Denis Naughten (Longford-Roscommon, Fine Gael)
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Question 33: To ask the Minister for Agriculture and Food the steps she intends to take to stop the European Commission proposal to abolish the current system of offering pre-financing export refunds for farmers; and if she will make a statement on the matter. [12014/06]

Mary Coughlan (Donegal South West, Fianna Fail)
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Irish beef exports in 2005 stood at 487,000 tonnes. All these exports went to the UK and continental Europe except for 35,000 tonnes which went to third countries, mainly Russia. While the beef industry has in recent years become less reliant on third countries, these markets are important for specific cuts at particular times of the year. Third country beef exports attract export refunds.

At the Council of Agriculture Ministers on the 20 of March, the Commissioner for Agriculture and Rural Development, Ms Fischer Boel, announced her intention to abolish pre-financing of export refunds on the basis of criticisms levelled at the system in a 2003 report by the Court of Auditors which stated that the controls were complex and unevenly applied across member states. The pre-financing regime allows for the payment of refunds at the time beef is put under customs control and for the meat to remain in storage for up to four months. The regime is of benefit to exporters in that it assists them with cash flow and provides time for the exporter to build up an exportable quantity of stock and to find a suitable market.

At the Council of Ministers, I strongly opposed the removal of pre-financing and argued that its abolition was not justified. Pre-financing is being used by most of our exporters of beef to third countries and is an important part of their operation. The system was streamlined in 2003 and the controls are now working well.

An internal impact study by the Commission shows that the main advantage of the scheme was in the administration of beef exports rather the financial element. The Commission proposed new beef control measures to replace the present scheme and my Department and I will be examining the proposals to ensure, as far as possible, that whatever is put in place by the Commission to replace the existing system best suits the needs of the Irish beef sector.

Denis Naughten (Longford-Roscommon, Fine Gael)
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I put it to the Minister that this is tantamount to the end of the export refund system as we know it. The timeframe for export refunds is limited to 2013 but is it not now the case that the European Commission is trying to put a more immediate end to these refunds? This will have a serious impact on the export of beef to third countries in terms of cashflow. The four-month period represents a substantial period and permitted a degree of flexibility, but its removal will threaten the viability of exporting products outside the European Union which has traditionally been important to this country.

Mary Coughlan (Donegal South West, Fianna Fail)
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I concur with the Deputy on a number of issues. France was the only state to support the argument I made at the last Council meeting that the removal of the pre-financing of export refunds is not appropriate at this time for two reasons. First, following the Court of Auditors investigation in 2003, we streamlined our procedures. Second, from a political and tactical point of view, it means the removal of export refunds in parallel with the loss of other support mechanisms as part of World Trade Organisation negotiations. I expressed my views forthrightly. It is unfortunate, however, that few apart from France support me on this.

I have written to the Commissioner to explain the issues we have with male beef and the fact that the pre-financing of export refunds is often exclusive to the export of carcases. We have listened to the views of the industry and are aware of the concerns it holds. I agree it is not necessary to introduce pre-financing at present. A further difficulty arises in that the matter is a Commission rather than a Council competence. However, we have presented our views to the Commissioner. I wrote to her to ask that our concerns about beef exports to third countries be considered in the context of the review she will conduct within the next six months of a new mechanism. We will strive to have these concerns addressed through beef management and will follow through politically.

Denis Naughten (Longford-Roscommon, Fine Gael)
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The Commissioner's decision will lead to great frustration among the agricultural community in Ireland. The Commission is selling our rights at WTO level and allowing a substantial tonnage of beef to be imported into the European Union at low or no tariff, while at the same time the limited supports in place for beef exports are being withdrawn prior to any final negotiations at the WTO. Will the Minister put it again to the Commission in that context?

What steps are being taken in this country, in light of export refunds evaporating from 2013, to develop premium markets in third countries? There are a number of premium markets, not just for beef but for other food products, where we could get a premium price for products. What steps are being taken at this stage to develop those markets so we do not end up with what appears to be a traditional scenario of worrying about solutions when everything else is being closed down?

Mary Coughlan (Donegal South West, Fianna Fail)
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We will raise the issue in the beef management committee and consider the adverse effect this will have. On the basis of our meat exports per se, the majority goes to the European community and the United Kingdom in particular. In our preparedness to deal with the impact of change in the market as a consequence of the WTO, the Minister of State at the Department of Agriculture and Food, Deputy Brendan Smith, initiated with me a considerable marketing promotion for the next three years focused on the premium market. This is being rolled out vigorously within the European community.

With regard to third countries, I have taken the opportunity to travel to Russia. We are also working in Egypt, we have opened markets in Algeria and now that we have progress on pig meat in China, we will take the opportunity of a diplomatic visit here by the Chinese Government to pursue the issue of beef in China. In particular we will pursue the issue within the United Arab Emirates, and one of my colleagues raised the issue on a visit there.

We will look to return to the premium markets, where a good return was received for investment. We will continue to do so diplomatically, politically, through Bord Bia and with companies themselves. The Deputy is correct in stating that this is where we are. When we see market supports being removed, we must consider quality and return on that basis.