Willie Penrose (Longford-Westmeath, Labour) | Oireachtas source

I welcome all the organisations whose representatives made comprehensive submissions. It appears those involved in the intermediate steps in the farm to fork beef industry and the wider agriculture industry are making money and the only people who are not making money are the primary producers. That is a peculiar phenomenon. The intermediary steps have to be examined because there is a lack of transparency. I never met group as skilful in avoiding indicating their market returns as those involved in the various steps in the food production chain, including the processors and all those involved. Much of this was predictable because when we look back to the period from 1998 to 2002 the average income derived from an 87 acre suckler farm was €12,228. I agree with Mr. McCormack that taking the average figure is a dangerous thing but it is the rage to do that. Working off the averages, in the period from 2013 to 2017, the average income derived from same suckler farm was €11,063, which represents more than €1,100 drop in income in that period.

If we factor in inflation, an income of €11,063 last year would need to increase to €16,752 to achieve the benefit of the income secured in 2013. That income derived from 87 acres represents a 1.6% return on the capital employed. When I was in college in the early 1970s, the return on the capital employed was 2.1%. Therefore, the return on capital employed is declining. I deal with many suckler cow farmers who understand this. Sometimes what is uttered by the three organisations does not reflect their views. I come from the midlands where there are a large number of suckler cow farmers who are looking at alternatives as they are aware that the market is not giving an adequate return. They are convinced that unless a Houdini enters the market, they will never receive an adequate return. In the context of Brexit, even a soft Brexit, they will still not see the significant improvement required to maintain their families. Many of them are considering reducing their stock numbers or using some of their land that might be suitable for forestry to achieve a return while making a contribution to dealing with climate change by way of carbon sequestration.

Deputy McConalogue was right and I have said it here previously that a few of those farmers have told me that they would be better off if they stopped producing beef. Considering that CAP payments represent 105% of their income, they would be better off out of the business as there would be no outflow. They would, as it were, be better off standing still. That is serious, especially in my area. One issue that really bugs them is grading. It is an absolute no-no for most of the farmers I know. There is too much involved. Everybody know that the quality pricing system, QPS, is grounded on subjectivity, albeit a few factors are included. I am not blaming the farming organisations for this, as they are considering various measures, including a pilot scheme involving the use of LED lights and cameras. Would it give farmers a better return? It might create confidence in that there would be objectivity, rather than the subjectivity, which is important. The perceived anomalies in grading between factories is a massive cause of concern and annoyance.

I recall campaigning many years ago to have a co-operative retained. I was one of the only fools to do so because farmers nearly smothered me in the run to get the money on offer from one of the big processors who is now causing them headaches. I do not like to say "I told you so," but farmers are involved in a sector in which the co-operatives are critical. We can argue about milk prices, about which Mr. McCormack and colleagues know more than I ever will, but the co-operative system has been very useful, including Ornua and everything else. The boards have their own representatives and deal with matters at first hand. Everything is transparent, but it was lost in the beef industry. We are talking about competition. It is great to be able to export cattle and calves to introduce competition, but it can be manipulated. Co-operatives in the processing sector would have provided real competition. I have always regretted that it has been lost.

Six or seven years ago when I mentioned that I had no time for feedlots, there was a bad reaction from some people, but I knew the game they were playing. They were releasing cattle into the market to depress prices.

It was called "controlled release". When I mentioned it, I was portrayed as a baddie. Some in the media do not like me saying these things, but I say what I believe to be the truth. The big boys are playing the game and will have enough as they have thousands of cattle. One big change is needed. A way must be found to ensure these concerns will not be eligible for CAP payments. I have always believed no corporation should be eligible for such payments. They were never meant for that purpose.

I might disagree with the delegates a little on the issue of convergence. The objective of the CAP was to maintain the maximum number of farmers on the land. When I started out in 1974, there were 375,000 farmers. Now that number is 100,000 or thereabouts. We have not maintained the maximum number on the land. The payments have not been used properly to do so. They have gone to well-off farmers, including corporate farmers. Let us stop codding ourselves. Let us face up to the harsh reality that one cannot represent everybody. The farmers at the bottom with 60 or 70 acres who include some of those represented by the men present are the ones we have to start to converge. We must make sure they get a decent return to maintain their families on the land. I have always supported that policy, to my detriment as some see it, but that is neither here nor there. One must stand for something or nothing.

I am struck by the issue concerning Kepak and Glanbia. It was the reaction to farmers getting annoyed. Deputy McConalogue is right. I have met some of those in County Westmeath who have switched to dairy farming in the last two, three or four years. Substantial farmers have left the beef sector. I can understand the reasons, but there is a consequence. One only has to look at the returns for milk processors. We are already way ahead of target. We are flying. Removing the quota had an impact, as I said it would at this committee.

Twenty years ago I conducted a study that showed one of the problems in the beef herd. At the time only one in four animals qualified for entry into the top markets in Europe. When I questioned the Dutch about the matter, they said they could get black and white cattle anywhere. When farmers compete in the beef market, they must have animals bred for beef production. There is no point producing Jersey or Holstein crosses or suchlike. One has to have top quality produce. That is where the Government can step in and it is the only way. We would then have a socialist system, with the Government stepping into everything. As I am a socialist, I would be very eager to see that happen. Beef farmers and some sheep farmers are really under threat. Farmers have to obtain a premium price for producing top quality beef as otherwise they will not survive.

There is a glut and a lot of talk about lairage facilities and everything else. Some exporters wail about how the Government has to step in, but it has to create the conditions to help out. Those exporters buy calves for €5 or €10 and want somebody else to step in and save them, but they should cop on. Let us call a spade a spade. It might not be very popular to do so, but sometimes we have to speak the truth. They were roaring and shouting about this issue, but if I was exporting, I would make sure I had access to lairage facilities. I was buying calves in marts in the south at a time when farmers could not give them away and exporters were still not happy, although they were getting them for virtually nothing.

I also represent some struggling shopkeepers who are entitled to ask me to get €150 a week or some subsidy for them to allow them to keep their doors open. It would be right to do so because most of them will close very soon.

These are the important issues and I heard Mr. McCormack say farmers did not want to be in this situation. They want to be in a situation where the market provides a return. They do not want to be in a position where they have to try to secure assistance. I subscribe to that view and think everything possible should be done to support them.

The suckler cow industry is the genesis of the beef industry and I worry about its future. When I hear very good suckler cow farmers in my area in the midlands talking about getting out, it is not a veiled threat. It is real. They are deeply concerned. The issue surrounding Kepak and Glanbia is interesting and I heard Mr. Woods examining it critically the other morning. He was right. It is important. It is a useful prototype to see if this type of scheme will work. Jersey cows and crosses are being excluded. Potentially a premium of 43 cent per kg could be paid between all of the various schemes, including seasonality bonuses, etc. We must factor in the whole lot. Why can it not be paid now?