Deputy Eamon Ó Cuív:

As Mr. Bryan knows, they have not got as far as that on Pillar 2. The co-financing rate is vital. The Minister has said that he will co-finance if there is no EU money left but different parts of the package attract different rates. I accept what Mr. Bryan says, that it needs to be co-funded completely at a 50-50 rate. I also know what Mr. Bryan said about the grasslands scheme.

I read Professor Renwick's report while I was on holidays. We need to look behind the figures and get some clarifications. It outlines cattle and sheep numbers and compares ewes with suckler cows. Of course one ewe is not equivalent to one suckler cow. Both these numbers shot up in the 1980s and up to 1992 - normally they seesaw. Was that a direct increase in production or was it people swapping from dairying into suckler cows and sheep? In other words were people switching to follow the money or was there an increase in the net farming output? Once the suckler cows reached a high number, the sheep numbers fell back again. Were people choosing suckler cows over ewes, allowing for the fact that one suckler cow would replace more than one ewe?

The next page deals with low-income sectors and outlines direct payments and subs. Did Professor Renwick do an analysis by breaking down the direct payment and subs between those that are output related, as suckler cow payment is, and non-output related such as the single farm payment and the DAS? Under DAS a farmer only has to meet the minimum stocking level of a ewe to a hectare which, except on a bad mountain, is no challenge at all. If the direct subsidies were taken out and divided between those that are fixed - in other words not related to what the production is - and those that are variable, such as suckler cow premium, grassland sheep scheme and so on where there is a production element involved, and if the grant that was production related was added to the market income, would it still be at a negative ignoring all grants? If a farmer's sales price and grant related to the number of units he or she has is in a negative, it seems that the more the farmer produces, the more he or she loses money. The other one is fixed and farmers will get it anyway so there is no incentive to produce. My argument has always been that unless the subsidy plus the price a farmer actually gets for the finished animal is greater than the production cost, there is no incentive to increase production and certainly a bank manager would give that advice.

Did Professor Renwick carry out a price-sensitivity analysis? Even the president of the IFA in his pitch admitted that subsidies now have a limit because of decoupling and the single-farm payment. Having worked out how much price on the market could affect production, that minus figure could be converted into a plus figure between a small grant of €100 a head and a decent price.

The next slide gives rise to a big question. Some 75% of all Irish beef goes on to retail; 47% of all the EU beef and they are the two biggest markets by far. We do not know how much the farmers are being robbed by the retailer - it is subject to another bit of work here. Is there space to be made up there? I hear horrendous stories at the moment about the price of cattle in a beef factory in England, but for some magical reason we cannot seem to get cattle on a boat in Dublin and send them three hours across the sea. The cattle can be transported from the far end of the west of Ireland to Dublin with no hassle, but we cannot seem to put cattle on a boat in Dublin to be sent to the nearest factory in Britain. If a few lorry loads started going, I have no doubt the factories belonging to the same people here would come up to the Irish price. How much does price sensitivity as well as subsidy sensitivity work to affect the attractiveness of this as an industry?

The message that comes across loud and clear is that this sector is an enormous economic producer spread throughout the country. It needs support because without critical mass there would be all sorts of problems. I accept what the president of the IFA said that if we cannot supply the market with sufficient cattle and sheep over the long term, we will lose market share because people want a continual supply of high-quality product.