Michael Creed (Cork North West, Fine Gael)

We are two weeks from the budget and I want the Minister to leave the Chamber tonight with one message ringing in his ears, namely, that there is no scope whatever for further savings in farm gate schemes. If he needs proof of that, he should read the Teagasc farm income survey of 2008 which shows that farm incomes in 2008 fell by an average of 13%. Today's figures show that farm incomes in 2009 have fallen by 28%.

Yesterday this country came to a standstill because people with secure employment and secure pension provision feared a cut in their pay. I have some sympathy but this House must respond to an industry which, over two years, has taken a cumulative cut in income of 41%. No other sector has taken that kind of cut in income. To put that in context, the Teagasc farm income survey showed that the average family farm income in the beef sector in 2008 was €7,700.

I am not saying there is no scope for efficiencies and savings in the departmental budget but I am stating clearly two weeks from the budget that there is no scope whatever for savings in farm gate schemes. There has been much comment on the McCarthy report in which efficiencies were identified. I agree with many of them but others are off the wall. The core message with which the Minister must leave this Chamber is that there is no scope for savings in farm gate schemes.

I will deal briefly with a number of sectoral issues. I refer to the beef sector. Evidence was published last week that in the past 12 months, the suckler cow herd has declined by 6%. I believe that figure to be a complete underestimate. I suspect the trend will be similar to what has happened in the sheep sector where breeding ewe numbers have dropped by almost 50% in a decade. I suspect the figure will be closer to a cumulative cut by the end of this year in the region of 20%. That is sufficient to undermine our beef industry, which is a huge employer in the economy. I have never been a great admirer of the suckler cow welfare scheme. It was flawed in its detail but in the current climate, we cannot countenance any interference with that scheme in the budget.

The Minister needs to roll up his sleeves and get involved in the introduction of a quality payment system in the beef sector. The negotiations between the industry and the primary producers have dragged on too long. I acknowledge there will be winners and losers in a quality payment system but for full-time beef farmers, we can no longer have a situation where quality production is not rewarded to the fullest extent possible.

Over the past decade our dependence on the UK market has increased substantially to a situation where 54% of our beef production goes to the UK. If we cast our minds back to the 1990s, we will remember that most of our beef production went to Egypt, which was our single biggest market. The most lucrative market for us is mainland Europe. Given the current sterling difficulties, we are excessively dependent on the UK market.

Live exports are a very important aspect, although not for the volume of live exports of finished cattle but for the price setting mechanism they establish. The Minister and the Tánaiste are complicit in national sabotage of the beef industry by failing to take on the meat factories which are colluding to deny the opportunity of slaughtering live exports in their UK owned plants. It is not acceptable.

We are paying good money under the beef investment fund — almost €50 million — to the main plants in this country to improve their facilities. That is as it should be but we have leverage to bring these companies to heel and ensure this national sabotage does not continue.

We continue to provide several hundred work permits to the industry annually at a time when the number of unemployed has increased by 200,000 in the past 12 months. There were proposals by the Department to FÁS to introduce a processing, butcher and deboning training scheme to replace those people but for some unknown reason, which is worthy of investigation, FÁS refused to proceed with that training scheme at a time when the Irish and EU market is allegedly unable to fill those vacancies. It is a scandal.

I wish to deal with the dairy sector which, along with every other sector, has had an annus horribilis. The price support mechanism in the Common Agricultural Policy did not work sufficiently to deliver support to family farms which cannot deal with the kind of price volatility that in an 18-month period has seen milk production prices drop from almost 40 cent to 20 cent per litre. The price support mechanisms in the Common Agricultural Policy did not work sufficiently to deliver support to those with family farms who cannot cope with such price volatility in an 18 month period during which milk production prices decreased from almost 40 cent a litre to 20 cent a litre. It will collapse the family farm structure, which is not desirable.

We have the results of the banking system following the processing of financial products, subprime mortgages, etc. Now the bankers are moving into trading in commodities, grain and dairy products. We will witness the hurricane that happened in the financial sector in the food sector unless that issue is addressed. We need a proper price support mechanism at a European level.

The Minister cannot continue to talk out of both sides of his mouth on the proposed electronic identification system. I refer to the sheep tagging system that is being foisted on the industry here. We have a system that works. We are being asked to carry the can for that fact that, during the foot and mouth disease outbreak in the UK in the early 1990s, it did not have a system. DG SANCO has now foisted a system on us that will not work. The Minister's Department is making plans to introduce that post-haste.

The proposed sheep tagging system will not work. It has been proven that the proposed electronic identification system has a 20% failure rate. If it is superimposed on a system that is currently working, both systems will collapse. We will have the worst of both possible worlds. It is interesting to note that in the cross-compliance checks, 20% of the problems currently arise in the sheep tagging system. The Minister will collapse the sheep industry with the imposition of an electronic identification system. The Minister of State, Deputy Trevor Sargent, might smile. This may not be a big issue in north county Dublin but a large number of farmers are engaged in the sheep industry throughout the country. It is a valuable industry and it is vital to peripheral communities in particular.

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