Address by Mr Noel Treacy T.D. Minister for Science, Technology and Commerce at the Co. Galway I.F.A. Dinner on December 4, 1998

I fully accept that Farming is going through a difficult period, at the moment. The shape of world food markets is changing at a remarkable pace and we are on the brink of the intensive phase of the negotiations, on Agenda 2000 just as we are about to move into the next Millennium.

There is seldom, if ever, a perfect year in farming but this year certainly was not one of them. It began well enough. Markets were stable and prices were reasonable, but in recent months, it has been very difficult. I fully recognise the problems of cattle, sheep and pigmeat producers, which have largely arisen, because the economic difficulties in Russia. An added difficulty is the shortage of fodder in certain parts of our country.

The Government collectively, and the Minister for Agriculture and Food, Mr Joe Walsh T.D., in particular, have used every means at our disposal to alleviate this serious situation. From the very onset of the problems, Minister Walsh met with, and discussed solutions with farm leaders, on many occasions and in many situations. He embarked on a series of contacts, with the EU Commission and with Commissioner Fischler and set in train a plan of action, to offset their impact. The strategy has been to address issues and find solutions, which make a real difference. He concentrated on delivery, not idle promises. In fact, that has been our whole approach since we returned to Office, just a mere 17 months ago. Specific Measures So let me highlight some of the measures, which this Government have taken:

• We negotiated a series of improved supports in Brussels. Intervention support was broadened so that close to 50% of steers would be eligible for support. Export refunds payable on beef sold outside the EU were increased by 9p/lb to 51P/lb. These measures have had a critical impact, in that the slide in cattle prices was stopped and prices have been firming up in recent weeks. We are still not satisfied with the level of cattle prices and the Minister has urged the meat industry in clearest terms to make maximum use of the supports. More is possible.

• We are making no apologies either for encouraging the live trade at this critical time and while Libya has yet to honour the agreement reached in Dublin last July, the overall figures speak for themselves.

• Through a combination of improved market access and the approval of additional shipping capacity, the number of live cattle and calves exported to date, has increased to 140,000 head, compared to 42,000 animals, in the same period of last year. The reopening of the Iranian market for beef and an additional contract of 20,000 cattle, to Lebanon, following Minister Walsh's earlier visits, to these markets, will give a further confidence boost.

• With regard to the fodder situation, the main concern has been to introduce assistance as a matter of urgency, targeted to cattle and sheep producers, in the worst affected areas and with the minimum of red-tape, and for payments to roll out quickly. The Fodder Scheme, the Sheep Top-up and Commonage Culled Ewe Scheme, introduced in conjunction with Arts, Culture and the Gaeltacht together are worth close to £20M.

• We are continuing our efforts to alleviate the problems, in the pigmeat sector. Extra capacity, higher Export Refunds - the latest last week for Russia - and a special storage scheme have been introduced, but more is needed at EU level because this is truly the most pronounced pig cycle, in modern times.

• The 1999 Book of Estimates, prepared and issued by us in Government, makes provision for a 19% net increase in the Vote for Agriculture. The Control of Farmyard Pollution, Dairy Hygiene and Installation Aid Schemes have been re-introduced ensuring that our commitments in the APM are honoured in full. There is a significant increase in REPS allocation. These measures and others, such as the increased funding, for the control of animal disease, are specifically designed to encourage new investment and gear for the future.

The Department of Agriculture has also made very significant improvements, in its delivery of service to its customers, especially on payments and at the same time, is fine-tuning controls systems, to safeguard and refine both the demands of the European Union on Community Funds and our own National Funds also.

Some £757M has been paid to farmers under the various headage and premium schemes, of which £457M relates to payments made under the 1998 schemes. The corresponding amount last year, was £314M. Payments under REPS and the Early Retirement Schemes amount to £117M and almost £55M respectively, so far this year.

Farmers are fully entitled to these vital payments, but you must understand that, a very special effort has been made by us, to get these payments, made quickly. Given the levels of payments involved, this will have a positive effect on cash flow on family farms, in the important weeks ahead.

I also want to reiterate that the problem of low income farmers was addressed in the Budget, earlier this Week. My Government colleague Mr Joe Walsh TD, Minister for Agriculture and Food, ensured that Wednesday's Budget contained important new measures for the benefit of the farming community. Most significantly farmers will benefit under a new Farm Assistance Scheme which will subsume the existing Smallholders Assistance Scheme and will provide support to the tune of £50m annually to low income farmers.

At present over 7,000 farmers are in receipt of £33m Annually, under this Scheme, which is available to all farmers, on low incomes, as assessed by the Officers of the Department of Community, Family and Social Affairs. The actual cost of the new scheme will depend on changing circumstances and level of uptake.

The new Scheme acknowledges the need for an improved support system for farmers on low incomes who have suffered most as a result of the poor weather conditions and the collapse of the Russian market. A particular focus of the Scheme will be farming families with dependant children.

This is on top of our Government's decision to introduce a pro-rata Pension for farmers, who were aged 56 or over in April 1998 and who have at least 5 years Contributions paid since then. Some 8,000 retired farmers and their 2,000 dependants, will be major beneficiaries of the £18m extension of the Contributory Old Age Pension Scheme.

Collectively, these amount to a formidable array of measures and they provide assistance across a range of Sectors. Our Government will continue to work for solutions and will be unstinting, in our efforts in that regard. Last week, the EU Council of Ministers voted to end the 32 month UK beef export ban. As you will recall, UK beef was banned in March 1996 after a link between BSE in cattle and its human equivalent, CJD, was revealed by the British Government. This resulted in a fall in consumer confidence which affected the sales of our beef in France and Germany, in particular, where differentiation with British produce was often difficult to achieve. Hopefully we will be shortly able to recover our market share which we had lost.

We are even more conscious, that we must also work to find long term solutions.

Where do we go from here and what kind of agriculture and food sector do we see, or more importantly, what kind of agriculture and food sector do we want?.

So let us look to the new horizons and then make every possible effort, to make it happen. It is this approach, which on a broader front, has enabled us achieve the Good Friday Agreement. It is this approach also, which has allowed us reach and sustain a level of economic growth nationally, which a few short years ago would have seemed incredible.

Right now, the degree of change in world food markets is remarkable in its pace and profound in its implications. It is embracing each and every aspect of the chain, from consumer demand, through market structure, product innovation and technology. Like all change it is presenting greater challenges, wider opportunities and indeed more risks. We have seen how events in Japan or Russia, can have an immediate impact on stock markets across the globe, and indeed on the prices paid for livestock, here in Ireland.

For agriculture and food, there can be little doubt, which direction we must take and for which we must plan. Ireland needs an agrifood sector that is market-driven and provides an essential economic and social vibrancy, to farming and rural Ireland.

The specific challenge, is to create the framework, on which to build this vision of the future. I believe that it must be built, around the primacy of the consumer. It must have the highest regard for food safety and quality and take due account of animal welfare.

It must also and critically have within it, the basis for generating sufficient returns, not just to secure a reasonable standard of living, but to ensure, that there is a capacity to invest for future viability.

We have the basis, for the growing of excellent primary raw materials and the production of these, on the most competitive basis possible, has to be one of our main priorities. The challenge here is truly enormous and Teagasc, as the relevant State agency, has a central role to play, in this situation.

At processing level, there is a need to ensure that everything possible is done to position our industry, among the strongest and the best. The potential to increase scale must be kept under constant review and where opportunities exist in this regard, then we must go for it. Always remember, our competitors are doing so. Increasing our competitiveness requires ongoing research and development, product innovation, imaginative and flexible marketing, in addition to competitive raw material production. We have made great strides in these areas in the past, but bigger strides are needed in the future. There will also, be a clear onus on the part of processing companies, to have greater price transparency and to build better and more trusting relationships, with their farmer customers.

So let me say, a few brief words on the planning process and how we are working to position agriculture and the food industry, for the future and how you as farmers, are fully involved in the process.

My Government Colleague, Minister Joe Walsh has established four consultative groups, in order to have the benefit of the best possible advice, for the Agenda 2000 negotiations, in line with our Government's commitments, on Partnership.

The Beef Task Force will report by the end of January next, so that the steps needed, to put the plan into action, can begin immediately thereafter. The Forum on Sheep is equally active.

Earlier this year my colleague Minister Ned O'Keeffe established a Food Industry Development Group. This Group, which will report soon, is charged with formulating a plan for the food industry, in the context of a strategic approach, to the future use of national and structural funds.

A White Paper of Rural Development, under the Chairmanship of Minister Noel Davern, is in the process of completion, which will guide future development in this very import area.

I believe, that as we enter the next millennium, we will be compelled to adapt, innovate and compete to a degree, hitherto unknown. The need for secure and more stable markets for our produce, is the most important strategic, issue facing all of us. Our future will be determined, by how we respond. We must recover market share for Irish beef in Europe, following the re-nationalisation of markets. We must build long term relationships, with major retail groups and the food service sector, for all of our meat exports and for a range of consumer products. We must aim to become the food island of Europe and I will personally, be looking to our vibrant modern food industry and Bord Bia to lead the way. I am very optimistic. Last week, I presented the National Enterprise Awards, once again I was so happy to see, that the three top awards, went to the agri-food sector.

The outcome of the negotiations on the Fischler Reforms, which are now underway, will be the major parallel influence, on the prospects for Irish agriculture and food, into the new Millennium. As you know, the Council of Agriculture Ministers accepted in November 1997, the basic principles for the reform, which is necessary to prepare European Agriculture, for the challenges of EU Enlargement and the next round of WTO negotiations. Ireland accepted the Commission's basic principles.

These consist of a continuation and deepening of the MacSharry reforms - that is, price reductions, with compensation in the form of increased direct payments, with a view to making European agriculture, more competitive on world markets and allowing it, to be developed on a sound, stable and sustainable basis. The detailed proposals, which the Commission presented in March 1998, were a major disimprovement on the original proposals. With the wholehearted support of our Government, Minister Walsh informed his colleagues, on the Agriculture Council that Ireland, emphatically rejected the proposals, on the grounds that they would be seriously damaging to Irish agriculture and the Irish national economy, in general.

There is no doubt, but that the proposals will need to be radically amended, to meet the needs of Irish agriculture. A significant breakthrough was achieved last May, when Minister Walsh secured an acknowledgement of the importance of both beef and milk, to Ireland by having written into the Conclusions of the Agriculture Council, a statement that the dependence of particular Member States, on specific sectors would be taken into account in the final settlement. Our Taoiseach, Mr Bertie Ahern T.D., had this commitment confirmed, at the European Council, in Cardiff in June, when the fifteen Heads of Government, agreed that further negotiations, should be based on the conclusions reached, by the May Council. Work on the proposals, is continuing in preparation, for the Agriculture Council next week, which in turn will report to the European Council, in Vienna on 11/12 December. It is expected that a final agreement, will not be reached, before March 1999.

Recent proposals in regard to financing of the EU, are a cause for grave concern and if they are followed through could do serious damage to the fundamental principles of the common agricultural policy. We fully recognise, that there are strong feelings in some Member States, who are net contributors, but the CAP should not be made a scapegoat, in seeking a resolution to that problem.

Our primary concern is, to ensure that there is fair treatment and adequate support, for the type of farming, which is practiced in this country. In particular, there must be a proper level of support for extensive agriculture, and there must be real support for the European model of agriculture, which recognises its diverse role and its importance to society in general.