ministers for Agriculture and Food, mainly against the Opposition party, but almost as often against the Ministers’ own party. I make this point in all seriousness. This country has been very well served by those who have gone to Brussels to negotiate on behalf of Irish farmers, all the way back to such people as Ray MacSharry, who did a superb job. He was buried, knifed and kicked by his own party while he was doing it, as well as by this side of the House. I was perhaps the only one in the House who defended what he was trying to do.
Ivan Yates is remembered better because he made a telephone call from Wexford rather than being at the airport at a given time or vice versa. He did a fantastic job, and Deputy Walsh has also done tremendous work. I compliment the Minister on her work to date, and I assure her of my future support.
I agree with almost all of the points made by Senator Quinn. I take issue with him on only one topic, which leads into what I wish to say. He bemoaned the lack of strategic leadership from the Government for Irish farmers. That is not the case, and Irish farmers have rejected such strategic leadership. I can quote many examples, but I will limit myself to two simple ones from the last 15 years. We sat here for ten years listening to a raging war about beef prices when anyone with two eyes and ears and half a brain knew that we would be dealing with world beef prices before the 1990s were out. While we all knew it we were still trying to convince or mislead farmers into thinking that we could stop it happening.
The story is similar with beet, which has been debated for 32 years. Beet was never a long-term European crop. It was put together mainly to protect farmers in the north of France and Belgium, together with the UK to some extent, and we got in on the back. It was never going to happen.
Those things have an impact, since the strategic issues raised by Senator Quinn, on which I agree with him, need to be considered. Heads must be knocked together. I want people to engage on the issues rather than the personalities. I want them to ask what they will do now that there is no beet industry.
The Minister is going to the WTO talks, and I agree with Senator Quinn’s points regarding the benchmarks put in place. How do we deal with it? Globalisation, like Irish unity, means different things to different people. For me, globalisation is the extension of the Treaty of Rome to the globe. It is the free movement of labour and capital, among other things. In her speech the Minister said that she would seek to protect Ireland’s position. How can she marry those two things? I believe that it could be done if we examined how globalisation might be extended in a way reflecting the needs of the Irish agriculture community, which needs our support at this stage.
We can do several things, including requiring standards to be met abroad and changing things at home. Let us take the beet issue. Globalisation should be tied very closely to the Kyoto commitments. The Minister and I both know that if matters continue as at present, Brazil will soon supply sugar cane to the entire world. I predict that it will happen within a year or two; there is no doubt that it can do it. Let us remember, however, that Brazil is clearing trees from an area equivalent to the acreage of Ireland every year. It is doing so against all that we believe in regarding Kyoto. To deal with that, we should not do business with the Brazilians or allow into Europe products coming from such a regime.
I could extend that beyond agriculture to such places as China. On “Morning Ireland”, it was stated in a throwaway phrase of which many of us have been aware for some time that the Chinese are opening a new coal-burning power station every five days. We are worried about that, and we should say to them that we will not accept that kind of carry-on. Regarding sugar beet, that is what we should also say.
We should make to Brazil the point that Senator Coonan, among others, made very articulately some weeks ago. Why should we allow into our country beef from a country that does not apply the same standards to its producers? We should all say that we are not willing to do that, since Europe cannot allow it. We are strict enough on our own farmers.
The other issue concerns the question of health and safety regulations. Globalisation must be dependent on fair health and safety. Once we are assured of that, we can rule out such things as sweatshops. We will not do business with those countries. This is an ethical and principled stance. In Senator Quinn’s words, it is a fair position to take. We help people in both jurisdictions by doing so.
Food safety is another area. I and others in this House have asked about it on numerous occasions but I still do not understand the nonsense whereby a Thai chicken can become a European one because someone cut off its head in Amsterdam. It is total madness. As well as affecting Irish producers and agriculture detrimentally, it also gives European legislation a bad name among ordinary people. If we cannot understand it, how can we expect ordinary people to do so?
Is there a basic position on which we can build our case? We should not oppose globalisation since it is a good idea. The problem is that the Americans have misinterpreted or reinterpreted it in their own way, just as they have done regarding torture and many other things. We should say that it is not what we expect or understand it to mean. There are also things that must be done here.
I have a single priority for Irish beef farmers with which the Minister could deal in the Houses in two weeks. Will she revise and reform the Abattoirs Act 1988? It was the biggest mistake ever made in Irish agriculture in the last 20 years. We no longer know where our beef comes from. Twenty years ago we knew when we walked into a local butcher’s shop in any part of Ireland that it was more than likely that the butcher had bought it locally. Senator Quinn may have a different view on this, but he will not disagree with what I say now. The Abattoirs Act 1988 has put great costs on outlets such as those of Senator Quinn, since they must try to prove where meat comes from. We did not have that problem until the Act was passed.
The Minister can do two things, the first being to examine the success of farmers’ markets and how we can sell locally. They have seen great growth around Europe. Regulations concerning them are interpreted differently in different parts of Europe. Second, she should take a holiday to Provence and visit the local vegetable market. This is a serious point. She should take half her officials with her and a digital camera. She should photograph what is on sale there — the beautiful, shiny, healthy, perfect vegetables. Then she should go to her local supermarket such as one of my colleague’s shops, photographing the extraordinarily good vegetables that he will have on display there.
Mr. O’Toole: She should note the difference. Vegetables are dumped in north Dublin because they will not pass through the sorters for the Dublin market, while in Provence they would be on display. People will go in and buy a beef tomato with four sides or a hugely distorted pepper. If it looks healthy, clean and luscious, they will buy it. Why does that happen there but not here? That and the Abattoirs Act 1988 must be addressed.
I agree with the point that it is immoral and unethical that the workers in Mallow and farmers supplying them will not get a shilling’s compensation for the closure of the beet factory and that €140 million will go to Greencore, which is no longer even an Irish company. Neither is it a beet company, meaning that there are two good reasons not to proceed on that basis. We should go to Irish farmers and tell them what we must do in the future. They must sell such things as bio-fuels, constructing wind energy plants wherever necessary in their areas, as well as many other things on which I cannot elaborate.
Mr. Brennan: I, too, welcome the Minister and her officials to the House and thank her for her detailed contribution. It is important that we make time to discuss issues such as the one before us for a number of reasons. First, there can be a tendency to consider negotiations such as those held at the World Trade Organisation as far off and of little everyday significance to ordinary people but what are the repercussions for Ireland at the World Trade Organisation discussions to be held in Hong Kong next week? Second, some see these negotiations as being of concern only to the declining number of farmers in Ireland or those deeply concerned with issues in the developing world but they are of much greater importance than that. We should see this as an opportunity to stress that point and to reaffirm Ireland’s continued support for a fair, multilateral trading system at the Doha development agenda.
The negotiations provide the world’s nations with a chance to take a number of important steps, including expanding trade, fostering global economic growth and supporting development. That is beneficial to Ireland, our fellow EU member states and developing countries. Less-developed countries will also benefit from duty free and quota free market access, commitments on the level of market access linked to their level of development and deferential treatment and measures to strengthen trade related assistance. We must remember that this is also meant to be a development round with the difficult objective of creating the conditions whereby poor countries can take advantage of globalisation, something that has been portrayed at times as impossible.
The World Trade Organisation is not singly concerned with the needs of the developed world over poorer countries. It must be remembered that the Cancún talks failed mainly because the concerns of the world’s poorest nations were not being meaningfully addressed. Ireland correctly supports international moves to address the challenges that result from economic and technological change. We rightly support equitable growth and development and we also promote all well-balanced actions in the interests of the World Trade Organisation’s members but in particular action in the interests of the developing countries.
The simplistic view is that it is a zero-sum game; gains for one mean losses for others but the heart of the current debate has been a need to ensure balance between the key areas of the development agenda. The agriculture sector expressed concerns that farming livelihoods are somehow being negotiated away at international level. To take the EU nitrates directive controversy as an example, the Department of Agriculture and Food issued a consultation paper, together with the text of draft regulations to give legal effect to the action programme last October but by the closing date of 4 November, 76 submissions had been received from a wide range of stakeholders including farming organisations, co-operatives, local authorities and other interested parties. As recently as last Monday, I received correspondence from farming interests concerned about the validity of a scientific report submitted to the Department on which decisions about the directive may be based. I cite that example because at international negotiations an agreement on agriculture and trade is necessary and welcome, particularly when the objectives are the promotion of free and fair trade, supporting development or protecting our environment. We must ensure, however, that all stakeholders and interested parties are kept abreast of positions taken, the basis for those positions and the likely outcome of developments. Stakeholders and interested parties need the fullest information possible if negotiations are to mend their confidence and trust.
Today’s statements and those in the Dáil on Thursday last are an opportunity for stakeholders and interested parties to get reassurance that Ireland will pursue the most beneficial outcome for the Irish agri-food sector at the Hong Kong negotiations. They provide an opportunity for those negotiating on their behalf and those negotiating on our behalf to state clearly that they accept the importance of their work, although it appears the Hong Kong conference will not result in final agreement being reached.
The next World Trade Organisation agreement will set the levels for future protection and support for the entire agriculture sector. There is no doubt that will have serious implications for the Common Agricultural Policy. I am aware the Minister for Agriculture and Food shares the concerns of the sector that the EU Commission has adopted an unnecessarily concessionary approach to the upcoming negotiations.
On the one hand, there are those who need reassurance about the World Trade Organisation negotiations. We need to hear that the EU’s latest offer is as far as we can go, having reformed domestic support, committed to the elimination of export subsidies and proposed substantial reductions in import tariffs. On the other hand, we need to hear that the priority in trade talks is to assist the world’s poorest countries and that Ireland accepts that developing nations do not have the same capacity to compete on the world markets and so require special treatment. We realise this is a complex area but one that requires a coherent approach. I am glad this series of statements provides an opportunity for those facts to be made clear and I wish the Minister every success next week.
Mr. K. Phelan: I, too, welcome the Minister to the House to speak on the important subject of the WTO negotiations but specifically in regard to Ireland. I listened carefully to the Minister’s contribution and I know the Irish corner will be well defended by the Minister at the WTO talks. It is important that Members of the Seanad get an opportunity to make contributions before the Minister leaves to attend the negotiations.
The ministerial conference is not the end point of the current round of the WTO negotiations and it was never intended as such. These negotiations are an important step on the way to the final stages in 2006-07. As I understand it, the negotiations were relaunched in 2004 when the WTO members agreed the core areas for negotiation. The EU’s acceptance of the abolition of the agriculture export subsidies on the basis of parallel reform by other WTO members’ competing subsidies, coupled with the continued reform of CAP, was the major reason for reaching the July agreement. In regard to those areas of agriculture, that will be the main topic of discussion at the conference.
The negotiations on the next WTO agreement are well under way in the run-up to the ministerial conference. There will probably be a need to hold a further conference in 2006 to finalise the details of the new agreement. Obviously, the Minister, who will attend the negotiations, will pursue the most beneficial outcome for the Irish agriculture sector. From our point of view, given the economic and social importance of our agriculture and food sector, this is a vitally important aspect of the negotiations. The outcome of the WTO agreement will determine the levels of future protection and support for agriculture and therefore the new round could have serious implications for the CAP.
There are three main areas on how the WTO talks will affect Irish agriculture. The three main areas of concern are domestic supports, the export subsidies and market access. It is important that the CAP and the single payment under the decoupling system are safeguarded under the green box because direct payments make a major contribution to farm incomes.
The Doha mandate provided for reductions and the eventual phasing out of export subsidies. It is important that the phasing out is carried out over the longest period possible so as to cause the least damage to Irish agriculture. We must retain the maximum possible level of protection for market access through a combination of tariff cuts and other mechanisms, including designating certain products as sensitive and implementing a special safeguard clause to protect our EU markets from increased competition from imports from some third countries.
Irish farmers are subject to full traceability of our beef, lamb and milk, while beef imports from Brazil and other countries outside the European Union are not subject to the same costly restrictions. Reducing tariffs substantially would prevent Ireland producing beef and milk at a profitable level. The only countries that would benefit are Brazil, New Zealand and Australia, which have large farms and huge heads of cattle and can produce beef at a low cost. Tariff reduction will not help poorer countries.
Some of the proposals being considered by the WTO in the lead-up to the Hong Kong meeting in December, including those of the EU, would devastate Irish farmers’ incomes. Furthermore, they would result in farm enterprises, excluding decoupled payments, operating at a loss. The result would be an unprecedented fall in output which in turn would impact severely on rural areas and the national economy. Once agreed, these proposals will be irreversible and will lead to an acceleration in rural decay through the decline of the population and infrastructure.
I was happy to hear the Minister say in the Dáil during the week that the Government’s priority was to ensure that the process of trade liberalisation continues in a fair and balanced manner and that the WTO continues to provide a stable and constant framework for the regulation of world trade. As a small, open economy Ireland has much to gain from a successful outcome to this round of multilateral negotiations.
The Minister has outlined the position on agriculture. The offer from the EU is as far as we can go, with which I agree as we have reformed domestic supports committed to the elimination of export subsidies and proposed substantial reductions in import tariffs. We have no more room for manoeuvre. It is unacceptable that the CAP would require further reform.
I wish the Minister and Minister of State at the Department of Enterprise, Trade and Employment, Deputy Michael Ahern, well and the best of luck in negotiations. Knowing them both, they will not be found wanting in defending Irish interests.
Mr. Ryan: I welcome the Minister to the House. Is breá an láé i gcónaí nuair a bhíonn sí inár dteannta. The Minister is correct about the Commission and the unfortunate representative negotiating on our behalf. I regret that he springs from the same political tradition as I, which I cannot understand, explain or justify. His political views are to the right of those of most members of the Christian democratic tradition in mainland Europe. His views on the use of war and state terror are more in conformity with those of President Bush than any Member of the Oireachtas. I compliment the Minister on making it clear that we will not be bounced. The same gentleman made the mistake of underestimating our present Minister for Finance when they dealt with each other on Northern Ireland affairs and I suspect he has discovered the same about our Minister for Agriculture and Food. If not, I hope he will.
Like Senator O’Toole, I believe the farming organisations bear considerable responsibility in this matter, which is a pity. From the time we joined the EEC, the mantra of the farming organisations had much in common with King Canute. They sat and said: “The tide will not come in because we say it will not come in.” Strategic thinking means carefully examining issues that are far away and reducing one’s inspection of matters that are up close. It was manifest to anyone who examined the CAP when we joined the EEC that the only question was how short a time would it be before it became fundamentally impossible to operate.
One does not need to be a neo-liberal economist to realise that if one guarantees prices to everyone all of the time for all of their production, something will give. It is a great pity that a country that has and had inherent comparative advantages in the production of high-quality agricultural products charged down a road of poor quality and vast quantity in return for guaranteed prices. Very little was done. Senator O’Toole is correct to a considerable degree. It was not the fault of the political leadership in agriculture, although I have not seen much imagination in the official side of agriculture other than the defence of the maximum payments to the maximum number of farmers, which was fine for a time but could not have lasted.
We must be wary of those who are the most enthusiastic about the free market, people who are usually never exposed to it. I am not allowed to mention names but I will start with the most eminent Irish man in the area of trade and so forth. He began in a profession that was a closed shop, was appointed — not elected — to high political office, was then appointed to an even higher political office, was appointed as the director general of the General Agreement on Tariffs and Trade, GATT, and was finally appointed without competition to his present eminent position. He has never experienced a competitive market in his life but now believes it would be good for everyone else. Of itself, this is sufficient reason for anyone to be wary of enthusiasts for market liberalism, those who say: “It is good for everybody else but we have reasons not to be exposed to it.”
For reasons relating to their admirable qualities, farmers have been seduced into believing they are the epitome of the free market when, in its best form, Irish and European agriculture represents a social democratic managed model of a humane economy, in which one balances the needs for quality and decent standards for those who work in the industry, either in the production or processing side. Even with its faults, the CAP is much better to those who work in the industry than the brutal agriculture practised in what is often called, and is in many ways, the underdeveloped world.
It is unfortunate that farmers were seduced into believing this as they could have looked elsewhere for political protection. I endeavoured to explain this to several members of the IFA last Wednesday night but neither I nor they were at their most coherent. However, I have vigorously made the point to the IFA that it should be careful not to celebrate the dilution or weakness of trade unions. If the influence of trade unions is diminished, it is inevitable that the diminution of the influence of organisations such as the IFA or others will follow. One cannot have a society in which some people are treated to the full brute force of the marketplace yet expect that other people should not. Whatever our exchanged words, we are all in this together. If we do not agree on institutions that protect people from the brutalities of the marketplace, we will all be exposed to it except, of course, the eminent individual to whom I referred earlier.
I am intrigued by how the entire economics profession in this country managed not to notice the Common Agricultural Policy, presumably because so many fat contracts came from the IFA. Economists would not say what they normally would have, what they are now saying about the partnership process, such as it is an inhibition to efficiency and so forth. I know why they did not say this about the CAP. The IFA is a good employer of economists and it would therefore be foolish to say anything. As I have said over the years, the CAP is a good idea but we need to examine its costs and benefits. One cost is that many consumers are paying more than they probably would in a world market. There are down sides to this argument, which I will address shortly.
It is a fact that the profession of economics, which spent its life in the 1980s shooting at the unemployed, for example, and demanding that welfare benefits be cut so that people would be forced out to work, managed to blissfully ignore the market distortions of the Common Agricultural Policy. I support many of these distortions. I have no ideological beliefs one way or another about the market. It is sometimes useful and sometimes a cruelty imposed on people.
In this context, I remember a meeting of the Joint Committee on European Affairs at which an eminent leader of the IFA, who is closer to the House now than he was then, managed to speak for 45 minutes about what needed to be done on behalf of farmers but did not mention the market or consumers. This was quite an achievement for someone who was in the business of producing that which people must buy.
Any strategic plan for agriculture in Ireland must deal with two issues, namely, what should we do to generate a way of dealing with food that is good for consumers and what gives a maximum income for farming. The IFA and most of the other farming organisations run away from the issue of income distribution within agriculture, for example. Where does the income go? Probably 80,000 or 90,000 people will march up and down the streets to defend a position which makes 5% of farmers extremely well off and leaves the rest of them just about surviving. There is a significant question, particularly when one is talking about large-scale State support, about the distribution of that State support between people who are barely surviving and people who are living in a style to which only directors of Irish Ferries are accustomed.
Another question I have asked a succession of Ministers concerns REPS. Part of the Department of Agriculture and Food’s responsibility is to ensure that we do not engage in intensive agriculture. The question I have asked about REPS is not how many farmers are involved, but what proportion of the total acreage in farming is involved and what proportion of our agricultural production comes from farms fully involved in the REPS. I have asked a few Ministers that question and I have never got an answer. I know there are approximately 30,000 farmers involved but are they real farmers, farmers mar dhea or part-time farmers. The really interesting question concerns how much of our agricultural production comes from farms involved in REPS.
The Commissioner makes me nervous. The core of a proper free trade world is a fair trade world. Despite what people say, I believe strongly there is a considerable amount of evidence that where people get the chance, they prefer to know that what they are buying is produced in a reasonably fair fashion. We cannot have equality. Nobody is trying to force Irish working standards, in terms of wages, hours or anything else, on people in developing countries. However, there is a dignified minimum and it is an issue on which many of the governments of poor countries resist. I found myself at the receiving end of a particularly virulent abuse from a senior diplomat from Malaysia when I mentioned at a World Trade Organisation parliamentary convention that I felt we were entitled to some international minimum standards and I was accused of protectionism. It is not protectionism; it is fair trade.
We have a perfectly legitimate interest in ensuring that countries do not compete with us by the exploitation of their own people. This is where I take issue with China. I find it difficult to argue with competition from India. India is a free-functioning liberal democracy, with some form of free trade unions and a free press. Therefore, the inevitable will happen in India. As India develops, there is the capacity of a free society and a free people to demand a fair share in terms of both income and other resources.
What happens in China is an entirely different matter. We do not know what is happening in China because large parts of it are not accessible. We do not know what pressures are put on people to work under certain labour conditions. We do not know what deals transnational corporations are making with Chinese authorities to ensure that is sustained and we are entitled to know that.
The same is true about Brazil, in terms of agricultural production or sugar production. If it is true, as I believe in some cases it can be, that allowing a world free market in sugar will change the lives of significant numbers of poor people in the developing world, then we must do it. That is the direction in which we must go. If, however, it is not true, then part of what we should be doing is ensuring that the new arrangements do not make many people poorer. For example, people in the ACP countries, the price of whose sugar will now drop, will be impoverished. Who would be made rich? The Common Agricultural Policy did not make nearly as many farmers rich as it made middle men running cold stores rich in the 1980s and 1990s. I would be concerned about the same happening here.
The fundamental point I would make to the Minister, Deputy Coughlan, is that in dealing with this particular Commissioner, given his obduracy and having to be sacked from government twice, the only tactics he understands are those where he is confronted. He does not understand subtlety, though he claims to be subtle. He does not understand sweet reason, as far as I can see. Therefore, the Minister must be adamant that it will not be done.
We must begin in these trade negotiations, both in terms of agriculture and of trade generally, to address the great pity that I cannot now find out where the shirt I am wearing was made because somebody changed the rules. It could have be made in Burma or Sweden. If it was made in Burma, it was almost certainly made by what is effectively slave labour. I find that most regrettable. I do not think the present EU Commissioner will have much sympathy with me but I hope the Government will.
If we were to link fair and free trade, we would have a wonderful world in which many people in Ireland would perhaps lose a little but many people in the rest of the world would gain. What we may well get now is simply a world which is even easier for transnational corporations to manipulate and, probably, to destroy.
Dr. Mansergh: I welcome the Minister, Deputy Coughlan, and her officials. I am satisfied and supportive of the position that she laid out in her speech. Before coming to sugar and the WTO, I compliment her and her Department on the efficient issue of the single farm payments a few days ago. That means, although this has not been much commented on, that farmers will have a good year this year, and will probably enjoy a double digit percentage increase in income. However, that must not be taken out of context because obviously next year will be somewhat leaner.
Given the last contribution, I must declare an interest in that I am an ordinary member of the IFA since I ceased to be in the advisory branch of the public service. The farm organisations do an excellent job for Irish farmers. I am glad, however, that they are social partners because that means that the type of somewhat unproductive confrontation in the 1980s and earlier, to which Senator Ryan referred, no longer happens.
The sugar negotiations showed the dangers and perils facing us. While we perhaps expect to be able to produce for another couple of years, I am a little shocked that we, alone of all countries, are being effectively knocked out of a business which has been profitable and good for Irish farmers. It throws into a certain light whether Greencore was wise to close down the Carlow plant, which divided farmers among themselves. That did not make the Minister’s task any easier. Then there were the divisions between farmers and Greencore.
In general, in negotiation I am not a great believer in unilateral concessions and that also applies to the WTO. To take an analogy from the Northern Ireland negotiations, if, as some parties urged ten years before the Good Friday Agreement, we had unilaterally changed Articles 2 and 3, whether we would have got the Good Friday Agreement, or whether it would have been as comprehensive, is very much open to doubt.
On the WTO, once again the EU has put its house in order and has put the foot forward while others hold back. One perhaps has a situation where the US Congress decides at the end of the day whether it might implement what is agreed. We need to be extremely wary of those situations.
Another unfortunate fact is that people, who one cannot entirely blame, facing the EU see that it is internally divided. There are people like the British Chancellor, Gordon Brown, MP. Even Commissioner Mandelson had a go at Gordon Brown the other day, effectively arguing that more concessions must be made. Quite obviously, one or two countries do not believe in the CAP and would be glad to see it go. Can one be surprised that other countries are pushing and pressing for concessions?
I somewhat resent the “tugging at the bleeding hearts” syndrome. Recently, I shared a platform with a representative from Oxfam to discuss the WTO and sugar and was quite shocked. While I contribute to Oxfam and its representative was a decent individual, the shallowness of its argument shocked me. It failed to make any distinction between what are now euphemistically called advanced developing countries like Brazil, and ACP countries, which will lose out as far as sugar is concerned. We must be clear about what is at issue, namely, a clash of interests. In the main, we are not talking about the poorest of the poor, whose interests are being cared for by various initiatives. One must bear in mind that it is almost always the strong, who are not always the greatest respecters of rules, who preach free market liberalisation. Back in the 1980s, we had, as we still do, a comparative advantage in the production of milk. Did that mean that other states without that advantage closed down their milk industries, thereby allowing us to produce for our advantage? Of course it did not, as Ireland is a small country. Hence, one must be wary of some of those arguments.
My final point is that food, even more than oil, is essential for security. We have an absolute right to produce an adequate amount of food to supply people’s needs. We do not know what hazards may arise in the future, in the form of political or environmental disruption. Hence, I wish the Minister well in continuing to fight the good fight. She will have the full support of everyone in this House and hopefully of practically everyone in the country.
Mr. Scanlon: I do not agree with him in public too often. However, he raised the issue of Brazilian beef and the competition and pressure that beef will put on the European markets on which Irish farmers depend. A recent interesting broadcast of the radio programme “Worlds Apart”, presented by Rodney Rice, focused on the San Pablo region in Brazil. Mr. Rice met local people, as well as interviewing people who had worked in the meat business in Ireland. Irish agriculture has done more for that region and its people than the WTO talks will do for the poor people of Brazil. He stated that one can see how working in Ireland made a difference to people, in terms of their quality of life and standard of housing. The interviewees had worked in Cork, Roscommon, Galway and throughout the country and the money they earned in Ireland enabled them to build up their homes and region. A great community spirit was to be found there.
The programme also revealed the damage which has been done to the rain forest in Brazil in terms of the amount of forests that have been felled. Mr. Rice spoke to local community representatives and noted that people do not stand in the way of those responsible for this destruction. While the land mass of Brazil is 80 times greater than that of Ireland, the land is owned by 5,000 ranchers. No one questions these people because, as an interviewee noted, the bodies of many people who had objected to what was taking place had been found on the side of the road. Those people had been shot.
Workers in meat factories in Brazil are paid €40 per month, while such people doing the same job in Ireland would earn €350 per week. Hence, Irish farmers must compete while paying wages of €1,200 or €1,400 per month, compared to €40 per month in Brazil. No business or industry could compete against a market with such a low base production cost. This is why I wish the Minister the best of luck. She has a tough job to do and I hope she will be successful.
I understand that Senator O’Toole mentioned the pig and poultry industries. The pig industry employs 3,500 people and while it has no bearing on the WTO talks, it is a self-sufficient industry, which works extremely hard. It does not receive any subsidies and lives in the real world. The nitrates directive has been mentioned and in that context, the Oireachtas Joint Committee on Agriculture and Food was informed last week that Denmark, which has a land mass the size of Munster, has 20 million pigs, while Ireland, which is four times larger, has 3.5 million pigs. However, Denmark can comply with the nitrates directive. I cannot understand how that can happen. I am aware that the local authorities in Denmark monitor the directive and carry out tests on the land, while I understand that the EPA does so in Ireland. Perhaps we should consider changing that practice.
Abattoirs were mentioned in respect of the 85% payments made last week. In fairness to the Minister, her Department and officials, the payments were made on 1 December, as promised. A further 15% are still outstanding. I know, as do other Members, as politicians, that there is a reason as those 15% have not been paid. I do not doubt that it will be resolved soon.
I also note that the protection of decoupled payments and the green box is a line that cannot be crossed. I hope we stick to that, as no deal is better than a bad deal, and it is crucial not to cross that line.
Mr. Bannon: I welcome the Minister to the debate on the forthcoming WTO negotiations concerning agriculture. The buck stops here and the future of Irish farming rests with the Minister and the Taoiseach. They must make the Government’s position on the WTO talks clear and must prevent the selling out of our farmers, who are being driven off the land by one directive after another. This has become evident in recent years.
This is a time for the Government to present a united front in the interest of Irish farming, unlike the recent shambles referred to by Senator Scanlon in respect of the nitrates directives, where the issue fell between the Departments of Agriculture and Food and the Environment, Heritage and Local Government, and became nothing more than a political football with resultant potentially devastating effects for the pig, poultry and dairy industries.
A total of 141,000 people, or 12% of the workforce, were employed in Irish farming in 1994. By 2004, this figure had been halved to 113,000 people, or 6% of the total workforce, which constitutes an indictment of the Government.
With a few violins playing, one could almost hear Eamon de Valera back in situ, fantasising about maidens at crossroads — a habit Fianna Fáil has never given up. The spin of the above would make one believe we have not moved on much further.
In 2003, the disease levy was doubled, costing farmers an extra €10 million. In 2004, the Government refused to fully roll back this levy and only reduced it by 50%. In budget 2003, roll-over tax relief was abolished. While the revenue yield of abolishing section 605 relief will not be significant, the abolition will severely penalise those farmers who are worst affected by compulsory purchase orders, for a minimal increase in tax yield.
The average farm income in 2004, revealed by Teagasc, was €15,557, half the average industrial wage of €30,000. In 2004, almost 40% of farmers earned an average income of less than €6,500. The average farm income on cattle rearing systems was €7,286. Average farm incomes on sheep rearing systems declined in 2004 by a massive 16%. Average industrial earnings in 2004 were €29,000, with average public service employee wages at €39,000. Lamb and pig exports fell by 12% and 7% respectively in 2003.
Almost half of farmers’ earned income is now non-farm, compared with 30% in 1987. In 2004, farmers were paid for their milk at 1989 prices, with a massive 40% margin going to supermarkets. There has been a 22.5% fall in farm profits since 1995. So much for the Government’s avowed support for rural communities and a strong agricultural sector. This is not a record of which the Government can be proud.
Now, following on one threat after another to the viability of Irish farming, we are faced with a worldwide situation that threatens the heart of what remains of the Irish farming sector. The EU offer to the World Trade Organisation in advance of the Hong Kong summit has the potential to destroy Irish farming. It is clear that the EU has made too many concessions too quickly and there is a serious danger that the Commission’s offer will destroy the internal market for food, which will, in turn, decimate both Irish farmers’ livelihoods and the rural economy.
Further concessions are likely, despite assurances by the EU Trade Commissioner, Peter Mandelson. These concessions could be made in an attempt to rescue the multilateral trade negotiating process of the WTO but would be disastrous for EU farming and, by extension, would further decimate the already suffering Irish farming industry. The heavy emphasis on agriculture in the WTO is masking the enormity of non-agriculture trade and these issues have yet to be debated at the WTO.
The EU offer of 28 October goes beyond the CAP reform agreement and the EU negotiating mandate and it is imperative that the Government brings pressure to bear on the Commission to withdraw its offer. John Dillon, IFA president, who came before the environment committee yesterday, has warned that under Mandelson, Europe will become the dumping ground of the world food market, where there will be no control over quality, no tagging and no food traceability. He says that the consequences of such a policy would be greater exposure to food and mouth disease, swine fever and avian flu. What we will get is beef of over 30 months that is produced by slave labour and, although it has been disputed this morning, full of hormones.
On a recent visit to South America I spoke with South American farmers. I was surprised to learn that in many cases they do not test their animals until they are at least four years of age. This beef can be imported into this country and could destroy our clean, beef producing sector. It is extremely worrying that our food safety budget is being cut, according to the Estimates, despite the fact that the number of food scares is growing, particularly from inferior food imports such as Brazilian beef. Irish farmers have invested much money and effort to ensure that Irish food is the safest and most secure in the world. With increased threats from foot and mouth disease in Brazilian beef or Asian flu and so forth we certainly cannot afford to reduce funding for food safety.
The IFA president has called on consumers to stand by our farmers in return for a secure supply of top quality, safe and traceable food at reasonable prices. It is imperative that the Minister impress on the Commission the need to defend and protect the CAP in the negotiations and oppose attempts to undermine the green box arrangement. Agriculture must not under any circumstances be sacrificed for the sake of the overall agreement. I was surprised to read in the Minister’s speech that concessions in agriculture should be a precondition for movement or progress in other aspects of the negotiation.
Mary Coughlan: That was a typographical error in the script. The Senator will see from the Official Report that I said it is not acceptable that concessions in agriculture should be a precondition for movement elsewhere.
Mr. Daly: I wish to intervene briefly in the debate. I am aware that other speakers wish to contribute. There is a united voice in this House and in politics generally about the necessity to defend the Common Agricultural Policy and especially small farmers, who are being threatened almost on a daily basis and who are gradually going out of business. That is obvious.
Without being patronising I congratulate the Minister for Agriculture and Food. Since she came into office she has brought a breath of fresh air into the Department, an air that is blowing in several directions. I hope she will continue in office for a number of years and that she will consolidate the work that has been done by successive Ministers of all parties over the years since we joined the EU. The basis of supporting farmers’ incomes and especially supporting small farmers is the Common Agricultural Policy. If that is threatened, the policy will come apart and the consequences will be devastating, particularly for small farmers.
I wish to make a point in connection with the single farm payment. For many small farmers, particularly the farmers in west Clare who I represent, it is an extremely small payment. In some cases it is €3,000 or €4,000. That is not sufficient to enable them to continue in the long term. Some schemes have been devised in conjunction with other Departments to put in place employment schemes for small farmers. Many farmers in my constituency work in Moneypoint, for example, to supplement their income but it is necessary to examine the single payment again with a view to establishing a minimum threshold that will ensure smaller farmers will have a minimum income level that will enable them to continue farming, even on a part-time basis.
The reason I intervene in this debate is to impress on the Minister the necessity to support the smaller farmers, especially those in western areas such as west Clare, and to ensure they can continue to have a living from the land for the foreseeable future.
Mr. J. Phelan: I thank Senator Daly for allowing me the opportunity to speak in this debate. I join other Speakers in welcoming the fact that the Minister has been present for the duration of the discussion. It is an important debate. I suggested a debate on the world trade talks about five or six weeks ago. I am glad we are having this debate but we should have had it a couple of weeks ago when the Commissioner for Trade, Mr. Mandelson, began to float the idea of agricultural reform and the potentially devastating impact the reforms he is intent on implementing would have on agriculture, particularly in Ireland. I wish the Minister well in the talks. She is a formidable operator but the Government’s commitment to agriculture is not as strong as it used to be. I get the impression from most Members of both Houses that that the priority which many communities in Ireland give to agriculture is not as strong with Government as was formerly the case. It is a sign of the times and the way this country has changed. We cannot allow a situation to develop whereby agriculture is sacrificed for the benefit of other sectors.
Senator Daly is correct that many thousands of people are still directly employed in agriculture as farmers or in other rural services that support agriculture. We must do as much as we can to ensure their employment remains viable and intact. The most fundamental way to ensure rural Ireland survives is to ensure people are involved in agriculture.
Much hot air, waffle and nonsense is spoken about the Common Agricultural Policy. Much of it has been regurgitated in this House today, including the bull we occasionally hear that the CAP has detrimental effects on agriculture in Third World countries. Agriculture exists in many Third World countries purely due to the preferential treatment they receive from the EU in terms of receiving European prices for their products. I am thinking in particular of the recent sugar reform proposals, which will have their most devastating effect in many of the Third World countries that used to receive the European sugar price. They will see complete collapse, as we are seeing in Ireland. Senator Callanan said we might get two more campaigns out of it in this country. That would be very convenient to get past the next general election.
Mr. J. Phelan: It was shocking that the Government and many of the farming lobby groups raised the white flag on the sugar sector. Over 3,000 farmers are directly involved, not including the people working in the plants and in transportation. It was given up at the drop of a hat.
Mr. J. Phelan: Now we are told that the bulk of the compensation to come to Ireland as a result of the abandonment of thesugar sector could go to Greencore. What a disgrace that would be. I accept that the deal has been done but I do not accept that it had to go the way it did and I do not accept the waffle that passes for comment from people who say this deal is being done to benefit poor producers in Third World countries. The benefits of this, and any other fallback in the position of agriculture in the WTO talks, will be enjoyedby South American ranch owners who have thousands of acres and employ slave labour. These people have very poor standards of production, if any, and yet we saddle our producers with red tape and bureaucracy while asking them to compete at world market prices with producers who have no traceability or food safety standards.
The Common Agricultural Policy has been a success for the EU because it has ensured European consumers have relatively cheap, safe food. As supporters — and I am a staunch supporter — of the CAP we should not be afraid to say that. At a time when farmers have had to undergo this dramatic change with decoupling — and we have seen many payments, but not enough of them, in the last week or so — they are being presented with anotherpotential reform of the CAP if Mr. Mandelson gets his way. I ask the Minister to ensure he does not get his way. We will give whatever support we can in either House or in Europe. We all know the British Government’s attitude to farmers. It would prefer if there were no farmers. The British Labour Party does not get agricultural votes and does not care about agriculture, but in this country we do care about agriculture. The Minister has a difficult task and I wish her the best of luck. I hope she will have the full support of her colleagues in Government because up to now she has not had enough support from them.
Minister for Agriculture and Food (Mary Coughlan): I thank the Senators for their participation in this debate. As always with agriculture we have strayed from the point, but it was all done in earnest. On the WTO, all parties are supportive of not going beyond the Council mandate that sets the parameters within which we work. I reiterate that we have gone as far as we can go in the green box on domestic support. We have agreed to phase out export refunds but there must be a parallel or reciprocity. We have concerns about the market access parameters beyond which we cannot go.
On domestic support we want to see other reforms, not what it may be in the future. That is why I have concerns with, for example, the farm Bill, which has not even been on the floor of Congress so we do not know what the outcome will be.
On food aid, the philosophy of the Irish Government and others is that cash is more appropriate. My Department gives food aid through the Food and Agriculture Organisation by way of cash payments. On market access there must be a parallel process and a balanced approach. I think everybody here will agree with my view on this.
The issue of beef has been debated here. Beef is imported into the EU because we have a beef deficit. I have expressed my concerns about this to the Commissioner for Health and Consumer Protection, Mr. Kyprianou, and asked for a review on the basis of the bans we have implemented in the EU on foot and mouth disease.
I agree that equal standards should apply to all but it will be difficult to ensure this happens. For less-developed countries that wish and need to achieve food safety and security standards we have aid for trade to support people who do not have the wherewithal to achieve that level. That has been a big issue for agencies such as Trócaire and is the right way forward, but Brazil is not a developing nation in the context of agriculture.
Mary Coughlan: If there is to be free trade — and there are issues about free market access and bottoming out prices — there are winners and losers. If others refuse to import Brazilian beef, why should we? Why can we not export to the US, Japan and North Korea? Our farmers are prepared to be competitive and ensure quality and standards but they must have a balanced approach. That is needed in the WTO talks.
Mary Coughlan: I am not being facetious but there is a naive view about the sugar deal. We had to reform the sugar sector because of the WTO talks before us and because we lost the WTO panel. I agree that this is where supporting less-developed countries becomes difficult and complex. The ACP countries asked us as a Council not to change the price. We have not seen the full outcome of the Everything but Arms agreement and the deal will not be finalised until 2009. It gives preferential treatment to developing nations, but the sugar regime will undermine this to some extent. A package of supports will be required for these people. These are the complexities of some naive views that the way this should be done is through an open market access process.
With regard to the deal I made on behalf of the Government, we were very much part of the bloc of 11 member states which opposed the reforms. At a certain time on the Wednesday evening I knew some had left and others were leaving. We were going to lose our power and my view was that we should reach the best deal possible. On the basis of the prices set over four years, I knew we would not be in a position to produce beet. As a result, we received different treatment with regard to diversification to the amount of €44 million, and we have a two-year determinant of €145 million under the restructuring fund. We also have a single farm payment.
No decision has been made on the restructuring fund, but a minimum of 10% will be allocated to growers. I must make a balanced decision and allow all those involved in the sector to put their views to me. A decision will be made at that stage. I am favourably disposed to supporting farmers and those involved in contracting alike.
Mary Coughlan: I will do all I can to support alternative ways to sustain agriculture, which were discussed today. With regard to the reform of the CAP, we have changed to become very much focused on market, consumer and quality. That is how the agricultural sector will survive.
We must deal with issues such as substantial transformation, and I agree with Senator O’Toole’s comments on this issue. I thank Senators for supporting within the Irish Medicines Board (Miscellaneous Provisions) Bill 2005 the need for labelling of country of origin. We must work on this framework, which is the vision for agriculture. I do not agree with the grim reaper reports for 2025. I agree with the report of the Agri Vision 2015 Committee, which was chaired by an eminent former Minister from Fine Gael. I will take on board many of its recommendations and work with them in the background on the reform of the CAP and the outcome of the WTO talks.
I take this opportunity to commend everybody involved in the single farm payment, including the farming organisations, Teagasc, my own Department and advisers who facilitated the 136,000 farmers in Ireland. Last Thursday, 85% of these farmers were given their payment. This figure has risen and some 113,000 of the 136,000 have now been given the payment. There was a telephone issue on Friday morning as there was a bug in the system. We were not sick but we had a problem.
Mary Coughlan: Some issues exist but they are not insurmountable, and they can be dealt with. We will do our utmost to ensure the remaining necessary funding for farmers will be dealt with as quickly as possible. Agriculture is a priority for me and all my colleagues within my parliamentary party and the Government. Agriculture is a necessity for the economic development of this country, be it the agrifood industry, where 50,000 people work, or the farming sector, where 136,000 work. It is my view and intention to support alternative and different types of enterprise, quality and access to markets.
Mary Coughlan: I wish to see import substitution in the vegetable market, for instance, in which we are involved. An onion growing initiative was launched last Friday in north County Dublin, as we invest in import substitution in the horticultural sector and organic food.
The consumer will ultimately determine how agriculture develops. The consumer expects quality, standards and safety. This does not necessarily come at a cheap price. We should strike a balance between both of these factors. We must reduce prices but not by sacrificing agricultural safety and food safety. The reduction of funding within the Vote for the Department of Agriculture and Food is not because food safety is taken lightly but is a result of a large reduction in diseases such as BSE and brucellosis, and a further reduction in tuberculosis. A substantial sum of money has been made available through the Department of Finance for supporting agriculture.
We need some cool heads on the nitrates issue. I have provided a substantial package in the farm waste management and dairy hygiene scheme. Last week, I announced funding of €4 million to deal with the poultry and pig sectors. I wish to take this opportunity to reduce the concerns of those involved in REPS, in particular, on the use of organics, such as slurry, being more beneficial than purchasing fertiliser. I support the pig industry in particular and assure those involved that the Department will not be overly bureaucratic or controlling on this matter. I am working with farmers to ensure progress will be made.
Directives make certain impositions, and one might question the reason for these. I do not agree that farmers are the main pollutant of farm land and water courses. There are many other factors involved. We must put our house in order and deal with the issue. A balance must be struck between agriculture’s sustainability and the environment. I intend to pursue and support this goal. The custodians of the environment are ultimately those who own the land, who are mainly farmers.
We will work towards this goal in a more sustainable manner, and I look forward to the support of all colleagues across the parties to ensure that a valuable and important industry is supported at home with new initiatives and financial support, as well as the WTO talks. These talks will be difficult, and I assure Members I will do my utmost to support and nurture agriculture. We will not sell out agriculture for other beneficial trade liberalisation policies. We will balance this goal with the need to support developing nations and those less well off, who may not be in the positions they should be.
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