When considering the issues facing our agriculture sector, it is worth recalling that agriculture remains more important to Ireland than to most other EU member states. The agri-food sector as a whole accounts for around 9% of GDP and employment and 7% of Irish exports. Because of its very low import content, agri-food contributes about one quarter of our total net foreign earnings.

The Government is committed to the long-term development of agriculture, food and rural development. The core of this policy is to maintain the greatest possible number of family farms, preserve the rural environment as the basis of a thriving rural community and have a competitive agri-business sector that serves the needs of national and international consumers.

Farm incomes are an important barometer of progress and, in that context, the subject of ongoing monitoring and analysis by the CSO, Teagasc, the European Commission and the Department. It is estimated that average income per person employed in agriculture increased by 15% in 2001 and 12% in 2000. The national farm survey published recently by Teagasc shows average family farm income increased by 17% in 2001 to over €15,800. This was in addition to a 22% increase in 2000. In considering the income situation it has also to be borne in mind that 64% of all farm households also have a source of off-farm income.

The increased availability of off-farm employment opportunities in rural areas has contributed to the future viability of many farm families. Because of the increasing importance of non-farm income to farm households, I have established a steering group on farm household income to assess up-to-date and comprehensive data in this area. The Department of Agriculture and Food chairs this group with participation from the CSO, Teagasc and the ESRI.

Public expenditure by the Department in support of the agri-food sector amounted to €2.7 billion in 2001, of which over 56% comes from the European Union. A record €1,382 million of this was in the form of direct payments to farmers, in the form of cheques in the post, which accounted for 53% of aggregate farm income. Expenditure also includes export refunds. Having produced the products there are export refunds to help exports to third countries. Intervention is available into which an amount of dairy products were put this year because of the difficulties in world dairying. There are also internal aids to support sectoral market prices at critical times. This very high level of public expenditure underlines the continuing commitment of the Government to the agri-food sector.

This year I have taken a series of special actions for the benefit of the farming and agriculture sector in recognition of particularly difficult market and weather conditions. These actions included obtaining EU agreement on a number of occasions to significantly strengthen market supports for dairy products when the price of milk and dairy products became difficult during the summer. Because most milk is produced during the summer it was important to get that support up to September. We also secured EU agreement to allow the use of set-aside land for grazing-fodder. Early this summer we had considerable rainfall and wet weather and this measure was important. We negotiated the removal of the Russian county ban on beef exports – six counties had been precluded from exporting beef to Russia and we obtained EU agreement to allow an increase by up to 30% in beef export refunds to assist the beef industry in agreeing contracts for exports to Egypt.

The actions also included obtaining EU agreement to allow an increase of up to 30% in beef export refunds to assist the beef industry in agreeing contracts for exports to Egypt, securing EU approval to have the advance payments under the bovine premium schemes increased from 60% to 80% this year, obtaining EU agreement to make an advance payment of 50% under the arable aid scheme on 16 October, which is one month ahead of the normal payment date, making administrative changes to simplify the rural environment protection scheme, making changes to reduce the paper work for farmers in applying for the 2003 extensification premia, and introducing improvements to the farm assist scheme.

Direct payments to farmers will bring total payments for the calendar year 2002 to considerably more than €1.4 billion. Ambitious targets for payment delivery in the protocol on direct payments to farmers are being met and Ireland's record for timely delivery of payments ranks us ahead of almost all other member states. Our system for delivering payments is one of the most efficient in the EU. We have considerably fewer disallowances in our payments system than other member states. All the data regarding meeting targets and deadlines and the efficiency of payments are available on the European Commission website.

These measures represent a concerted and proactive response on my part to the difficulties confronting farmers and the agriculture sector this year. I will continue this approach, especially as regards simplification of procedures in line with the commitments in my Department's customer service action plan.

On the beef sector, there have been protests in recent weeks concerning the price of beef. I was concerned that the disagreement between suppliers and factories could have given rise to a situation where the sector as a whole might suffer as a result of interruption of supplies of beef to our main markets. Fortunately, this has been avoided and I welcome the fact that slaughterings are continuing as normal.

Regardless of the rights and wrongs of the situation, any sector that is subject to ongoing disputes between producers and processors needs to re-examine itself seriously. The time has surely come when producers and processors or farmers and factories should work together in a concerted effort to ensure what is produced is what the market needs and that they avail of every possible outlet.

The day of producing and processing beef without an eye to the eventual market destination is gone. If the market demands a certain quality or age of animal, that is what must be produced. We are 100% self-sufficient in beef with 7.2 million cattle. We have outlets in the United Kingdom and will sell more than 200,000 tonnes there this year. Regrettably, only 25% of that will be on retail outlet shelves, the rest being in the lower end of the market in bulk and catering. That is not where it should go. Cattle more than 30 months old are not needed anymore for different reasons, yet we continue to keep them for longer than that.

We must accept the signals from the marketplace and produce what customers and consumers want. In this regard, I am pleased that producers have responded to the additional opportunities in different markets, especially the British market, by moving to finishing cattle earlier. This means those between 24 to 30 months. Anything older than that is not wanted anymore.

The most effective means of transmitting the needs of the market back to farmers is by means of price. If they obtain a better price for their product, they will continue to produce that product. Not only should the pricing system reflect the needs of the market, especially in terms of quality, it should also include a level of transparency and clarity which engenders the full confidence of the suppliers of the primary product.

Some 18 months ago I put a great deal of effort into putting this transparency in place which means every week the prices from different factories are published. That is a degree of transparency and clarity but I want this extended to include the returns from the marketplace. There is no point in factories saying they cannot pay any more than a certain price because farmers do not trust that system. They want transparency and clarity regarding the returns from the marketplace. Whatever business people are in, they need a margin to operate. If farmers receive an improved margin, they will respond to it.

The beef sector has come through difficult times in recent years and has shown itself to be resilient. The industry should work to ensure that no further risks are taken with valuable markets by interrupting supplies and that markets which have been reopened are not left to be supplied by competitors. If we open markets and they are not availed of, someone else will move in to supply it.

A classic example is the Egyptian market. Considerable political and diplomatic efforts were made to lift the ban on Irish beef to Egypt. The industry said it needed extra subsidies to get beef to that market and Commissioner Fischler allowed a 30% increase specifically focused on Egypt. Even with that, the industry has not availed of the opportunity and is not supplying the market. Only one consignment has been sent so far. That is regrettable because, if a market is opened up, a medium and long-term view should be taken and product should be supplied to it while ensuring greater competitiveness than others. There is not much point in making political and diplomatic efforts to open markets if it is left to competitors to supply them.

The agriculture sector or the environment in which it operates never remains static. We need to be continually aware of emerging challenges. In this regard, the Government is guided by the agri-food 2010 action plan, which is a comprehensive, long-term strategy for the sector. I had eminent people study the sector for the first decade of the millennium and they produced the plan in 1999 outlining the trends and likely development of agriculture and the agri-food sector for the first decade of this century. This is important because we do not operate in an ad hoc system. We have a medium and long-term strategy, namely, the 2010 action plan.

The mid-term review of Agenda 2000, enlargement and the World Trade Organisation negotiations loom large. Following the decision by the European Union Heads of Government at the European Council in Brussels on 24 and 25 October on the budgetary allocations in the enlarged Union, some of the major questions about the future of the common agricultural policy have been resolved satisfactorily. The European Council decided that in the short term, funding for the CAP in existing member states in the period to the end of 2006 will remain as agreed in Berlin under Agenda 2000. The costs of implementing the CAP in the new member states, including the costs of the phasing in of direct payments, will be provided separately as was also envisaged in Agenda 2000.

In the longer term beyond 2006, the Council agreed that the total annual outlay on market related expenditure and direct payments should not exceed the amount in real terms of the ceiling set for these expenditures for the existing Union for 2006 by the Berlin European Council plus expenditure for the ten new member states. This amounts to a total of €45.3 billion which constitutes the baseline for future years. The Council decided that expenditure in nominal terms over the years 2007 to 2013 should be kept within the baseline, increasing by 1% per annum. This will provide funding of €48.6 billion in 2013. I am confident that, based on current best estimates of expenditure for the years ahead, this level of funding will be sufficient to provide for the costs of the market-related expenditure and direct payments in a Union of 25 member states.

In arriving at its conclusions, the European Council achieved a balance between the need to contain expenditure on agriculture with the need to make a fair offer to the new member states. The agreement provides assurances to the net contributor member states that the extension of the CAP to a Union of 25 will not place intolerable burdens on their exchequers and, in the process, provides safeguards for the farmers of the existing member states.

In so far as it can be foreseen, budgetary provision for the CAP is now in place until 2013. This gives a great deal of stability, security and confidence for farmers moving forward in that they know the budgetary position and the financial support for farming and agriculture in an enlarged Union are secure. There were concerns about this during the referendum on the Nice treaty. What would pay for enlargement and how could farmers in Poland, Hungary and the Baltic states be brought up to the level of member states? We now have a financial framework up to 2013, which should give security to our farming community in that regard.

The decisions of the European Council are stated to be without prejudice to the future decisions on the CAP and the financing of the European Union after 2006; any result following the implementation of the reviews of the Agenda 2000 agreement provided for by the Berlin European Council, and the international commitments which the Union has undertaken, inter alia, in launching the Doha round of WTO negotiations.

As I stated, the European Council decisions on the EU budget were taken without prejudice to the outcome of the mid-term review of Agenda 2000, which is under way. Commissioner Fischler will be presenting detailed proposals in the coming months, as a follow-on to the outline proposals published last July, and seeking decisions on them in the Council in the new year. However, there is now little likelihood that a qualified majority can be obtained for the implementation of any significant change in the CAP before 2007.

A positive feature of the Brussels summit is that no upper limits have been placed after 2006 on rural development expenditure, which includes agri-environmental programmes such as the rural environment protection scheme, REPS, forestry and farmer retirement. The Council also emphasised that the needs of farmers living in disadvantaged areas should be safeguarded and multifunctional agriculture maintained in all areas of Europe. This represents a significant commitment by the European Council to protect and enhance the economic and social fabric of Europe's rural areas.

I repeat my commitment to the agriculture and food industry that I will not agree to changes to the Agenda 2000 agreement which will impact negatively on them. I have already stated my position clearly to the Council of Ministers.

The negotiations on EU enlargement are in their final stages and due to conclude at the EU summit in Copenhagen next month. It has now been agreed that ten new member states will join the European Union in 2004. As this coincides with Ireland's Presidency of the European Union in the first six months of 2004, this will be the first country to hold the Presidency of the enlarged European Union.

Direct payments will be phased in in the new member states over a ten year period. The first 25% of the level applicable in the Union of 15 will apply in 2004 followed by three increments of 5% in the next three years and, from 2008, by an annual increment of 10%, reaching 100% in 2013. This approach is designed to minimise the economic distortion that would in many cases result from sudden huge increases in income and avoid discouraging the restructuring of agriculture which will be necessary in many of the new member states.

Decisions remain to be taken on the sensitive issues of quotas and reference periods for the applicant countries. I expect these decisions to be finalised at the Copenhagen summit in December. It is clear that the conclusion of the enlargement negotiations will not create the conditions which will force further CAP reform on the Union.

As I indicated during the course of the campaign for the ratification of the Nice treaty, funding was provided separately for the costs of enlargement up to 2006. That position has been confirmed by the Heads of Government in Brussels. The decision on the budget post-2006 does not in itself require that further reform be undertaken in relation to market supports or direct payments. On the other hand, the integration of the new member states into a single market of approximately 480 million consumers without tariff or other trade barriers will create a new impetus for growth in the market and provide opportunities for all member states, old and new. Most of the new member states are more dependent on agriculture than we are and I expect will be most useful allies in defending the interests of agriculture within the European Union.

A new round of multilateral trade negotiations, including agriculture, was launched at the WTO Doha ministerial conference last November. The outcome of the new round, which will be of immense significance for EU and Irish agriculture, will pose a major challenge. The next WTO round will determine the conditions under which we can continue to export to third countries, the level of market access for our competitors to the EU market and the levels of EU support that can be provided for agriculture. We have particular concerns in relation to the retention of the European Union's system of direct payments and export subsidies. As I have already indicated, direct payments make a substantial contribution to farm incomes in Ireland and, under the current GATT Uruguay Round agreement, are exempt from reductions. My aim will be to ensure the continuation of this exemption into the future. I spoke of direct payments to farmers of €1.4 billion this year. If that is challenged by the WTO, it will have serious implications for Irish farmers and I want to continue the exemption.

As a major exporter of agricultural produce, we are heavily dependent on export subsidies to remain competitive on world markets. With my French colleague, I managed to ensure the terms of reference for the next round did not prejudge the outcome of the negotiations in terms of the elimination of export refunds as was sought by other WTO member countries. However, I am under no illusion that there is a strong hostility towards the CAP among certain trading groups and that the European Union's position will come under pressure in the difficult negotiations in the new round. While we can take considerable comfort from the outcome of the European Council in Brussels, the challenges to the CAP will continue. I remain determined to protect the gains from Agenda 2000 which represented a very good outcome for Ireland.

The agri-food sector is a major indigenous industry. I am committed to ensuring a favourable framework for the development of the sector and rural communities into the future and ensuring favourable conditions for the continued presence of high quality Irish produce, both for Irish consumers and on world export markets.

Before the present crisis, approximately 20,000 farmers were earning less than €200 per week. With the present crisis, it is estimated that another 20,000 are in danger of being forced out of farming in the very near future. Under the leadership of the Minister, if a farmer wanted to generate an income on a par with someone on the average industrial wage, he or she would require from his or her enterprise 250 head of beef stock and 165 acres of land, a suckler herd of 90 suckler units, a milk quota of 80,000 gallons, 550 sheep, 600 acres of barley or 400 acres of winter wheat. The average size farm in Ireland is 65 acres. To improve their incomes, farmers require an increase in prices for their produce and an increase in scale and productivity which requires access to more land at more favourable prices.

The Minister and the Government have stood idly by this and every other autumn as the factories force down the price of cattle by at least €70 per head, while the market remains stable in Britain. Prices have increased on the Continent. We have heard umpteen times that there is no cartel in the beef factories. It must be an extraordinary coincidence that on the same morning every week the factories quote lists for the price of cattle that read the same. For God's sake, who is codding whom?

Then we have the disgraceful behaviour of the Competition Authority which stated in response to farmers' complaints that it was understaffed and would take 12 months to reply. Yet on a whim after a phone call it could raid the homes of private individuals, the unpaid representatives of the farming community who are doing their best to ensure the survival of the farming sector. The Minister and the Tánaiste have a lot of questions to answer in that regard.

The Minister has failed, as he said himself, to get produce into the Egyptian market. Nothing has happened there, in Saudi Arabia, in the Gulf States and the Middle East, in Indonesia or in South Africa. We can name all the places where nothing is happening. Will we have to set up some new derby like the Kentucky Derby to get things moving in these places?

In Ireland the dead trade depends to a large extent on the live trade. Live exports play a crucial role in maintaining cattle price competition and in maintaining adequate market outlets for Irish producers. Beef imports from South America have inflicted severe damage on both our home market and on the UK market. It is totally unacceptable that Irish producers have to conform to the highest international standards of beef safety and traceability, animal welfare and environmental standards while imports are allowed into the EU from countries which have very lax traceability standards. Food imports now account for a significant share of the home market. For example, there is no traceability with 33% of poultry, including chicken from Thailand. Elements of the Irish catering trade favour cheap imported produce and consumers then think they are eating Irish goods.

Regarding the schemes being put in place by the Government, we are told environmentally friendly farming is the way forward, particularly in the European market. Protection of the environment is of the utmost importance but here the Government has made a mess of REPS II. That is an important scheme which meets the social, environmental and income needs of farmers. It is anticipated that 70,000 farmers will join the REPS II and if they do it will automatically satisfy EU water quality requirements. However, the number in REPS II today is 10,000 fewer than when REPS I ceased two years ago. Why are farmers not joining? Because the payment rates are simply too low and there are too many restrictions. The scheme is too complex and bureaucratic and investment costs are too high. The scheme must be improved so that €250 per hectare is paid and the limit is raised from 40 hectares to 60 acres, or from 100 acres to 150 acres. Those on less than 40 hectares should get an increase from €6,000 at present to €10,000. The Minister has taken €50 million out of REPS II this year. That implies the uptake of the scheme has been deliberately held back and postponing the review of the scheme to 2003 means that any proposal to the European Commission will not be passed for implementation until 2004. Farmers therefore receive the current rate, which is too low, and that is why they are not joining the scheme.

Farm waste management is another very important issue for farmers and the environment. Over 4,000 farmers now participate in the scheme but that is significantly lower than anticipated under the National Development Plan. The Book of Estimates for 2002 allocated €37 million to this but it is estimated that only €10 million has been spent under the scheme. No wonder the Minister for Finance, who is a gambler himself, thinks Deputy Walsh is the best man for agriculture – he is saving the most money for the Minister for Finance.

Grants for the control of farmyard pollution should be made available to every farmer. This is another example of bureaucracy strangling a scheme, because the facts speak for themselves: 800 farmers or 20% of those who apply for a grant have been refused. Again, the income limit for this scheme should be abolished and investment should be increased from €50,000 to €75,000. Farmers should get the same level of grant from the EU as municipal authorities get to cater for their sewerage problems.

The Minister has failed to put the sheep tagging issue to bed; instead he has increased the layers of bureaucracy. One tag – a flock or herd tag – in one ear of the animal is acceptable to the Commission and is applied in Europe. What does our Minister want? Not only does he want one tag in one ear, he wants several tags in both ears. He knows that nowadays farmers must be qualified auditors as well as farmers to survive this system. This must be addressed urgently.

There have been savage ewe premium cuts, another example of the Minister's sustained panic attack on the agriculture sector. His dismal performance at the Luxembourg talks last summer, where he gave away 50,000 premium quota, means farmers now face penalties on applications over 50 units this winter, the time they can least afford it. Many farmers received 80% advance payments before the Nice referendum, as the Minister said, but they received destocking letters afterwards which upset them further. Many more have received no payment at all this year. Surely every farmer is entitled to advance payments on time.

Unlike the Minister, these farmers are not going away. They should not be penalised for technical or other reasons, such as a strike or work to rule in the public service unions. Failure to pay farmers on time and excessive penalties are driving farmers out of business and frightening young people away from farming. We face difficult CAP reform proposals and Commissioner Fischler has proposed area based payments to replace premium payments. The EU revelation that less than 1% of the total budget is spent on agriculture makes Commissioner Fischler's demands for more cuts sound hollow.

I have referred to a number of schemes but there are many others which are not working and to which I could allude. I cannot do so because of time constraints but I will refer to one more, the farm retirement scheme. According to this scheme 45% of farmers are over 55. Over half of that 45% is over 60, so this scheme needs reform. The farmers have lost confidence in the Minister and are going directly to Brussels. That is an indication that the Minister should consider availing of the farm retirement scheme himself as farmers have lost confidence in him. They need a new, energetic and imaginative approach as there is no long-term plan for agriculture from the Government, which is drifting from one crisis to another. By failing to plan it has planned to fail. The Minister should consider the retirement scheme and I wish him good luck with it.

The importance of early payments and direct income supports is clearly evident from the fact that they amount to in excess of €1.3 billion annually. As the Minister said, they account for 53% of farm income. In reply to Senator Coonan, in 2001 Tipperary received in excess of £90 million from EU aid payments. That the Minister and his Department ensured that €650 million of these payments were made within a week of the start of the EU financial year on 16 October is something farmers greatly appreciate.

It goes without saying that the future of farming will depend on the influx of new entrants into the sector. The agri-food 2010 plan of action contained recommendations that should be introduced to encourage land mobility and early transfer. Currently, 20% of farm land is farmed by holders aged over 65 years. There are a number of tax incentives which aim to reduce the cost of farm transfers. The new scheme of early retirement allows for participation by part-time farmers to transfer land to younger farmers and to receive land transfers themselves. These changes make the scheme more attractive to both parties involved.

Younger farmers are also benefiting from the increased training and educational opportunities available. Prospective full-time commercial farmers are currently being encouraged to undertake the national certificate in agriculture programme and to follow on to the proposed national diploma in agriculture. There has been an increased number of students attending UCD and the agricultural colleges both last year and this year.

The mainstreaming of the new agricultural and horticultural courses into the CAO system will also provide highly trained entrants into these sectors. It is envisaged that the increased educational profile of Irish farmers will enable them to better compete on the world market. There has also been concrete support available under the agri-food 2010 plan to encourage productive farm investment. All these schemes of public funding have been available to both full and part-time farmers.

The Minister and the Ministers of State, Deputies Treacy and Aylward, are committed to the future of farming, a future which provides full and part-time farmers with every available option to achieve a viable level of farm household income and to have a sustainable future in agriculture. However, if we are to bring about a positive vision of the agri-food 2010 report, there must be significant action by all players in the industry, from the producers to processors and exporters. When the report was launched, the Minister stated that if appropriate action was not taken in the short term, then more painful changes would be forced on us in the long term. The clock is still ticking. I urge all Members to consider what they can do to contribute to the competitive position of the Irish agri-food sector. The Government's role has been to provide a sustainable environment and a support framework. The extent to which the agri-food 2010 plan of action has been implemented provides a positive testimony to our success in doing so.

The beef industry is an "up and down" industry but it is a substantial national industry. Unless farmers, processors and exporters come together to determine a programme which will be successful for all concerned, this country will be without a beef industry in the future. The drop in prices over the past few weeks is unacceptable. Farmers have been forced to take action and markets which were not easily won are being put at risk. Unless the difficulties are faced, not farmers, processors or exporters will be in business.

The Minister has shown unrelenting commitment to the highest standards of food safety since he first came to the Department in 1987. Food safety is a non-negotiable element of the food production system. There can be no compromises in this regard. New food safety regulations being adopted at national and EU levels will strengthen existing controls. There is now a modern livestock traceability system for cattle in place. This has been extended to sheep and pigs. Under new legislation adopted by the EU earlier this year, traceability systems will have to be in place for all food and feed products by 2005.

Senator Coonan referred to imports from non-EU countries. We need a structure within the EU that will keep a record of such imports and ensure an enforcement policy. We are aware of imports of doubtful origin and quality.

With reference to the rural environment protection scheme I welcome the Minister's recently announced consultative process which will make comprehensive proposals to the EU Commission in 2003. This process will give stakeholder groups a chance to contribute to the formulation of these proposals. Consultation should be wide ranging and cover all aspects of the scheme, including the structure of REPS, individual measures, payment rates and controls and sanctions. REPS has so far delivered over €1 billion to Irish farmers. It is important that the proposals developed from the consultative process should ensure the continuation of this significant funding.

Significant progress has also been achieved within the North-South Ministerial Council framework, particularly in relation to an all-island animal health strategy. At its meeting in September the North-South Ministerial Council endorsed a paper setting out the scope of convergence of animal health policy North and South and agreed that officials should seek to finalise discussions with the UK authorities prior to final agreement of the strategy. The detailed issues are currently being dealt with in the various policy working groups in accordance with the timetable set out in the paper. The council also initiated discussions to identify areas for public co-operation in plant health, pesticides, diagnostics and research co-operation. It has also agreed to explore the establishment of a plant health risk assessment panel. Discussions were also initiated on identifying new areas for co-operation.

In September the council agreed that under EU matters, food labelling and trade issues would be examined. Organic farming and agricultural training are to be submitted to the working groups. I welcome those initiatives. In less than 15 minutes we are meeting members of the Northern Assembly at our party meeting which I will chair. I hope to be forgiven if I leave the Chamber as soon as I have finished my contribution.

I wish to make a comment on the recent controversy surrounding the storage by the Department of Agriculture and Food of the carcasses of BSE-positive animals in County Tipperary. I never cease to be amazed at the capacity of certain sections of the media and others to distort facts on a subject of this importance. There is no foundation whatsoever for the suggestion that the Department of Agriculture and Food breached environmental laws in relation to the disposal of BSE positive carcases. The Department's handling of all aspects of BSE fully accords with EU and national legislation. It is the subject of ongoing scrutiny by various independent bodies such as the EU Food and Veterinary Office, the Food Safety Authority of Ireland and others and has been recognised time and time again as comprehensive, rigorous and responsible.

The treatment of BSE positive material is specifically dealt with in EU veterinary legislation. Under such legislation, the only approved means of disposal of such material are burial or incineration. We all know the Department discontinued the practice of burial of BSE carcases in late 2000 and in the absence of any suitable incineration facility within the State, it has been necessary to make interim storage arrangements pending the resolution of the problem of ultimate disposal of carcases. Since November 2000 such carcases have been frozen and stored in a secure and dedicated cold store owned by the Department and located in Tipperary.

On the cereal sector in which I have some interest, the persistent wet weather in the first half of the year made growing and harvesting somewhat difficult but we survived. Yields are well down and I hope there will be a few bob in the kitty for some of us. Total production was close to the average of 2 million tonnes mainly due to an increase in the area under winter wheat. The fruit and vegetable sector also suffered severe losses and I ask the Department and the Minister to pay particular attention to it. To alleviate the cash flow problems of cereal farmers, I am glad the Minister secured approval from the EU to bring forward 50% of the area aid payments by one month. He also increased the rate of voluntary set aside from next year so that farmers may set aside up to 40% of their land if they so wish.

I welcome the forthright, dedicated and committed statement by the Minister. The Minister and the Ministers of State, Deputies Treacy and Aylward, together with Department officials will make a good team. They have secured the position of agriculture in Ireland under sometimes difficult circumstances and it is only right that we express our appreciation of all concerned.

As we all know, the Agenda 2000 agreement was designed to run until 2006 but it seems it is being thrown out the window without any consultation with political or farming representatives. The Fischler announcement had long been flagged as a review of Agenda 2000 which one might have assumed would be an assessment of the progress of the implementation of the Berlin agreement and its effects on the agriculture industry in member states. Instead, it seems Franz Fischler seems intent on terminating Agenda 2000, throwing out what remains to be implemented in that agreement and proceeding to reform CAP overnight. I sympathise with the question being raised by many farm leaders recently. They asked if the European Commission can be trusted in relation to the implementation of agreements signed by Agriculture Ministers as with that in Berlin in 1999. Whatever about not being able to trust the Commission in the future, the confidence of Irish farmers in the EU has been severely dented by the nature of the announcement by the Commissioner, Franz Fischler.

As was rightly pointed out, another important development in Irish farming is the concentration on farm training. At present in Irish farming, there are talented, intelligent and young farmers. However, the manner in which they are treated at times by this Government is appalling. The recent attempt by the Government to buy votes in the Nice treaty by sending out badly needed money during the week of the referendum offends people's intellect and sense of honour. I represent a constituency which is predominantly agricultural and I know people voted "No" because of that. It is not a good idea to use these types of ploys in a referendum, an election or a by-election as it insults the integrity, common sense and intellect of many people involved in farming.

Senator Callanan made a far-reaching contribution on many matters. I profoundly disagree with his cúpla focal on BSE-infected material housed in Tipperary which was not classified as hazardous and transported safely. The Labour Party has called for a comprehensive statement from the Minister to explain why specified risk material from slaughtered cattle, some of which may have contained BSE, had not been classified by the Department as hazardous waste. Specified risk material, known as SRM, includes material such spinal cords, tonsils and skulls which are removed from all slaughtered cattle over 12 months old before they are ready for consumption. This is done to reduce the risk of Creutzfelt-Jakob disease being contracted by humans. The SRM is removed and stored in a large warehouse in County Tipperary to await transportation abroad for incineration. The SRM stored in Tipperary could contain BSE-infected material, and therefore become a risk to human health. EU directives and the Waste Management Act, 1996, require that such material be classified as hazardous waste, but this was not done in this case. That is quite worrying.

Given the increasing concerns about the BSE incidence and the fact that consumer confidence has been shaken by the discovery of BSE in three cows born after 1997, when the ban on meat and bonemeal was imposed, the situation is fundamentally unacceptable. It has led to An Taisce taking the issue to Europe in the wake of a recent "Prime Time" programme to seek that the material housed in Tipperary be classified immediately as hazardous.

This year in particular was an extraordinarily bad one for farmers. Senator Noel Coonan rightly points out that farmers' incomes next year will be significantly depleted, as opposed to the paltry increases they had in 2000 and 2001. There is an onus on this Government to ensure that farming is safeguarded and that as many young people as possible can be encouraged to undertake careers in farming. The incentives available in many other areas of professional occupation increasingly lure young people from the land, and that is a very sad development in Irish society. At one time, in any rural area the vast majority of people depended in some way or other on an agriculture-based income. A large part of the income of the dwindling number of farmers left on the land is from direct payments, not from farming activity itself.

I urge the Minister to take cognisance of the fact that young farmers are no longer considering careers in farming. I urge him to look at the appalling vista in Irish agriculture and to ensure as far as he can that the schemes available for young farmers are safeguarded, that the funding which is allowed for such schemes is kept to an optimum. I hope when the Minister returns from Brussels following successful CAP negotiations, he will have a package that is worthwhile for Irish farmers.

Notwithstanding all those challenges, the most immediate and serious challenge facing us is the new round of WTO negotiations. Given the way the Minister, Deputy Walsh, dealt with the Uruguay round, how he dealt with foot and mouth and how he has dealt with the on-going debate over potential change of the Common Agricultural Policy, I have every confidence that he, his Minister of State and the officials of the Department of Agriculture and Food can effectively meet those challenges so that the industry can continue to survive and prosper.

As a practising farmer, I believe there has been an extended whinge over a considerable time which has been entirely detrimental to farming putting its case at national level. It has got to the point now that when farmers complain, the general public shrug and say "That is the farmers again." When there are genuine complaints, as there were earlier this year with regard to the appalling weather, the general public just do not listen anymore. When there are genuine complaints about the returns to farming, the general public do not listen anymore because they have been fed on a diet of whingeing even when times were good. There is a significant political lesson there for farming organisations and it is one they should take to heart.

I regard enlargement as an opportunity for us on several fronts. Facing into the serious challenges of the WTO round and the shaping of the new Common Agricultural Policy, we now at last will have allies who speak the same language as we do. Rather than having to rely on the French to buttress us, or perhaps at times the Mediterranean countries who have different interests, we will now have a large bloc of people within the European political establishment who understand and sympathise with the arguments we have been making over the years. That is a significant advantage.

There is a great fear about what will happen to our productive industry when we are faced with low-cost competition from Poland, the Czech Republic and other central and eastern European states. These fears, while understandable, are not sustainable. When we joined the European Community, it was widely believed that the Mediterranean countries would be the main driving force of production in both horticulture and agriculture because of their low cost base. It did not turn out like that.

If quality was important then, it is even more important now. We have the capacity to deliver quality to the market that is unmatched worldwide, with the possible exception of New Zealand. We have that capacity and it is up to us to market that quality, to market the perception of this country as a place where quality food comes from. It is wrong to suggest that we should lower ourselves to standards which are far inferior to ours in order to compete. The opposite is the case. We have to maintain the standards we have established.

A classic example is the matter of beef hormones. There were long debates on this issue in this House, and one of the contributors was Professor Tom Raftery, an expert in the area. It was incontrovertible from a scientific point of view that anabolic steroids were not harmful to human health when used properly on beef animals – and I am not including angeldust in that category, which is a different matter. People then said that the American farmers are using these steroids so we should also be able to use them. What this fails to recognise is the primacy of the consumer. If European consumers decide that they want beef without hormones that is the end of the argument; the science does not enter into it. Unfortunately, the legacy left by intervention over so many years is to make us avoid that reality and to assume that we could produce for a market and that it was up to the market to clear the product. There was no mention of the consumer. It is a hangover that is still with us and is causing problems in terms of selling our products on international markets.

There are huge opportunities for Irish agri-business in an enlarged market. I was in America quite recently and saw what is being done there by Irish agri-business in a very hostile environment. We have that capacity within our leading co-ops and food PLCs to match the very best in the world and to beat them. We need to have a little more confidence in our capacity to do that and we should talk it up a bit more than we do.

In terms of the industy's capacity to respond to the challenges, there are two essential elements that are being neglected. These are research and agricultural advice. We are not keeping pace in our thinking about what we need to do to meet these challenges and evolve different ways of thinking and producing. In light of the fact that agricultural incomes are unquestionably falling, we need to see things in terms of a global rural society.

If I can live on my home farm and make a living from it without having to move to a city, that is an advance. It is appropriate that farm people, like others, should aspire to higher living standards. There seems to be a belief that, because one lives in a rural area and farms, one should not have the same expectations of success for oneself or one's children as city people have. This is wrong.

Is it any wonder that there is a flight from the land to the cities by young people when they have sat at breakfast tables for years and heard their parent complain about how terrible life is on the land? My son has just completed a PhD in agriculture and he works for the Department of Agriculture. If he had been subjected to this constant battering, it would not have been surprising if he turned his back and walked away. People who wish their children to stay on the land have a responsibility at least to make it an encouraging career for their children. We must rethink the model.

The bureaucracy of the agricultural system is a serious issue. It is impossible to read some of the forms. It is a pity a journalist does not write some of them so that people can understand them. On two occasions, I had queries in relation to arable area aid on my own farm which were unnecessary and should not have been made. The Department of Agriculture and Food made the mistake. Regarding payments being described as bribery for a "Yes" vote in the referendum on the Nice treaty, as far as I can recall, my payment for arable area aid arrived at the same time as it did last year. The cheque arrived on 16 October and was dated 16 October. I was paid on time and I would have been upset had I not been.

There is a facile suggestion that the Minister for Agriculture and Food is responsible for intervening in a wrangle between farmers and the meat factories – that is not the way the market works. The Minister is correct to insist on a degree of liaison and transparency with regard to how prices are arrived at. The weekly monitoring of prices has been a help but we do not need to re-invent the wheel. I visited France 25 years ago where a system for grain prices based on accountancy principles derived from the books of grain co-operatives was in place, along with a system of sharing profit and, in the event of pain, sharing the loss. There are models which are not of the confrontational nature such as we see at present where crude market forces operate alone. I question how the Minister can intervene helpfully with regard to restraining those market forces other than by ensuring that prices are transparent and available and people know exactly what the product is making.

I congratulate the Minister on what he has achieved to date with the Council of Europe and I am confident that the successes achieved in the past on the Uruguay round and other negotiations at European level can be repeated. To be fair to the Minister, he did not do what one of his predecessors on the other side of the House did. I still have the press release – issued on the morning of a general election – stating that the Egyptian market had been opened when it had not. We can all point fingers but it is not useful to how the industry advances and progresses. I wish the Minister, his colleagues and everyone in his Department well in the challenges ahead and I am confident they will face them to the benefit of Irish agriculture and the country as a whole.

I disagree with Senator Dardis and some others who spoke because I want to condemn, in the strongest possible terms, the squalid little deal on agriculture entered into between France and Germany at the last European Council and fully colluded in by this Government. The net effect of this cosy little arrangement is to put the reform of the Common Agricultural Policy off the agenda for the foreseeable future. I am proud to be Irish and a European citizen and I am well known around the world as a champion of the Irish food industry, but I cringe every time I hear of a new refusal by Europe to face up to realties in regard to the CAP.

For as long as we leave the CAP unreformed, we are trying to live in the past. In its present form, the policy is both hugely wasteful and highly inefficient, even in reaching its own declared objectives. It penalises the majority of Europeans at the expense of a small minority. Even worse, it penalises the peoples of the developing world by distorting the world marketplace for their agricultural goods. In Ireland, successive Governments have taken precisely the wrong attitude towards this cancer in the European project. We did not invent it – it was there when we joined – but instead of recognising it for the uneconomic, unfair and ultimately unsustainable monster that it was, we fell on it like manna from heaven.

As a predominantly agricultural country, we would have had immense moral authority if we had chosen instead to lead the way out of the quagmire our partners had created for themselves before we joined. Unlike Britain, which has clear vested interests in this matter, no one would have questioned our bona fides if we had put a hand up and told the truth. That truth, which has been staring us in the face for 30 years, is that the CAP cannot survive as a permanent part of a united Europe.

We need to face up to this and to debate it but the debate is unheard. Some of what I have to say is anathema to some Members who have spoken. Instead of planning for life after CAP, we decided to stick out heads in the sand and pretend we could drag out the good times forever. We have persisted in this doomed policy at enormous cost. First, in absolute terms, the agricultural policy swallows up the lion's share of the EU budget year after year. Valery Giscard d'Estaing wants us to change the name of the EU yet again. If we named it after where the money goes, maybe we should call it "The Union of European Farmers". For an entity with the aspirations of the European Union to spend 75% of its entire annual budget on farm supports shows a peculiar sense of priorities indeed. That is, however, not the nub of my objection to the policy.

I believe in supporting farms and farmers. I believe in developing the food industry in Ireland and across Europe and helping people to preserve the rural way of life. In particular, I believe in helping people in rural areas find new ways beyond agriculture of developing the economic potential in those areas. I am the first to admit that these measures will cost the broad mass of citizens an arm and a leg but what I will not admit is that the CAP is the right way to go about that.

Two categories of people are short-changed by the Common Agricultural Policy. The first category is the ordinary customers, the broad mass of the nearly half a billion people the European Union will soon embrace through enlargement. They must pay twice for the Common Agricultural Policy and the smallest part of what they pay is through the taxes that fund the European budget but the most important burden on them is the higher prices they pay every day when they go out to buy their food. Every time they buy food, week in and week out, they pay more than they should have to pay. The prices they pay are determined by the market laws of supply and demand. These prices are totally artificial and are determined by the need to use the market to deliver a certain level of support to farmers throughout the Union.

Instead of supporting farmers directly, we support them mainly through a price support system that is totally inappropriate and it is obvious to any independent economist that this system does not benefit anybody. It certainly does not benefit the consumers who buy the food. It does not benefit farmers either because, despite what it may have done in the past, the Common Agricultural Policy fails to provide a proper living to most European farmers. We heard about some aspects of that today. Falling incomes have driven more and more people off the land – referred to my many speakers – and instead have encouraged large scale, more intensive farming that produces commodities of often dubious quality. I say that as somebody who knows the difficulty involved in getting top quality food on occasions. A total of 80% of all EU subsidies go to 20% of farmers, in other words, they go to the big farmers.

The CAP encourages the wasteful over-production of food. It is a peculiar irony that a system originally designed to make Europe self-sufficient in food is now characterised, more than anything else, by the fact that it results in too much food being produced year after year. This is where the other mass of people who are short-changed by the CAP come in – the people of the developing world. The negative effect of the CAP, and the European trade policy that springs directly from it, is much greater for them than it is even for the people of Europe. On the one hand, we keep the produce from the developing world out of our own market and, on the other, we undermine prices for them elsewhere in the world by flooding other markets with all our surpluses at uneconomic prices. As a result, those people cannot get into those markets and compete. Meanwhile, we beat our breasts about the need to help developing countries as long as that help is delivered in the least suitable way in the form of large gifts or grants of cash. We give them with one hand while using the other to prevent them trading in the only things they have to trade. If we traded fairly, we could keep all our aid and the developing world would still be better off.

What we are doing is not only bad economics, it is a morally rotten way to behave. It is an amazing way for a country like Ireland to behave with all our traditions and values. If we persist in behaving that way, we cannot hope, as Europeans, to gain the influence and respect we seek in the rest of the world. From the viewpoint of those in the developing world, they see the two great powerhouses of wealth – the United States and Europe – lined up against them. Both powerhouses undermine the developing world by distorting food markets and subsidising farm production in their own areas. Of the two, however, Europe is by far the worst offender. Ireland should lead the way out of this policy that is both economically and morally bankrupt.

No one could ever question the regard we have for farmers, agriculture and the rural way of life. If we were to say to our partners, with the moral standing we would have as a result of our own vested interests, that we have to find a better way of achieving our objectives, would they not listen to us? Would they listen if we were to say, with a degree of moral standing, that it is now time to turn our backs on the 20th century and find a way forward for agriculture that is right for the 21st century? They may or may not listen but at least we could be proud of what we were doing. Sadly, we cannot be proud of what we are doing now.

For the past five years I was a member of the Oireachtas Joint Committee on Agriculture and Food and I realise these are harsh words but I do not have actual solutions. All I am saying is that in encouraging the continuance of the CAP, we are not taking even one step towards finding a way out of meeting immediate political objectives that are short term. I urge the Minister to give serious thought to how we can take a different attitude to this matter in the years ahead so that we, as a nation, can be proud of our farmers and our consumers.

I support the proposals put forward recently by Mr. Fischler because we need to decouple production to get away from the numbers, and payment should be area based. There are 7.5 million cattle in this country. Farmers must have numbers to survive in farming today. This is wrong. If payments were made through an area based system, cattle numbers would be reduced substantially. I would not be surprised if they were cut in half. We would then have a better quality animal produced at a much younger age. I heard the Minister say earlier that the days when one would see animals over 13 months, or even 24 to 30 months, are long gone. By reducing the numbers of cattle, farmers will be in a better position to feed them and a better quality of animal will go to the marketplace. That is the only way forward.

I want to raise an issue which came to my notice recently. I come from the north-west, an area recognised as a major producer of store cattle. We depend very much on buyers coming Northern Ireland to buy store cattle. The value of sterling against the euro makes it very attractive for buyers from the North to buy our cattle, particularly in the north west. However, there now appears to be a doubt as to whether meat factories in the North will take cattle which have been reared on this side of the Border and subsequently fattened in Northern Ireland. There is also a question mark over the price which will be paid for such cattle. This serious issue needs to be addressed.

I welcome the Minister's statement on the need for greater transparency in the relationship between meat factories and farmers. As matters stand, it is very clear that farmers do not trust the factories. This situation needs to be improved quickly because the producer and the processor must work together for the benefit of the entire sector. Any action which can be taken in that regard would be most welcome.

The present level of bureaucracy is grossly excessive. In many cases the penalties being applied are totally disproportionate to the nature of the infringement. I will quote a few examples from my home county, Longford. Farmer A had a 100% penalty applied to his REPS payment because he obliged a local football club by allowing the removal of a few metres of dangerously rusty barbed wire fence which was replaced by a beech hedgerow, thereby greatly enhancing the local environment. Is that fair treatment? Farmer B was penalised because an arm of the State, the Office of Public Works, broke a branch of a tree while cleaning a river running through his land. He was required by an inspector from the Department of Agriculture and Food to obtain an officially stamped letter from a senior official of the Department of Finance before part payment of his REPS grant would be considered. The most ridiculous example was that of farmer C who had a 100% penalty applied to his suckler cow grant because he did not replace a cow in April 2001 when the same Department was operating a total ban on the movement of animals during the foot and mouth disease crisis. The farmer concerned was informed of this penalty by registered letter. This unfair behaviour by the Department of Agriculture and Food must stop and a more human approach to farm inspections adopted. I appeal to the Minister to eliminate the current excessive penalties.

The Minister will also be aware that huge numbers of farmers are getting out of sheep production due to the sheep register, which is proving to be a disaster, as well as the poor prices being paid for lamb. A recent response presented by the Department as a simplification has actually resulted in even greater complexity and unfairness than before. It is quite unworkable. I appeal to the Minister to replace the present cruel and complex system with a practical and workable flock-based system of identification and traceability.

With regard to the REP scheme, I condemn the Government for taking €50 million out of its budget for 2002 as part of the cutbacks in agriculture. Once again, this proves that the Minister cannot argue our case at the Cabinet table. Instead of cutbacks at this time, rates of payment should be increased, especially for smaller farmers. The failure of the Minister to utilise the full REPS allocation in the Estimate for his Department is a clear indication that the national development plan target of 70,000 farmers in the scheme is unattainable. The current number of farmers participating is 15,000 less than projected, clearly demonstrating that the Government has failed to meet its own targets. I urge the Minister to reduce the level of bureaucracy and increase the payment rates by 50% in the scheme which is of great benefit in the implementation of the EU agri-environment programme. It is essential that more farmers are encouraged to join. The main reason this is not happening is that the present format of the scheme is no longer attractive. Payment rates are far too low, particularly for farms of less than 50 acres. The upper limit of 100 acres per farm is unduly restrictive, the scheme is overly bureaucratic and complex and penalties are too high.

This is a very difficult year for farmers, with cattle and sheep prices under serious pressure and major losses as a result of the worst summer in recent memory, although I will not blame the Government for the weather.

Farmers are up in arms against the factories over the price of beef. The factories should improve their price because beef markets are improving. Finished cattle come out at this time of year and they are plentiful now. It is important that the factories pay the best possible price to cattle sellers.

The Minister is doing a good job. He is doing his best in the circumstances. As a farmer I know that the bad weather was a greater problem this summer than the poor prices.

The other issue is the price of beef. We are looking at it the wrong way. The problem is not the price a farmer is receiving for beef, it is the price being charged in the supermarkets and where the difference is going. Surveys and consumers price indices show that there is no relationship between the farm-gate or factory price of beef and the price consumers are paying. Farmers are subject to the surges and spikes of the market but this is not reflected along the way. One of the reasons, which I would like the Minister to clarify, is the Abattoir Act which was passed ten years ago. I bitterly opposed this legislation on the floor of the House. It has had the impact of closing down abattoirs in every small town in Ireland. It means that a farmer cannot have a few sheep killed for his her own use or his neighbour's use. It means that a butcher can no longer raise animals on the land and kill them off the land.

We have created a monster of non-traceability. There is no longer any indication where meat in a butcher's shop has come from. Certain shops indicate on the meat the name of the producer. I am assured by people working in abattoirs that this is next to impossible to do. In most cases it might be a fair attempt but does not do the business.

Why can this legislation not be amended? It is not in force in the rest of Europe. During the Nice referendum campaign a large group of sheep hill-farmers in the west of Ireland were completely opposed to it. They had very strong arguments which were unanswerable in many cases. They pointed to the fact that they were being deprived of their livelihood by ridiculous bureaucracy. I checked this and what I found was appalling.

Much can be learned from one example. The farmer who produces a lamb is required to tag its left ear. The farmer who buys from the producing farmer is then required to put his tag on the sheep's right ear. I ask a very simple question. What happens a year later if the original farmer buys back the year old ewe for his own production purposes? This happens all the time in small areas. Does he now put two tags? I could not get an answer to this question when I sought it. It is a classic example.

I looked at the operation of a number of sheep and lamb co-ops. These people are being destroyed by bureaucracy in the sense that they make their living by buying wool and supplying veterinary products. All of those things now require two or three different trips which means that they are not in a position to supply material. If the lamb co-operative in Dingle wants to supply Beare Island with dose, dip or whatever, it must one day get the order and validate it and the next day go down to get the material. Two stages are needed and that is not right. There is no wool scouring plant in Ireland and every piece of Irish wool goes to Bradford.

I could mention various sectors of the agricultural industry but will simply say that there is much that could be done. This is about more important matters than the price of beef. Farmers need support, guidance, direction and infrastructure which is not there for them at present.

The fundamental problem facing farming is uncertainty about the medium and long-term future. That is why, contrary to what Senator Quinn has said, the agreement at the European Council in Brussels is such a big advance in that it provides a degree of certainty until 2013 and leaves quite a bit of room available. It is an immense achievement and in some ways is a reward for the "Yes" vote on the Nice treaty because it is doubtful that this would have happened if the vote had gone the other way. It is a vindication of the Franco-Irish alliance, including the political alliance between Fianna Fáil and the Gaullist party.

The CAP is not that expensive. It is about 1.2% of GNP in terms of expenditure, if translated into domestic expenditure, and is an economical form of support that is vital to the fabric of the societies of all EU member states. I disagree with Senator Quinn who would have us give up the CAP without having any particular alternative in mind. With all due respect to the Senator, I am not clear that the morality of the supermarket interest is superior to the morality of the farm interest, and there is a wide gap between what is received at the farm gate and what is received elsewhere. To be fair to the social partners and those such as Senator O'Toole, they recognise the interdependence that exists.

Security of supply is the key reason underpinning the Common Agricultural Policy. I remember talking to New Zealand's Minister for Agriculture and hearing him complain about the Saudis and Japanese putting vast amounts of money into uneconomical agriculture. However, those countries very legitimately did not want to be completely dependent on imports. Food is the most vital product and countries do not want to be dependent on distant markets.

I have reservations about the Fischler proposals. If supports are divorced from production, it will not be long before the newspapers highlight people getting vast amounts of money for doing nothing. That will undermine political support for the CAP.

Many farming organisations have met with Oireachtas Members about issues they wanted pursued by the Minister. Many of those issues relate to the period before the general election when farming organisations were talking about the REP scheme and the exclusion of ewes from the stock density calculations. The Minister and this Government should take up those issues.

Dealer registration for bona fide farmers and the identification system, abouot which many Senators have spoken, are issues I would like to see addressed. As Senators O'Toole and Henry mentioned, there should be simpler ways to deal with identification rather than the cumbersome methods currently proposed.

The IFA talked about an important social policy issue relating to the health service, that of the carer's payment, and particularly about PRSI coverage for farm spouses. That issue has not been dealt with in an adequate way. There have been many areas where the PAYE sector is helped the most, including the family income supplement scheme. Self-employed persons like those running their own businesses on farms do not seem to qualify under many of these schemes, which is unfortunate. Farm spouses made a strong case to the Minister for inclusion. I hope these issues will be addressed and thank the Minister for his fine speech.