Agenda 2000: Statements 9th November, 2000 Minister for Agriculture, Food and Rural Development (Mr. J. Walsh): I welcome this opportunity to address the Seanad on the challenge facing European and Irish agriculture in the negotiation of the next WTO round and the importance of protecting the gains from the Agenda 2000 agreement. I am sure I need hardly point out the continuing importance of agriculture and the food industry to Irish society and the economy. Sometimes one is led to believe that other sectors of the economy are far more important that agriculture and food. Agriculture is the cornerstone of the economy and it will remain so for the foreseeable future. For example, it currently generates about one third of Ireland's net foreign earnings and provides employment for almost one in eight people in the workforce. The value of exports of agricultural products and food this year will be almost £6 billion and the figure is increasing. Critically, the industries associated with the agri-food sector are well located geographically and regionally. Therefore it is crucially important that we plan the development of the agri-food sector and that we are well equipped to deal with the challenges arising, particularly from the WTO negotiations. The single most important development in agriculture at EU level in recent years has been the agreement which was reached on Agenda 2000. It is easy to overlook at this remove the anxiety caused by the original proposals which the European Commission brought forward in March 1998. As I pointed out to the House at the time, I faced major difficulties in the negotiations in that the Commission's proposals represented a severe loss for Irish agriculture and would have been a severe set back if they had been accepted as proposed. From the outset, I rejected the Commission's proposals because of the serious damage they would inflict on Irish agriculture and on the economy. 11 o'clock As Members will know, we had a very successful outcome to those negotiations and the Agenda 2000 agreement forms a very solid framework for the agriculture and food industries into the new millennium. I accepted the principle of CAP reform at the time because I felt that European agriculture had to be positioned to cope with the changes which lay ahead, in particular the challenges which will inevitably arise from the enlargement of the Union and, more particularly, under the next round of the World Trade Organisation negotiations. The gains negotiated in Agenda 2000 were too hard won and are far too important for the well-being of Irish farm families to allow any erosion of them in the future. I was particularly pleased, therefore, that the Heads of Government meeting in Berlin in March 1999 agreed that the decisions adopted regarding reform of the CAP within the framework of Agenda 2000 would constitute the essential elements in defining the Commission's negotiating mandate for the future multilateral trade negotiations at the WTO. In agreeing this approach, the 15 member states were setting out, at the highest possible level, the negotiating position of the EU for the next round of international trade negotiations. The decision of the Heads of Government was subsequently reflected in the negotiating mandate for the Commission that was agreed by the Council of Agriculture Ministers in September 1999 and later endorsed by the General Affairs Council. The opening statement of the mandate demonstrates the importance which the Council attaches to the role of agriculture and is one with which I believe we can all agree. It states: The Agriculture Council stresses that safeguarding the future of the European model of agriculture, as an economic sector and as a basis for sustainable development, is of fundamental importance because of the multi-functional nature of Europe's agriculture and the part agriculture plays in the economy, the environment and landscape as well as for society. Thus the contribution of agriculture remains vital to the European economy and society. That is the framework and the basis on which the negotiations will be carried out. The Ministerial Council of the WTO, which met in Seattle at the end of last year, endeavoured but failed to reach agreement on the launch of a comprehensive round of multilateral trade negotiations. Following the failure to launch this general round, the negotiations on agriculture got under way in March this year under Article 20 of the Agreement on Agriculture of the previous Uruguay Round. To remind ourselves, Article 20 is quite specific in its mandate for further negotiations. It states: Recognising that the long-term objective of substantial progressive reductions in support and protection resulting in fundamental reform is an ongoing process, Members agree that negotiations for continuing the process will be initiated one year before the end of the implementation period... The period to the end of this year is being used for the purpose of examination, analysis and debate in Geneva on the various issues arising. This work is being carried out on the basis of submissions from the WTO members as well as papers produced by the WTO secretariat. A comprehensive EU negotiating proposal, which is based on the Agenda 2000 Agreement, is under discussion and is likely to be finalised at the Council of Agriculture Ministers meeting later this month. Substantive negotiations will not get under way under the Article 20 mandate until early next year. It still remains to be seen whether a comprehensive round of trade negotiations will be launched. In that event, the agriculture negotiations will be subsumed into the comprehensive round. The outcome of the WTO negotiations will establish the world trading framework within which EU and Irish agriculture will have to operate over the next decade or so. As a major exporter of agricultural products, the outcome of these negotiations will be of immense significance for Ireland. The outcome will determine the conditions under which we will export to non-EU countries and also the level of competition we will face on EU markets. The main issues which are likely to arise in the WTO negotiations include exemption from reduction of direct payments to farmers - we all know how important direct payments are in that they are valued at £1 billion per annum; recognition of the multi-functional role of agriculture and the manner in which such recognition is to be expressed; recognition of the impact on competitiveness of food safety and animal welfare standards and the manner in which such recognition is to be expressed; the future arrangements to apply to export subsidies; the introduction of a discipline on export credits and other less transparent forms of support; the extent of the liberalisation of market access, including tariff rate reductions and tariff rate quota increases and the arrangements to apply to developing countries. I do not propose to go into detail on all these issues today but I would like to underline the importance to Ireland of two of them in particular. First, the exemption from reduction of direct payments to farmers is of particular concern to Irish farmers and the farming community. A central element of the Uruguay Round agreement was that the level of domestic support for agriculture would be subject to annual reductions over the years 1995 to 2000. However, there was an exemption from the reduction commitments for certain direct payments to farmers. These exempt payments, known as the "blue box" payments, are those made under production limiting programmes and are based on fixed area or yields in the case of crops and on a fixed number of head in the case of livestock. About 50% of Irish farmers' incomes - I think it is 57% at the moment - fall within the blue box category and is accordingly exempt from reduction under the Uruguay Round rules. The importance of preserving the blue box exemption is, therefore, obvious in terms of the protection of the income of Irish farmers. The blue box payments compensate for the price reductions agreed under the 1992 CAP reform and under the Agenda 2000 reform. They have, therefore, facilitated the reform of European agriculture, through the reduction of market supports which kept European prices significantly higher than world prices. In objective terms, there is an irrefutable case for preserving the blue box exemption under the next WTO round. Direct payments have also performed another essential task. They have compensated farmers for the costs imposed on them by the EU's high environmental, food safety and animal welfare standards. When I visit other countries and they complain about European agriculture, I always point out that Irish farmers, the industry in Ireland and in EU member states have to have the highest food safety regulations and standards, the highest environmental standards and the highest animal welfare standards. In milk or beef production, many countries trading worldwide do not have the same standards in relation to enhancing substances used for production of milk or beef as we have. Therefore, they have a major economic advantage but we believe that in the interests of the consumer, food safety and purity, we have the correct attitude and the food should be produced in its most natural form. That, however, has limitations. The direct payments make up for some of those limitations and, therefore, they have to be protected within the blue box. These payments serve to preserve smallscale family farming in particular and the economic and social fabric of rural communities. We all know rural communities are under threat and that a lot of the younger generations see opportunities for themselves outside their own regions and outside farming. We want to make farming and residing in and making a decent livelihood in rural areas as attractive as we possibly can so that if young people have an option, they will remain in rural areas and sustain rural communities. These elements are part of the European model of agriculture and distinguish European and Irish agriculture from agriculture as practised in most of the countries which are major players on world markets. Agriculture in Europe has many functions and this multi-functional nature of our agriculture has to be respected in the arrangements to be negotiated in the next WTO round. The preservation and enhancement of the blue box is one way in which this requirement can be addressed. The second issue is export refunds which are critical to Irish agriculture. We have to remind ourselves now and again that we export about 85% of the food we produce. We are dependent on markets outside our domestic economy, whereas in most other countries that is not the case. They are relatively self-sufficient and have much larger populations than we have, therefore, their main outlet is their domestic market. In our case, the main outlet is export markets. Therefore, export refunds are more critical to Ireland and to the agricultural economy than to any other member state. Under the Uruguay Round, export refunds have had to be reduced annually, both in terms of volume of each product subsidised and the money value of the subsidies. For a number of products of importance to Ireland, particularly beef, respecting these volume limits has caused some difficulties. The nature of the commitments which WTO members agree to make in relation to export subsidies under the new round will, therefore, be of major significance to Ireland's ability to export its surplus production. Closely related to the export refunds issue is the less transparent, but nonetheless significant, subsidisation of exports through export credits, the actions of State-trading entities and also the provision of food aid. While many WTO member countries have declared that the next round must provide for the ending of export refunds, they have been less vocal on these related issues. There can be no move by the EU on further reducing export refunds unless these issues are also addressed. This is one of the issues which the EU has highlighted in its submissions to the WTO secretariat in Geneva. Other trading nations have farm budgets. For example, the US invests massive amounts of money to support farming, yet it complains about our export refunds and direct payments. We are making this clear in Geneva. It may be called a type of farm rescue package, but support for farming and for agriculture is part of the economic model of most countries. It is inevitable that the WTO negotiations will result in further liberalisation of world trade, with stiffer competition and better opportunities for Irish producers and processors on EU and third country markets. It is important that we are in a position to meet that competition and avail of those opportunities. We can do so by improving our competitiveness. There is no doubt that there is room for improvement. While many of our farmers are as good as, and better than, the best in the EU, there are many who fall short of the highest standards. There is also room for improvement in the State's approach to agriculture. The success of the Agenda 2000 negotiations must not be allowed to induce complacency either at the level of the individual farmer or at State level. We must continue to strive for a high level of prosperity for farm families, the preservation of the economic and social fabric of rural areas and the maximisation of employment and exports in food processing. I am determined that, to the extent that it is within my power, the Irish agri-food industry will pursue and attain excellence, and will do so in a coherent and planned manner. With this objective in mind, I established the agri-food 2010 group, with a wide range of expertise to propose a broad strategy for the development of the agri-food sector over the next decade. In addition to changes in the trading environment, which may result from the enlargement of the EU and from the WTO negotiations, I was conscious in setting up the group of factors such as changing consumer tastes, new food distribution channels and general technological developments. That group's report entitled Agri Food 2010 was completed this year. I have approved and published a plan of action for the implementation of its recommendations, of which there were 200. My aim is to ensure the agriculture and food industries can maximise their contribution to Irish wealth creation and employment and to the development of our rural areas over the next ten years. As a result, I expect that the agri-food sector will be well prepared to deal with the challenges arising from the WTO negotiations and from enlargement of the EU, as well as the many unforeseen challenges that inevitably lie ahead. Ireland, like other member states, will be participating in the WTO negotiations as part of the EU, which will be negotiating on the basis of the mandate agreed by the Council. I am satisfied that the mandate leaves no room for doubt about the importance which the Council attaches to the role of agriculture and the need to protect the Agenda 2000 outcome. A satisfactory WTO agreement is not guaranteed but I assure the House that I will be striving to ensure that whatever WTO agreement is reached will provide the environment to allow Irish agriculture to reap the benefits of the Agenda 2000 agreement and to fulfil its full potential. That full potential means a percolation of the benefits to every parish and townland throughout rural Ireland. This is not easy, but there is a White Paper on Rural Development, direct payments and mechanisms such as Leader funding and agri-tourism funding to ensure this is the case. Apart from the overall 2010 plan, I also had study groups and recommendations on a number of key areas. One related to education and training. That task force reported to me recently and pointed out changes that need to be made in relation to education and training for younger farmers. Technically when a young person on a farm completes his or her secondary education, he or she has the option of going on to third level education, including an institute of technology, university or agricultural college. In recent years, the majority of young students opting for additional education have gone to either university or technological college. The result of this is a reduction in the number of younger people opting for agricultural training and education. I appointed a task force which reported to me that agricultural education will have to be brought into the mainstream of education. We cannot tell students to go off and get a green cert or do one year in an agricultural college. This is not good enough for the present generation of farmers who have to deal with many standards, regulations and criteria relating to animal welfare, food safety, accounting and so on. People taking up agriculture and farming nowadays need to be well qualified in a whole range of areas. One would almost need to be a senior counsel, chemist and environmentalist, given the criteria that must be followed and the plethora of forms which must be filled correctly in order to avoid penalties. I am pleased the EU Commissioner agreed that the penalty system was unfair and unjust, that the penalties did not fit the crime and that the issue would be addressed. A new system of education, including new courses, is being put in place for young people about to enter farming. In April this year Teagasc commissioned the ESRI to undertake a study of the future requirements of agricultural training, particularly through the agricultural colleges. This ESRI report was finalised in September 2000 and is currently being considered by the Teagasc authority. Teagasc management has had consultations with all the colleges on the main aspects of the report. It will be a matter for each college to decide its future direction. I emphasise that no request or proposals were made to me to change any aspect of agricultural college education in our agricultural or horticultural colleges, nor have I made, nor am I about to make, a decision in relation to these colleges. If student numbers are decreasing, it is a matter for each college to decide whether to go into aspects of horticulture or agriculture, such as organic production, animal breeding or whatever, to ensure they modernise and address the changing needs of farming. Teagasc will continue to support all the colleges which intend to provide agricultural and horticultural training in the future on the same basis as heretofore. Last year I made a special allocation of £10 million to upgrade the colleges, both Teagasc and private colleges. They are embarking on capital investment programmes to provide improved training facilities in both Teagasc and private colleges. All colleges constitute a significant resource in rural communities. Apart from young people who are seeking education and training, rural people wish, for example, to do business with Departments electronically, to qualify for an EU driving licence or to avail of the various courses offered in the colleges. The principal of each college should investigate its usefulness locally. There is no use in having a college if students are not coming through its doors. We all know that people do not attend churches as frequently as they used do. In my own town, for example, one church has become a thriving post office. The structure is, at least, being used. There would be no point in leaving it empty and unused. The same is true of the agricultural colleges. There is a range of activities which should be carried on there. The principal and management of each college must be aware of the £10 million package for the modernisation and upgrading of the colleges.

There is a task force report on the modernisation of the curriculum and the mainstreaming of education. Some colleges have linked with their local institute of technology or with the Thurles rural college, for example, to provide distance education education. Kildalton has linked with the Carlow Institute of Technology to provide courses electronically by video conferencing. It is up to each college to use the available resources in the most suitable way. I have not received a request or proposal to close any college, not that I propose to do so. That would be out of the question. I want to see them thriving as resources in rural areas. The colleges constitute significant development centres for rural communities. I want to see them broaden their activities beyond conventional agricultural education. In that way, there will be an assured future for every college in the context of Agenda 2000 and in an industry whose philosophy is to include all sections and regions of the country, linking with agricultural co-operatives and PLCs. I detect a confidence in the future which has not been evident for some time. It has been my privilege to attend this august body and to speak to the Members. Mr. T. Hayes: I welcome the Minister's announcement, particularly what he had to say about agricultural colleges. There is considerable concern in some parts of the country regarding these colleges. Change is vitally important in agricultual education and I do not oppose it. However, there is widespread worry, particularly with regard to Rockwell College in south Tipperary. I agree with the broad thrust of what the Minister has said and I am delighted to hear his assurance that no college will be closed. I am surprised to hear him say he has not received any proposal to close a college. He did not receive such a proposal from Rockwell College because it is one of the most modern agricultural colleges in the country. It boasts a dairy unit which was built with a massive injection of capital a couple of years ago and is probably the best in Europe. The units in the college are run on an individual basis. The beef unit, for example, which is quite separate from the dairy unit, is super-efficient. The sheep unit is run on a commercial basis and is also extremely efficient. Every element of Rockwell College is run as a modern, stand-alone unit on a commercial basis. More successful farmers have been educated in Rockwell than in any college in the country. I live within a few miles of the college. I know of the concern among the teaching staff and the workers on the farm. The Minister has assured us that it is not his intention to close any college. This assurance will be welcome in Rockwell. The type of farming being developed at Rockwell has been promoted by all the farming organisations. I am delighted to hear his assurance. The Minister has allocated £10 million for the upgrading of agricultural colleges. I am told £400,000 would equip Rockwell College for its future needs. There is a steady demand for places in the college and the management is confident that the college can continue if it is given an injection of that amount of money. The Minister will agree that this is a small amount of money compared with the overall allocation of funding to agricultural education. The Minister has spoken of the need to link agricultural colleges to third level colleges. However, the type of student who attends a third level colleges may not make a good farmer. I recently spoke to a veterinary surgeon who knew ten students who had got very high points in the leaving certificate, had studied veterinary medicine and had come to work in his practice as students. Of the ten, he believed only one had good animal husbandry skills, despite their academic abilities. As the Minister, knows, it takes a particular type of person to deal with animals. While much of the report is good, I question how it will work in practice because while a person might be good academically, only certain individuals are good at managing animals and the land. The Minister should bear this in mind before he accepts the report in full, but I will relate his good news to the people in my constituency. I welcome this debate. It is most important to discuss the WTO talks in which the Minister will be involved. They will have huge implications for Ireland because the backbone of agriculture over the past number of years has been our success at the negotiating table. This side of the House always supported the Government in terms of achieving a successful outcome in such negotiations. This was because such negotiations have huge implications for consumers, co-op workers and everybody associated with agriculture. We needed the negotiations to be successful to ensure great benefits for the economy. Despite the dwindling number of farmers throughout the country, agriculture is the backbone of the economy and will continue to be so into the next millennium. Approximately 140,000 people depend on the land for a living and thousands more work in related industries. This is a huge number by any standard. Many towns and villages depend solely on agriculture for their income. There have been massive changes on many farms over the past number of years and, as a result, there have been huge changes in rural life. The Minister must fight hard in the negotiations in which he will participate and I wish him success. He mentioned the blue box exemption under the WTO round. This is essential in terms of the success of the negotiations. Regarding the importance of protecting the gains resulting from Agenda 2000, there is a need to consider what has been achieved to date. There were successes, but there are also downsides and the dairy, beef and sheep sectors have concerns. Regarding the dairy sector, it is important to point out that Ireland is six times more dependent on dairying than any other EU member state. There are still many problems in the sector, particularly with regard to the quota regime. Young farmers were mentioned earlier in relation to agricultural colleges and the need to educate them. While there is a need to retain young people in agriculture, they must have sustainable farms. Access to quotas for younger farmers must be examined. Many young people who are currently attending agricultural colleges or working at home on the land are crying out for extra quotas. Proposals are put to the Department every year and there is a need to reconsider the access to quotas available to younger farmers. I constantly receive representations from young farmers wanting to know how they can get extra quotas. They want me to make a case for them at departmental and governmental level. There is a need to make quotas more accessible to younger farmers. Another problem is farmers with animals with disease problems. Ireland needs to negotiate more quotas because dairying is the backbone of the economy. The issue of grants in the dairy sector also needs to be examined. The beef sector has been discussed at length. When one looks back at developments over the past number of years and considers the success of Agenda 2000, one cannot forget the sight of farmers sitting outside meat factory gates 18 months ago. People did not think this could happen, but farmers had to sit outside gates to introduce some realism regarding the price of beef. That was a success in its own right, but many Members spoke to those farmers and their stories were desperate. They felt they had to sit outside factory gates to try to improve the price of 70p per pound that was being offered. They succeeded but it was not a good sign that people found it necessary to try to guarantee their rights and increase the price by sitting outside factory gates during the implementation of an agreement. There is a story in today's newspapers about the Hungarian ban on beef. The Minister's Department is annoyed about it, but why is Hungary banning Irish beef? From where are the stories or leads emanating? From where are they getting the information? There is a need for a marketing campaign in this regard. A structure must be put in place to ensure people are told the precise position in relation to Irish beef. As the Minister is on record as saying, Irish beef is the best in the world. The grass based production method used in Ireland is the only way to ensure sound and clean beef. The problems of the sheep sector can be summed up by saying it is one of the poorer stories in terms of Agenda 2000. People are worried about various aspects. The number of sheep farmers that have gone out of production in recent years is frightening. Figures show that there are 370,000 fewer ewes. The compensation mechanism for sheep farmers must be considered. There are huge questions marks over that mechanism in the sheep sector. No other sector of agriculture has been hung out to dry more than the pig industry. Smaller units are going out of production while bigger units are increasing in size. They are coming under the control of a few. It is not a healthy sign that the big pig producers are getting larger while smaller units are going out of production. Many small producers are leaving the tillage sector. The problem arising from the Agenda 2000 proposals is that smaller operators are going out of production. This is happening for financial reasons; they are being forced out because there is no money left in agriculture. The average income in the sheep industry is lower than the minimum wage. Who will stay in a business which gives them such a small income despite years of investment? The role of smaller farmers cannot be forgotten. We have argued here, in the Lower House and in many places on the role and importance of the family farm. However, if small family farms go out of business, what will be left? If the trend which has been developing in recent years continues, we will be left with a few big factory farms. There will be no need for agricultural colleges or subsidisation. We have a unique case to fight at the negotiating table for the small farms of which we are proud and which have been successful. They have been a great way of life. Everything is not as it seems in terms of the Agenda 2000 proposals. They have brought benefits but there are also downsides, and we must remember that when we debate this issue. I wish the Minister the best of luck. He is known as a nice man but he must be tough and must fight our case. He must point out at all levels that we have a special case, particularly in terms of dairying and beef farming. We are a small nation which is largely dependent on agriculture. Mr. R. Kiely: I welcome the Minister and compliment Senator Tom Hayes on his worthwhile contribution and his words of encouragement to the Minister in the difficult task he faces. The Minister has accomplished a lot for agriculture in these negotiations and I congratulate him on that. We are discussing the importance of protecting the gains from Agenda 2000 in the new World Trade Organisation round. Agriculture and the food industry are key elements of the economy. In 1999 the agri-food sector accounted for almost 10% of GDP and almost 12% of employment. Primary agriculture remains more important to Ireland than to 13 of the 14 other EU member states. The record growth experienced by the Celtic tiger economy in the 1990s has created both opportunities and threats for the agri-food sector. By increasing our farm employment opportunities, we have improved the viability of many farm households. A more prosperous society has also benefited the food industry by increasing demand for convenience and luxury foods. On the other hand, the increased availability of employment and higher wages in other sectors have made farming and the food industry less attractive as career options for young people. At EU level the MacSharry reforms of 1992 not only introduced new policies but established a new policy direction which was followed in Agenda 2000. Direct payments to farmers are growing with an even greater focus on the environment, animal welfare etc. while market supports are eroding. EU budget pressures may arise due to the financial constraints imposed as part of the Berlin Agreement and these pressures will increase with enlargement. Public support for agriculture is more visible and open to public debate. Direct payments accounted for more than half, or 56%, of farm incomes in 1999. The total level of support, including direct and indirect subsidies, is higher, providing more than 100% of farm incomes for some enterprises. These supports have a major impact on the agricultural sector and were the source of a large net transfer of £1.7 billion in 1997 from the EU to Ireland. The administration of these schemes is placing an increasing burden on the State and on farmers. The outcome of the Agenda 2000 negotiations was positive for Irish farmers and consumers. The Minister must be congratulated on a successful outcome. It also provides some comfort in terms of EU policy over the next seven years. However, it is important to recognise that Agenda 2000 is open to review. Six reviews are planned for the 2002 to 2003 period. The most important reviews from Ireland's point of view will be those on dairy quotas, as Senator Tom Hayes said, cereals and the agricultural budget. The limits set on agricultural spending in Agenda 2000 are an important new discipline which may have significant consequences. It is likely there will be some pressure on the budget in the years ahead and this may trigger further reforms. International trade rules play an increasingly important role in shaping EU agricultural policy. The Uruguay round trade agreement is currently being implemented. The agreement includes a commitment to continue the reform process and achieve a substantial progressive reduction in support and protection. Negotiations will soon start on a new trade round. We cannot predict the outcome of the new round but we are confident it will mean more liberalisation and further pressure on market supports, particularly on export refunds. There will be pressure to further decouple direct payments from production. This will have implications for the speed and depth of CAP reform, but it should not change the current direction of EU policy. Export refunds are more important to Ireland than other member states because we are more dependent than other countries on third country exports of beef in particular. In 1999 Ireland accounted for almost 50% of the EU's beef export refunds, but only 7% of its cattle. For this reason, the outcome of the World Trade Organisation round in terms of the future of export refunds will have a far greater effect on Ireland than on other EU member states. Strong growth in global demand for food is projected for the coming decades. The growth will be largely in developing countries, particularly China and south-east Asia. Demand will be driven by increases in the number of people in these countries and by a return to strong growth in their personal incomes. In contrast, demand growth in the developed countries will continue to be slow, reflecting low rates of population growth at less than 1% per year and incomes at approximately 2% per person per year. Spending on food is also being relegated to a smaller fraction of additional outlays. The outcome of the Agenda 2000 negotiations was a considerable success for the Government and for farmers. The Minister played a big part in ensuring this success and he must be complimented. The initial price cuts were considerably diluted and additional direct compensation was put in place. In addition, the milk quota system which has served farmers well since its introduction was maintained. The Minister referred to the proposals the European Commission brought forward in March 1998. He said he faced major difficulties in the negotiations on the Commission's proposals which would have represented an estimated loss of £233 million a year to Irish agriculture when the proposed reforms were implemented. From the outset he emphatically rejected the Commission's proposals because of the serious damage they would inflict on agriculture and the economy. His success is history and he must be congratulated on it. The EU Commission has proposed an alternative strategy under Agenda 2000, which should increase internal and external competitiveness by significantly reduced price supports and continued income support by increasing direct income payments. Competitiveness is not just a question of price, food quality and safety are essential requirements for the consumer, to which the agri-food sector must respond. The Minister referred to agricultural education and provided assurances regarding the future of agricultural colleges. I agree with his view that agricultural education is vital because of the changes in agriculture, including the number of forms that must be filled. Farmers are not used to this clerical work, but they will have to become accustomed to it. Senator Tom Hayes was rightly vocal in expressing concern about the future of Rockwell College. There is an agricultural college in my constituency, the Salesian College, Pallaskenry, which provides a very good education for local farmers. My eldest son, Vincent, Deputy Kelleher and the former Minister from Limerick West, Deputy Noonan, are ex-students, as was the former Minister for Agriculture, the late Tom Walsh from Kilkenny. It is important that these colleges are maintained. I am delighted with the Minister's announcement because concern has been expressed about the future of the college at Pallaskenry. The raw materials, the students, must be present to keep these colleges going. Agenda 2000 has laid the foundation for the development of Irish agriculture through a combination of supply control, price support and direct payment. In addition, the rural development plan, the area retirement scheme, the rural environment protection scheme, the disadvantaged areas repayments scheme, the non-farm investment scheme, the farm waste scheme, the area hygiene and installation aid for young farmers and the improved taxation situation all provide a strong foundation for the development of a vibrant and viable agricultural sector. However, like those in the past, the current generation of farmers face many threats, one of the main ones being the next round of world trade talks. We are all too familiar with the major threat posed by attempts to unravel the CAP and the low income problem among farmers at these talks. The Government must ensure that the gains achieved under Agenda 2000 are not eroded. I am sure the Minister will achieve this. The Government must also continue to ensure that the EU Commission does not barter the CAP in return for concessions in other areas, such as the industrial and services sectors. Last year I was a member of a delegation that attended a conference in Chicago. I was accompanied by my colleagues, Senator O'Brien, Deputy Kelleher, who lead the delegation, Deputy Creed and Deputy Ring. A meeting with the largest association representing the farmers of America was arranged. It was apparent that the views of Irish farmers and politicians are poles apart from those held by our American counterparts. The Americans favour removing regular Government involvement in production or subsidisation to ensure the retention of farmers' incomes at a reasonable level. They pointed out that the free market is of greater benefit and that the way forward would be to remove quota restrictions and income supports. I pointed out that this would have a dramatic impact on the rural fabric of Europe and would exacerbate the difficulties faced by many EU member states where farmers are leaving the industry. I also said their proposals would have a major impact on Third World countries as very often their only form of income is from agricultural produce. I said that if there was a free for all, the large countries, such as Canada, America, Australia and Argentina, would be able to flood the world's food markets, mainly in beef, milk and cereals, to such an extent that the countries trying to encourage and maintain farming as an integral part of rural life would be unable to compete. From our discussions with the farmers' representatives in America it was evident that, for them, quantity is the order of the day. Economy of scale is the currency they want to deal in. I pointed out that this had failed in America as it led to a massive flight from the land by farming families, especially in the mid-west region, which has resulted in farming by the few with a resulting negative impact on local economies. I also said that if the same developments were to take place in Europe it would have major repercussions in the downgrading of rural areas and the problems associated with migration towards the cities. It is clear, however, that American farmers take an opposite view to those in the EU. They hold that free world trade should be the order. This would have an unfortunate impact on farming families in Europe and on Third World economies. The most important consequence of unregulated free trade would be the creation of large economies of scale and cheap food. America takes a different approach from Europe on the question of genetically modified foods, growth promoters and milk producing hormones. Senator Tom Hayes mentioned the ban imposed on Irish beef by Hungary. There is no genetically modified food in Ireland. We should be proud of the beef we produce, but there is a need for greater promotion. There is a view in America that science will always be able to stay ahead of nature and that scientific expertise should be used for the purpose of producing food using cheap methods, if possible by using ethnological advances. At the conference in Chicago we pointed out that in Europe food producers and consumers have major concerns about using scientific methods to advance the production of beef, milk and dairy products. We said that such technologically driven methods should be subject to tight regulation. Again it seems that America holds a view contrary to the vast majority of politicians, consumer groups and farming organisations and this is an area which will have major repercussions in negotiations in the years ahead.

Having listened to the US view on the various synthetic forms of food production, I am firmly of the view that we should be very cautious in our approach to such methods, which would have an adverse impact on the confidence of the consumers, particularly of Irish food. Any advantages of our near natural food production methods could be undermined. This is an obvious opportunity for Ireland to attract consumers who are conscious, if not fearful, of the use of such methods of food production. Generally the American model of large-scale low-cost food production has failed. If this model was allowed to be replicated, it would have devastating effects on the basic make-up of the many rural communities throughout western Europe. The EU Commission and the member state governments should resist at all costs the complete removal of barriers and the price supports currently in place. A drift towards an open market policy is not the way forward. In addition, the environmental issues, which are very much alive in Europe, must be continually addressed to ensure that European food enjoys the confidence of the European consumers. It is inconceivable that we could allow a situation whereby American food produced by genetic modification synthetic hormone methods could be available to consumers in Europe. While we are moving in the direction of ensuring that our methods are as near as possible to natural production, the confidence of the consumer could be undermined by the very fact that such food would be available on the supermarket shelves. For this reason any negotiations in the World Trade Organisation or between the European Union and America should ensure that our views would be vigorously pursued, to such an extent that we would try to convince the Americans of the necessity to deal with the European model of food production as the most beneficial, not only to consumers but also to rural life, which has enjoyed the economic benefits of policies pursued by the European Union. The Agenda 2000 agreement protects farmers' incomes through market supports, export refunds and direct payments. All of these will come under threat at the next round of trade talks. These measures are critical to maintain Irish farmers' incomes and Europe must not bow to the pressure of the Americans or CAIRNS group. The Americans preach free trade but in reality operate a highly protected agricultural sector. In 2000 alone, US government payments to US farmers reached a record $28 billion, representing 50% of farm cash income. Europe has two choices, the first of which is the free trade route, which will immediately lead to the destruction of the family farm structure and the development of large factory-type farms, with the consequent negative impact on rural areas and the environment. Alternatively we can stick with the Agenda 2000 agreement, which will maintain the family farm structure. The EU should totally oppose any reform over and above the Agenda 2000 agreement. The agreement has laid a solid basis for Irish farmers and any attempt to unravel it must be strongly opposed. Dr. Henry: Like other Senators, I welcome the Minister's statement on the agricultural colleges. In view of the fact that I have a postal vote and my constituency includes all the agricultural colleges, I am particularly glad that they are all being promoted. The Minister and I discussed the situation and we agreed that there were not many young women coming forward nowadays to be trained as poultry instructresses, but that there were other aspects of farming on which we could ask these agricultural colleges to concentrate. I am sure the investment which was put into them was worthwhile. I particularly asked the Minister about Gurteen, which is of course in Senator Tom Hayes's area. I am delighted at the Minister's response because I think the colleges will respond with enthusiasm to an injection of capital and to being asked to do a little more in the countryside. I am very pleased also with the Minister's emphasis on food safety and his insistence that we must have the very highest standards, including high environmental standards, and that these must be the cornerstone of agriculture here. Senator Rory Kiely's emphasis on the need to produce food which is as natural as possible is important because that is really what consumers are looking for nowadays. It is for that reason that all of us taxpayers pay up money for schemes such as the rural environment protection scheme and the farm retirement scheme which are encouraging people to stay on the land. The emphasis on natural food is certainly of great importance from an export point of view because there is huge competition within the European Union. If we cannot produce food of the highest quality, we are in a very serious situation. However, the domestic consumer must be considered also and this issue is very important to the domestic consumer. Nowadays if one goes to supermarkets or vegetable shops in particular, one sees increasing amounts of space being assigned to organic food, free range eggs, etc., because consumers have had such a frightening experience with BSE, particularly in the United Kingdom, that they are most anxious to know what is in their food.

Senator Kiely was right to stress the concern even about genetically modified organisms. While experimentation between and within species has taken place over decades, crossing the North Atlantic flounder and the tomato is a pretty novel approach. It is these sorts of experiments which have made people very anxious. The report of Lord Phillips's inquiry on the bovine spongiform encephalitis saga was published the other day and, speaking in the House of Commons, the Minister for Agriculture, Fisheries and Food said he had forwarded a copy of the report to all the governments within the European Union. I presume it has been forwarded to the Department of Agriculture, Food and Rural Development. I wonder if the Minister for Health and Children should have been sent a copy also because this is a serious public health issue. I want to put on the record of the House the main conclusions of Lord Phillips's report. We in Ireland do not really understand how lucky we are not to have had more cases. I know we have had over 100 cases of BSE in cows already this year but considering the huge herds in Ireland, we have been remarkably fortunate. The report's executive summary states that BSE developed into an epidemic as a consequence of an intensive farming practice, the recycling of animal protein in rumen and feed. It states that this practice, unchallenged over decades, proved a recipe for disaster and that, in the years up to March 1996, most of those responsible for responding to the challenge posed by BSE emerge with credit. However, the report states there were a number of shortcomings in the way things were done and in this area criticisms were made of members of my own profession, the veterinary profession, public administrators and politicians. The report states that at the heart of the BSE story lie questions of how to handle hazard, a known hazard to cattle and an unknown hazard to humans. The report states that the British Government took sensible measures to address both hazards, but these were not always timely and not adequately implemented and enforced. The report is a little disingenuous here because while BSE was known to be a hazard to cattle, the spongiform encephalopathies had been known to be a hazard in sheep for a considerable time. By the late 1980s we knew it was no longer species specific because in England cats had been diagnosed. Therefore we knew from as early as that that it was not species specific and that it could cross the species border. In the early 1990s at London Zoo there were cases among antelopes and other types of deer and I believe there was even a case where a marmoset contracted the disease. Even though we do not like to contemplate it, the genetic make-up of marmosets is not that far removed from that of mankind. It is a pity that Great Britain did not show more interest in these scientific findings at an earlier date because we would have received warnings here as a result. We are obliged to rely, to a considerable extent, on what happens in Great Britain. The report to which I refer also indicates that the rigour with which policy measures were implemented for the protection of human health was affected by the belief of many people, prior to early 1996, that BSE was not a potential threat to human life. However, there were many others who thought the disease did pose a threat. It is a great pity that more emphasis was not placed on their findings. The British Government was anxious to act in the best interests of human and animal health. To this end, it sought and followed the advice of independent scientific experts, sometimes when decisions could have been reached more swiftly and satisfactorily within Government. In dealing with BSE it was not the Ministry for Agriculture, Fisheries and Food's policy to lean in favour of the agricultural producers to the detriment of the consumer. There are those who might argue with that assertion but I will let it pass. The report proceeds to state that at times officials showed a lack of rigour in considering how policy should be turned into practice, to the detriment of the efficiency of the measures taken. That is certainly true because there was a very slow response in England to the problems that arose. It continues by stating that at times bureaucratic processes resulted in unacceptable delays in giving effect to policy. The British Government introduced measures to guard against the risk that BSE might be a matter of life and death, not merely for cattle but also for humans, but the possibility of a risk to humans was not communicated to the public and to those whose job it was to implement and enforce the precautionary measures. All Governments in the EU must consider what occurred in the United Kingdom because the reluctance to bring forward information for the general public may have been extremely important in the unfortunately high level of variant Creutzfeldt-Jakob disease in that country. Ireland has been incredibly fortunate in only recording one case of the disease and that case involved a woman who lived in England for many years. It is amazing that to date we have experienced so little in the way of infection of humans. The report also states that the British Government did not lie to the public about BSE because it believed that the risk the disease posed to humans was remote. That is quite a sweeping statement to make when they knew approximately seven years earlier that it had crossed the species barrier and had been transmitted from cows to cats. Where was the evidence that the disease could not be transmitted to humans? It is further stated that the campaign of reassurance was a mistake and that the British Government was preoccupied with preventing an alarmist overreaction to BSE because it thought the chances of people's health being damaged was remote. On 20 March 1996, the British Government announced that BSE had probably been transmitted to humans. The public felt they had been betrayed. Confidence in Government pronouncements about risk was a further casualty of BSE. Cases of new variants of CJD were identified by the CJD surveillance unit and the conclusion that they were probably linked to BSE was reached as early as was reasonably possible. The like between BSE and variant CJD is now clearly established, though the manner of infection is not clear. The point I wish to make is that because Ireland is a much smaller country than the UK, we must be careful about relying on the findings of the British and on what they are doing. I urge the Minister to ensure that we try to keep our research into this area up to the highest possible standard. When Sir John Krebs of the British Food Safety Agency considered the report to which I refer, he stated that there should be no relaxation of the standards that operate in Britain. I am sure everyone agrees with his assertion. However, perhaps we in Ireland should do more than we are doing at present. As the Minister is aware, the United Kingdom is currently the only country that bans the inclusion of meat and bonemeal in all animal feed. In the remainder of the EU, including Ireland, these ingredients are used in poultry and pig meal. In view of the fact that scrapie has been endemic in sheep for so long, concerns have been expressed that a variant of BSE is developing in sheep. Given that our lamb trade is so important, would it not be wise to provide that no meal containing meat or bonemeal should be used in this country? Lambs and ewes can be fed meal for the purposes of fattening and it would be great if we could reassure Irish and European consumers that there is no possibility that these animals can consume meal containing meat or bonemeal. I am not referring here to meal containing meat and bonemeal from contaminated animals, rather to meat and bonemeal from all animals. I understand the difficulties involved in this regard because of the fact that we export vast quantities of meat and bonemeal. If we are not prepared to feed it to Irish animals, it is difficult to claim that it is acceptable to feed it to animals in other countries. This is an important issue. I am aware that Bord Bia has a quality assurance scheme in place in respect of pig producers. However, I understand that not all pig producers are involved in the scheme. Some of the largest are not. This means that quite a proportion of pigmeat could come from animals that were fed on meat and bonemeal. People always refer to the fact that pigs are omnivores. While it is not right that herbivores such as cattle and sheep should be fed meat and bonemeal, it is claimed that omnivores such as pigs can be fed such products. It is also stated that pigs are slaughtered very young. That may be the case but we have very little knowledge about this disease. We do not know its natural history, nor have we identified the mutations that might occur. It appears that only certain breeds of sheep are susceptible to the disease. There have been generations of sheep that were resistant to scrapie but there appear to be other sheep that are not resistant to it. I would like us to be in a position to state that animals in this country are not being fed on meal that contains meat and bonemeal. That would be an important point to stress when selling our produce abroad. The Minister stressed that we should be in a position to state that our food is of the highest natural quality. Senator Kiely made similar comments during his contribution. The poultry industry has a voluntary code of practice under which the excreta and feathers of chickens can no longer be used in the meal. That is an extraordinary and very unhygienic practice, particularly when one considers that we are desperately trying to reduce the amount of antibiotics in animal feeds. I love the fact that these antibiotics are referred to as "growth promoters". The reason they are used is to reduce infection. It will be an important decision, in terms of economic concerns and public health, to ensure that animals are fed on meal that does not contain meat or bonemeal. However, it will be an important selling point if we can claim that our produce is free of infection. I hope the Minister will promote a campaign to ensure that this happens. The Minister referred to environmental factors in farming, which is an extremely important matter. I hope that in the near future we can discuss the Environmental Protection Agency's report for last year. We ever seem to get around to discussing this and there are extremely important points in it about pollution in general and about agricultural pollution in particular. This is the time of year when slurry cannot be spread. Given the terribly wet conditions at present, it is impossible to spread it. Even at the best times of the year there is a serious problem with the pollution of private water sources by e.coli. This can only come from human or animal contamination. We need to examine this carefully and have the matter taken more seriously. The pollution in the water in a psychiatric hospital in Cork the other day was as a result of e.coli. I cannot say whether it was agricultural or human sewage, but it is most undesirable that these cases arise. In general, it is due to lack of information and failure to enforce the protection of wells. After all, it is the people in the area who will have to drink the water. It is important to recognise also that the water supplies of many towns are drawn from lakes and rivers which all too frequently become polluted by agricultural waste products. We must take this issue seriously. I would be glad if we could get time some day to discuss this. I congratulate the Minister on all he has done and I will do everything I can to support him in his efforts to have our food seen as being of the highest standards for consumers, not just here but within the European Union, because it is still an important export. I know the computer and pharmaceutical industries have much greater exports at present. They could easily move away but the agricultural industry would still be with us. We need to promote it. Mr. Callanan: I welcome the opportunity to contribute to this important debate, for the earlier part of which the Minister for Agriculture, Food and Rural Development was present. The Minister of State is here now and I welcome him. It is pleasing to hear the general welcome for the successful outcome to Agenda 2000 which the Minister, Deputy Walsh, brought about----- Mr. T. Hayes: The Senator was not listening to us all. He was not paying attention. Mr. Callanan: -----leading from a low base. We wished him well. I am sure we all welcome the fact that he and his team brought back a package which will not be surpassed. In debating the protection required for European agriculture, we are talking about a way of life, an industry and food production. It is fair to say that farming in Europe is different from that in any other part of the world and that agriculture is an important part of our economy and of the social fabric of the country. The success of Agenda 2000 and our approach to the World Trade Organisation discussions and negotiations will be of paramount importance to Europe and Ireland.

The difference I referred to is exemplified by the CAIRNS group. It has low cost production and a much lower standard of environmental protection. It has a different approach and would deal with industrial-style farming, similar to the South American countries which are also in competition with us. They are extremely low cost. If one examined closely the trade between some of the South American countries, one would detect a measure of indirect subsidy which is above and beyond what we have in Europe. That is a clear fact. If one examined closely what was happening in the United States, one would see a reinvention over the past three or four years of aid to agricultural production and the farming community there. It has embarked upon subsidisation of its agricultural base because it is absolutely necessary for survival. Food is essential to mankind's survival. The United States has ensured it has what it requires. However, it must be done economically, which is why it has introduced its form of subsidisation. In referring to the United States, I also refer to Monsanto, genetic modification, the safety of food production and what the consumer requires. It is now accepted that there is a huge gap between the European approach and the American approach. The use of hormones is an example. Monsanto has taken over the regime of breeding plants in the United States to the point where it almost has a monopoly. I referred to that before when it introduced the terminator gene which, I am glad to say, has been taken out of its regime. That said, the new systems are unacceptable and are not what a European consumer requires. Following the failure of Seattle in December 1999 to open negotiations on the new world trade round, the agenda was deferred until after the US presidential election, the conclusion of which is taking longer than expected. There should be no doubt that the outcome of the election will impact on world trade negotiations. Gore and Bush would have very different approaches and it is important that Ireland recognises that. Some commentators seem to think there is not any great difference but I and many others believe there is. Negotiations in the World Trade Organisation are likely to reopen early in 2001. The EU's general position on agriculture for the world trade negotiations was agreed in autumn 1999 in advance of Seattle and a detailed EU position on agriculture is likely to be presented some time during 2001. The US negotiating position on agriculture is likely to be influenced by the outcome of the US presidential election. However, the fact that the US Government has increased its support for agriculture from $8.3 billion in 1997 to $29.6 billion in 2000 has weakened its earlier argument that government support for agriculture in all developed countries should be reduced. Those are the exact figures, which show the level of support the American administration has been forced to give to farmers to protect agriculture in that country. The EU and other signatories to the GATT Uruguay round are committed to negotiating further reductions in the protections and supports for agriculture within the world trade framework and to open negotiations in 1999 and 2000. In anticipation of these negotiations, the EU agreed to further reforms of the Common Agricultural Policy, or CAP reform 2, which apply from 2000. The first requirement is that the EU negotiates in the WTO only within the parameters agreed in CAP reform 2 and does not accept any further cuts in EU agriculture in excess of what has been agreed in the CAP. It is important to bear that in mind. The overall process of CAP reform which commenced in 1993 is based on a two-pronged strategy - altering over time the method of support away from price and market supports to direct payments to farmers and limiting EU production in the main sectors by means of production quotas, premium quotas, extensification premia and land set-aside. By limiting its own production and export, the EU policy is making a very positive contribution to stabilising world markets and this benefits all the food exporting countries of the world. The main driving force for the change have been the demands of GATT and the WTO. Now that the structure of support has been changed we should insist that the CAP direct payments system must be fully protected from future WTO rounds. I am glad the Minister dealt extensively with the "blue box" issue earlier and it would be desirable if that were reported in the media. This must be achieved by protecting the "blue box" status of these payments on a permanent basis and guaranteeing their exemption from future challenge in the WTO. The pace of further reduction in EU import tariffs must be moderate and gradual and within the parameters of CAP reform 2. In the context of further reductions in EU import tariffs in the millennium round, the EU must not also concede a further increase in the minimum access clause from its current level of 5%. Furthermore, the EU must ensure that any new concessions in the form of preferential import agreements must not threaten the stability of CAP in the future. The EU must also insist on the renewal of the special safeguard clause to protect the EU market from occasional exceptionally low levels of world market prices. Independent analysis indicates that the EU will continue to require significant levels of export refunds at the end of CAP reform 2 for beef and dairy products from 2006 to 2008 based on the likely gap between EU and world price levels. Within the EU 15, Ireland is by far the most dependent on the export refund mechanism for beef and dairy products based on our high self-sufficiency rates and costs in reaching the EU continental market. Thus the retention of the export refund mechanism for beef and dairy products is an issue of great importance to Ireland. While I mention the beef industry and cattle exports, one must compliment the Minister on his success in the live cattle trade. The major benefits of that are self-evident in the prices pertaining today as against last year or the previous two years. We should congratulate the Minister on that achievement. In the case of cereals, the EU price is likely to be close to world market prices following CAP reform 2. Depending on the level of world market prices, which fluctuate over time, the EU may be in a position to export some wheat without export refunds. Thus, for cereals the EU will continue to need the flexibility offered by the refund system but clearly the EU should operate refunds in a sensitive manner. While some EU member states who are not significant exporters to non-EU countries may feel that the export refund mechanism is not important to them, it must also be recognised that structural surpluses in the EU market, unless removed, will depress the overall market price. If, for example, Ireland was no longer in a position to export beef to third country markets, the product would be sold on the internal EU market. Given that the EU market is already in balance, any increased supply would depress the price. Thus all EU countries benefit directly or indirectly from the export refund mechanism. Nonetheless, the EU can make a reasonable offer on export refunds in the millennium round. Arising from the CAP reform price cuts, the gap between EU and world prices will have been narrowed, which will facilitate a reduction in the unit rates of refunds. This is an adequate commitment by the EU and the volume ceiling on refunds agreed in the Uruguay round should not be reduced in the new round. A solution acceptable to the EU on the SPS will be a crucial issue in the millennium round. Currently GATT and WTO decisions on such non-tariff barriers to trade are based on international standards or independent scientific advice. In practice, the US Food and Drug Administration is setting the standards on food safety and protection of consumer health not just for US consumers but also for EU consumers. The EU and US are on divergent paths on a range of issues such as the use of growth promoters in beef production, the use of hormones in milk production, attitudes to GMOs and on the wider issues of the role of agriculture in society and in the environment. The EU is now seeking to change the basic WTO rules on SPS so that other factors such as consumer concerns are taken into account. I strongly support this approach. Genuine consumer concerns exist in Europe which are not driven by producers or by protectionist instincts. Producers have a long interest in maintaining the confidence of consumers in food. Producers also need a level playing field in the context of cost advantages offered by new technology in competitor counties. Also, the EU's position in defending its standards should be strengthened by the establishment of the new European Food Safety Agency under the control of Commissioner Byrne. That should lead to major successes in consumer protection in Europe and in establishing differentiation between US and other areas of production. It gives the consumer what he or she requires and that is an important facet of agriculture and EU trade. We should look at it that way. The European model of agriculture has been agreed at the Berlin Summit as the way forward for EU farm families in the rural economy and society. The EU negotiators must defend trenchantly the European model in the WTO negotiations. Senator Tom Hayes and others mentioned the family farms in Ireland. They are important to everyone, including the Minister of State, Deputy Davern, who pays tremendous attention to this issue. If one looks at the White Paper he produced on rural development, he negotiated £6.4 billion for rural development in the national plan. Regarding that national plan, without access and technology, the outlying areas will be difficult to sustain. It should be an important issue and the Minister of State should push harder for access - for roads and public transport - for remote rural areas. Technology and access will mean all Ireland will be close to the centre. The EU negotiating mandate on agriculture adopted by the Council of Agriculture Ministers in September 1999 has the broad support of farm organisations in Europe, but the negotiators on behalf of the European Commission must not deviate from that position. It is important to specify that. While much emphasis is on statements on the protection of our position relative to Agenda 2000 vis-à-vis the WTO, I would like to see some improvements implemented. I was particularly glad the Minister spoke about the State improving conditions. I would like improvements in the area of form filling. The Minister referred to the next generation of farmers needing the skills of accountants, solicitors, barristers, planners, environmentalists and workers. Form filling is the bane of our lives and the amount of surplus bureaucratic detail required to draw down some grants begs the question as to why the forms are so difficult. I ask the Minister to return with the matter to the Department - I know he is keen in this regard - so that farmers are given simplified forms. Perhaps in two generations things will change, but the current generation of farmers is not used to filling such forms. There is no real need for the difficult bureaucratic forms which are issued. Mr. Davern: A figure of £500 can be equated with every half hour farmers spend filling up forms. Mr. Callanan: We all say - I think the Minister will be the first to accept this - that form filling is a difficult task. The purpose of form filling is income aid which is given for duties imposed upon us by EU regulations and standards. It is fair to ask that simplified versions of forms should be available. Early retirement schemes were introduced to encourage elderly farmers to hand over the land to a younger generation of farmers and to ensure the viability of farming, a scheme driven by Europe. However, a retired farmer may not work and dare not be seen herding cows, driving a tractor or even walking a greyhound, although his or her doctor may have told him or her to take such walks. A case can justifiably be made for making the early retirement scheme more flexible and I challenge anybody to say I am wrong. The professional services of those in the public service and Civil Service who retire and take up their pension, such as teachers, nurses and gardaí, are still required. I am not saying the system of State pensions is wrong, but I am paralleling this with the very unequal position whereby farmers who retire are told they may not do one stroke of work even if the son to whom the farm was handed over is out sick for a month. Such bureaucracy is wrong and I will continue to say that until changes are brought about. Otherwise farmers aged 60, 65 or 70 who retire will be driven around the twist. I know the Minister is aware of this problem. From my contact with farmers in the Six Counties, I know they wish to work on an all-Ireland basis. We should examine the strengthening of cross-Border institutions. I know David Trimble has taken a different line, but be that as it may, farmers in Northern Ireland would much prefer to be served by Agriculture House and its Ministers than to have direction, instruction and support from Great Britain. We are an island and should have an all-island approach to agriculture in terms of animal diseases, financial supports etc. Farmers in the South are doing much better, and those in the North know that and wish to be part of this regime. It is fair to say that a joint approach to farming in terms of development and protection is the one area above all others which can help build trust among the communities. Mr. Burke: I welcome the Minister to the House. I wish to refer to the filling of forms. I presume the new method of filling forms will be similar to the voting system in America, and we know the problems that has caused. Agriculture is talked about at great length throughout the country. From a Government point of view one would think everything was rosy in the garden, but that is not the case. We have only to look at the numbers who are leaving the land. There must be some reason the number of farmers is dwindling on a weekly basis. I presume some of the reasons are to be found in an article in the Irish Farmers Journal which gives the outlook for sheep farming over the next seven years up to 2007. According to the article, sheep farmers will get no more money for their sheep in 2007 then they do at present. That is why people are leaving the land and something will have to be done about it.

I am delighted by the response of the Minister on the subject of the agricultural colleges. He said there is a fund in place and that he does not want to see any college closing. Over recent years agricultural colleges have not been properly funded and I am delighted the Minister is putting in place supports for these colleges. Some agricultural colleges offer two year courses which is the way forward because agriculture is changing drastically. Given the stringent controls being imposed by the Food Safety Authority on food producers, restaurants, processors etc., there is a need for better training for farmers and others involved in the agriculture industry. The Minister should provide additional funding to colleges to allow them to offer one, two and even three year courses. Agricultural colleges, which operate on very low budgets, have been getting the thin edge of the wedge in recent years in that they are the only educational institutions which pay local authority rates. I do not know whether the Minister for Agriculture, Food and Rural Development, the Minister for the Environment and Local Government or the local authorities have responsibility for levying rates on these colleges, but the issue should be examined as this places the colleges at a disadvantage. Much credit is due to the colleges which have managed to survive the strain of recent years. Some of the colleges owned by religious orders survived by virtue of having their own land banks. Many good farmers and others involved in the industry have been trained in these colleges and that should be recognised. The Minister stated that he does not want to see any agricultural colleges closing and that a fund will be put in place to avoid that. Huge changes are occurring in the food processing industry and value should be added to all Irish farm produce. The Food Safety Authority and the health boards prohibit the washing of potatoes and cabbage in the same basin in restaurants. This is deemed necessary from an e-coli and food safety point of view. The catering industry is being advised to purchase prepacked, washed food, much of which is currently being imported. Irish farmers will lose out unless small processors, abattoirs etc. are grant aided. Unless Irish produce is value added, we will continue to lose out. The fast food industry has lost out for years. Millions of pounds worth of potato chips are imported into Ireland every year and we will see further imports of meat and vegetables due to the Food Safety Authority recommendation unless we take action. The Government has done nothing to protect farmers in this area and that is one of the reasons so many people are leaving the land. They see no future in farming. By 2007 sheep farmers will earn the same amount of money as they do at the moment and that is not heartening. Additional jobs could be created in small industries through value being added to meat and vegetable produce. In that way, we could cut down on our level of imports. One of the country's biggest milling and compounding companies closed last week because the pig trade has collapsed. The Department should put in place a plan to assist small processors in adding value to their produce. I was delighted to hear the Minister state recently that there is a need for 50,000 new houses in the country and that he did not see why up to 15,000 of these should not be built in rural areas. However, that does not seem to be filtering through to planners. Planners throughout the country do not want brick or PVC used in building houses and planning is refused on the basis of lack of sewerage systems, septic tanks, poor views and bad roads. Local authority members should include house building measures in local development plans. We do not appear to have the strength to convey our views to planners who seem to think they are above everyone else. Planning decisions are a matter of opinion. One planner may approve an application while another may refuse it. Perhaps the Government should give a stronger lead in this matter. Unless that happens, people will be concentrated in towns and houses will not be built in rural areas. Mr. Gibbons: I welcome the Minister to the House for this timely debate. During the tributes in the Dáil to the late Michael Pat Murphy, his colleague, Deputy Sheehan, recalled Michael Pat in his early days in the Dáil talking about the need to do the groundwork on an ongoing basis prior to the big day when he said, "You don't fatten the pig the day before the fair." With the WTO negotiations due to resume, it is important for us not to fatten the pig the day before proceedings commence.   1 o'clock In March 1998 when we received the Commission's proposals for action within the terms of Agenda 2000, the prospects for Irish agriculture looked very bleak. The implications of those proposals would have resulted in huge losses in the economy, particularly the rural economy. The Minister stated that more than £1.5 billion would have been lost over the period covered by Agenda 2000. As a result of the very effective negotiations carried out on our behalf by the Minister and his team, the Agenda 2000 negotiations were successfully concluded and Ireland's position was secured to the end of 2006, thereby turning around a situation in which we would have lost significantly to one in which we made significant gains. Possibly the greatest achievement of the negotiations from Ireland's point of view is that we now have a framework whereby agriculture and the food industry can plan for its development over a number of years. That framework has removed the uncertainty which existed in the past. Sitting suspended at 1 p.m. and resumed at 2 p.m. Mr. Gibbons: Our negotiations with regard to Agenda 2000 have been very beneficial and we should compliment the Minister, the Ministers of State and the Department of Agriculture, Food and Rural Development on the successful conclusion to which they have brought those negotiations. The two greatest challenges which now face Irish agriculture are enlargement of the EU and the World Trade Organisation negotiations which will resume early in the new year. Enormous strains and pressures will be placed on European agriculture, particularly from the United States but also from Australia and South American countries. The philosophy of agriculture and food production in those parts of the world is very different from ours. In those countries farming is on a much bigger scale than in Europe. Europe is self sufficient in most food products and has an over-supply in some. Differences exist in our system of production, we demand higher standards of our food products in Europe and we are much more consumer orientated. The position in Ireland is different again. While Europe is, in general, self sufficient, Ireland is dependent totally on exports for the maintenance of our agriculture and food industries. The Minister mentioned this morning that 85% of our production is dependent on exports. This places Ireland in a very different position from any other country and this is why the negotiations are of paramount importance to Ireland. It is important that we face the negotiations with this in mind. We must also emphasise this fact in Europe. It must be understood at EU level that Ireland is totally dependent on such things as export refunds because of the dependence of our agricultural production on exports. The standards we set ourselves in Europe are higher than those set elsewhere in the world. We must continue to pressurise all food producers to attain even higher standards. There are times when we feel standards are too high and add to the cost of food production. Nevertheless, we must be extremely careful because the health and the welfare of consumers is of paramount importance. There is no point producing food which is unsafe for people to eat or which they do not want to eat. We must ensure the negotiations emphasise the importance of high standards. We must not be bamboozled by economic arguments put forward by the United States. Producers in the United States are very keen to continue using growth promoters and growth enhancers. These have been banned in this country for a number of years. We should never have been using them. If agriculture is dependent on the use of these products it is on a very slippery slope. Food is produced to be eaten. We must be assured that the best quality food is available for everybody. These arguments must be put forward strenuously by European and, particularly, by Irish negotiators. Our dependence on direct payments from Europe is extremely important. The fabric of rural society is now dependent on them. We have moved from a price support system to an income support system, which deals with the problems of over-production in a more beneficial way. I agree fully with what the Minister said about the protection of the "blue box" payments. It is vital that those payments are secured. It will be to the long-term benefit of agriculture to increase the level of payments covered by that approach. Agriculture has been put on a very firm footing as a result of our negotiations under Agenda 2000 and we must not allow any slippage in this area. Export refunds are also important. Due to the fact that we export so much of our production to countries outside the EU, Irish agriculture would collapse without export refunds. It is felt in the United States that this brings about unfair trading arrangements between the different groupings. However, American negotiators continually fail to mention the very significant supports which have always been in place for their farmers. We do not wish to eliminate a large number of farmers in Ireland and be left with a small number of large ranchers. Such a system may work in Australia, the pampas of South America or the North American grain belt but it would not work here. The fabric of rural society in Ireland is based on the small family farm. That is under great threat and the Minister of State, Deputy Davern, is very active in implementing the recommendations of the White Paper on Rural Development. I have taken a great interest in this area and I know that finding solutions to these problems is a huge task. There are many challenges for us. We must enforce the view within the talks that are about to take place that Irish agriculture cannot survive in a regime where the Americans are insisting that we are over-supporting incomes in Europe and they are not. They are, possibly to a far greater extent in some cases. I remember from my days in college studying agricultural economics the argument was always made about the benefits of competitive advantage. The suggestion was that if one happened to be in a given area particularly suited to a particular form of production, that was what one should concentrate on because of the competitive advantage one would have over those producing the same product elsewhere. Irish agriculture has improved enormously over the past 30 years, so much so that looking at the outcome of the harvest this year for cereal production, the yield of winter wheat of four tonnes per acre or ten tonnes per hectare was the highest ever attained anywhere in the world. I remember when winter wheat production commenced here 15 to 20 years ago this target was put to farmers as Utopian. The fact that average production is running at that level indicates the degree of efficiency to which our farmers are working today. It must be borne in mind that we do our job extraordinarily well. We have farmers who are committed, to the last detail, to doing the job properly, well and efficiently and ensuring the final product is of the highest quality. We must enforce on others this regime of the highest standards and quality at all times. What measures must be put in place here to ensure this type of regime is the one that will see the light of day? The one thing we must do is become much more scientific about production. While I am aware that this a topical issue, I was critical of agricultural education, particularly in the agricultural colleges, not because of the courses on offer per se, but because the system was based on the attainment of the green cert so that an application could be made for grant aid, installation aid and so on. That is no reason to go to college. One goes to college to obtain information, the footing on which to develop the enterprise in which one wants to become involved thereafter. That is the reason we must become much more scientific about education in agricultural colleges. The courses on offer need to be extended. I am aware of the level of co-operation between agricultural colleges and institutes of technology, to which the Minister referred. This is a welcome development because it introduces science to a higher degree. It must be emphasised that farming is the environmental science. Courses must be set up in such a way that they will attract young people on the basis that, having qualified, they need not necessarily become involved in agricultural production, that they will be equipped with the necessary scientific and educational background to work in the food industry. Another matter about which I feel strongly is investment in research, in which Senator Quinn has a great interest. He would probably be the first to tell us of the benefits of market research in the sector in which he is involved. We must know where we are going. Senator Henry spoke about the dangers associated with food production, in particular diseases such as BSE, and the need for further scientific information, which will only be obtained if we invest in proper research and development. We have gone through what I would describe as a bad phase over the past 15 years in this area in which there has been insufficient investment. Thankfully, the Government has changed this by committing significant moneys to it. I mention in particular the investment of £25 million in biotechnology. While this is a welcome development, there is a need for further investment. There must be a scientific basis in terms of the direction agriculture must take in the future. It has to be based on producing food products in which the consumer can have the utmost confidence as the best available and the best they can eat. That is the reason investment is so important. Biotechnology has caused much concern in terms of food production, particularly genetically modified foods. This is an area in which there are tremendous opportunities, but the necessary research has to be conducted. Unfortunately, spurious results have been presented in the media. There has been scaremongering on a gross scale with regard to the dangers associated with genetically modified organisms. As someone with a background in scientific research, I am perfectly aware that, where there is lack of information in a given area, one must tread very carefully. That is particularly the case with regard to genetic modification. I have great difficulty in understanding how a gene from the plant kingdom can be introduced to the animal kingdom and vice versa. The likelihood of this happening in nature is so remote as to be considered infinitesimal. There are, however, working within the animal kingdom or the plant kingdom, great opportunities with regard to human health in terms of the control of major diseases and folic acid in particular. It must be established if biotechnology and proper genetic engineering can be used to bring about a situation where foodstuffs can be produced which will benefit the general health of the population. We must be fully apprised of all the associated dangers before we move further. The only way we will find this out is by investing in research and coming up with answers. While Senator Henry said that she would have great concerns about availing of the results of research in other countries, we must, at the same time, be aware of what is happening in other countries. We must also do our own research because we have to satisfy ourselves and our consumers. To deviate slightly - this is important in terms of rural development, a matter on which the Minister of State, Deputy Davern, is working extremely hard - I wish to refer to decentralisation. In a past experience, I worked with what was then called An Foras Talúntais and is now Teagasc, and I could never understand the reason the headquarters of that organisation was on Sandymount Avenue in Dublin. At the time, that organisation had seven major centres throughout the country carrying out research into different fields, yet its headquarters were based in Dublin. That does not make sense. We need people to interact with one another, particularly in research. We need to interact internationally with people working in the same areas, but our own staff must be together. Leaving aside the benefits of decentralisation for a given area, it is particularly important that we rationalise organisations of this nature because it will bring about enormous benefits, not just for the areas concerned but also for the people in those organisations.

Mr. Quinn: I welcome the Minister of State, Deputy Davern, to the House. I also welcome the debate, which is worthwhile, but I have a concern. I am a member of the joint Oireachtas committee on food and agriculture. The Minister of State will note that I put "food" before "agriculture" and, although it is not alphabetically correct, I want to put food rather than agriculture to the top of the agenda. We had a visit from Franz Fischler, the European Commissioner, who spoke for about 20 minutes. His contribution was interesting but I made the point afterwards that he never once mentioned the consumer, and I thought to myself that that would not happen with the Minister for Agriculture, Food and Rural Development, Deputy Joe Walsh, because he has been one of our best Ministers for food. When I got to know him first some years ago, he was Minister of State with responsibility for food, not Minister for Agriculture, in the Department of Agriculture and Food and he clearly identified with the customer and with the need for the marketplace. I was shocked, therefore, to hear him make a long contribution today without once mentioning the consumer, although he did refer to the markets. There is an increasing air of unreality in debates such as this in that they work on an assumption that is going out of date. The assumption is that the future of the world food industry will be decided by what governments do and in particular by international trade agreements such as those agreed in the WTO in Melbourne or Seattle. If we believe that, we are not living in the modern world and if we persist in doing that, the cost to our food and agriculture sectors will be enormous. About a year and a half ago I spoke at the World Meat Congress in the RDS in Dublin, which was organised by An Bord Bia. It was very well attended and I was happy to speak. I told that gathering, and I have repeated the theme at several international conferences because people in the meat business particularly do not seem to hear the message, that we have already seen a fundamental shift in what drives the world food industry, that is, the effect of it being customer driven. Until recently, that industry worked within a framework of international trade agreements, which dictated everything. That is the way it used to work in the past. All the other factors, including customer demand, happened within that framework and by comparison with that overriding framework. None of the other factors were considered important and, probably, they were not. We have now seen a total change in these arrangements. The framework that dominates the shape of the world food industry is not international agreements; it is consumer demand - what the customer wants. As before, the framework dominates the scene and determines what happens, and everything else is of minor importance compared to it. That is the reason it is assumed in debates like this that the dominant framework is one of international agreements but we appear to be dangerously close to running into difficulty and leaving aside the point we should be making. The food and agriculture sectors should concentrate their attention on satisfying customer demands, not on desperately trying to hold onto markets through means that time has passed by. Let us examine what concerns customers most about the food that they buy and eat. Like it or not, what concerns them most is the issue of food safety. It was referred to by Senator Henry in particular this morning, and by Senators Gibbons and Callanan earlier. That issue will not go away. It will not disappear through wishful thinking. It is the issue that constitutes the biggest threat to the food and agriculture sectors in the years ahead, yet food safety is not at the top of the agenda in these sectors. We had a terrifying warning of what could happen during the BSE crisis, which arose in March 1996, and as a result of that people's confidence was fatally undermined in institutions and in products they had trusted up to that date. It is only in the past few weeks, with the publication of the latest reports into the handling of the BSE crisis in Britain, the Krebs report and the Phillips report, that it has become clear how much that trust was misplaced and how right the people of Europe were to react as they did. Despite the warnings of 1996, are there any signs that the lessons have been learned? The answer to that question is mixed. On the one hand, we have had real action for the first time at European level and, as Senator Callanan said, that culminated yesterday with the announcement by Commissioner David Byrne of the setting up of an EU wide food safety authority. I wish that new body all the luck it needs to succeed. On the other hand, however, we are in the grip of a new crisis, this time in France where, according to reports, sales of meat have fallen off by 20% in the last fortnight. That was the figure available to me when I prepared these notes this morning but today's Financial Times referred to the Rungis market in Paris. It stated that more municipal authorities in France have banned red meat in school meals. It went on to state that yesterday the volume of beef sold in the main Paris market was down 41% on the average of the four Wednesdays in the previous month, and it gave other details such as that. That is a reminder of the way disaster can happen. That scare arose over the use of animal waste in cattle feed. I do not know the French system of government too well but, under that system, President Chirac can be both Head of State and Leader of the Opposition. I am sure we would have an interesting situation if that were the case here. He has called for an outright ban on the use of such wastes in animal feed. Meanwhile the French Minister for Agriculture wrings his hand and says the country could never afford such a ban, as has been proposed. It is not only in France that there are rumblings about BSE. An increasing number of human deaths are being reported in Britain and the number being reported in Ireland actually rising, not falling. We would be entitled to expect them to fall by now if the measures previously put in place were working. If the agriculture sector across Europe had kept its eye on the right ball, it would have realised by now the overriding importance of dealing effectively with BSE. Senator Gibbons spoke earlier about the need for research, and I support him on that wholeheartedly. Scientific research is exactly what we need to overcome the issue of emotion. If we have scientific research there is some chance that it will be believed. Throughout Europe customers are not impressed by the way the problems are being handled. In France we are beginning to see the awesome strength of consumer power. A while ago I took part in an interesting discussion during which the participants were asked to look forward 100 years and to choose an aspect of daily life that we take for granted now but which in 100 years' time will no longer be accepted. The historical example given was slavery, which is now universally abhorred, although it was taken for granted until comparatively recently. It is only 140 years since there was slavery in America and it was the norm up until quite recently in other parts of the world. Many suggestions were put. One was that in 100 years' time smoking would be a thing of the past. I did not have a difficulty believing that.