Pre Budget 2009

Deputy Dan Neville

I welcome the opportunity to contribute to this debate. I also wish to raise the issue of farm incomes which are under serious downward pressure in 2009. It is important to flag this issue prior to the budget to ensure the Minister responds to the needs of the agricultural industry which has served this country since the foundation of the State and before and has supported many farm families. Unfortunately there have been many changes in recent decades but the current situation is dire, and I wish to raise our concerns with the Minister.

The Central Statistics Office figures for February 2009 show that national farm income was down by about 12.4% in 2008. The main factors which affected farm income last year were significantly increased input costs coupled with a fall in output prices for key sectors, including dairying, which is of enormous significance to the economy of my constituency in County Limerick. Dairying is very prominent in the area and contributes significantly to the economic wellbeing of the constituency.

Farm incomes are projected to fall significantly further this year with major and sustained downward pressures across the major commodities. For example, producer prices in the dairying sector have dropped below the cost of production and even the most efficient producers will generate little or no income from their production in 2009. The situation needs urgent attention in that the intervention prices of milk at the current level of 20 cent to 21 cent per litre is inadequate to give any return to the dairying community producing it. The effective intervention viable price is around 27 cent to 28 cent. I ask the Minister to examine this with a view to ensuring the survival of the dairying industry.

The previous speaker referred to the problems affecting the co-ops and I reiterate that the absence of working capital has created enormous pressures for the dairy co-ops especially at peak times. The Minister should endeavour to ensure there is a response by the banks to the needs of the dairying industry.

The depreciation of sterling against the euro and the retail price war have also impacted on the return to the dairy farmer. I also wish to raise the issue of the mark-up on farm products by the supermarkets. The various farming organisations, especially the two with which I deal regularly, the Irish Farmers’ Association and the Irish Creamery Milk Suppliers’ Association, over a number of decades have raised the issue of the mark-up price, the price to the farmer of produce leaving the farm gate and the cost to the customer in supermarkets. With the present downturn in the dairying sector being an issue, prices for cattle, vegetables and other commodities are falling, due to a large extent to the depreciation of sterling against the euro. The Government decision in last October’s budget to cut funding for essential farm schemes also adds significantly to the fall in farm incomes this year. While input prices have turned down, this has not matched the downturn in producer prices. It is estimated that due to a combination of falling prices and the October 2008 budget cuts, farm income in 2009 is set to fall at least by another 12.5%. Based on the current outlook, farm income could drop below an average income of €20,000 for a full-time farmer and to below €16,000 for a part-time farmer.

Employment in the agricultural sector has proven more resilient to the downturn than other sectors. During 2008, employment in agriculture fell from 118,000 to 116,000, a drop of only 2,000. This is in marked contrast to the significant fall in employment in other sectors. The numbers in the agricultural sector can be maintained and sustained and increased. With the right support from Government, there is an opportunity here to ensure that the numbers employed in agriculture can be sustained and increased.

The absence of alternative employment in construction will result in a return to farming for a large number of young people. Family farms have simply no more to give as incomes are under serious pressure and any further cuts in farm schemes will be a direct hit on already low farm family incomes. I am flagging the Minister that the cuts in the last budget were highly significant for the small farmers, the small to middle income producers and any further cuts in the forthcoming budget will have very serious consequences for the livelihoods of those in the agricultural community.

Farm families are facing increased income pressures in 2009 and require all existing EU and national supports to be retained in order to remain viable. The majority of these schemes are co-funded by the EU and are vital to farm incomes, and farmers have made their investment plans and bank repayments commitments on the basis of their continuation. To preserve jobs in the sector, to help maintain family farm incomes at a viable level and to keep families out of the social welfare system, the Government must avoid further cuts in essential farm schemes.

A number of cuts in farm schemes were introduced in the previous budget and these will impact directly on farm incomes this year. At public meetings, concerned farmers raised three areas of concern, namely, the suspension of the EU support measures to promote structural reform and encourage new entrants – the early retirement scheme and the installation aid scheme – the cutback of €34 million in the disadvantaged areas scheme which represents a significant loss for the 37,000 farmers affected – these are not middle income farmers but low income farmers – and the cutbacks in the new payment rate for the new suckler cow welfare scheme. The decision to suspend entry to the early retirement scheme and installation aid scheme must be reversed as the long-term cost to the economy will be greater than any short-term savings achieved. A number of farm families had bona fide plans in place to avail of these schemes.

In this April budget I urge the Government to make provision to fully discharge its responsibilities to these farm families. This is an issue which raises its head again and again when we meet the people involved. These farm families had plans in place and had expenditure completed in order to avail of the schemes referred to and when the schemes were cut it left them at a great disadvantage. I urge the Minister for Finance to make provision in the budget to fully discharge what I believe is the Government’s responsibility to these farm families. The cutbacks in the payment rate for the disadvantaged areas scheme will disproportionately affect lower income farmers and must be reversed. The €80 rate per cow for the suckler cow welfare scheme must be maintained and the €250 million allocated to the scheme must be honoured.

The Minister for Health and Children has decided to cut the allocation to the National Suicide Prevention Office by 12.5%. This is a retrograde step at a time of recession. International research from 1897 has shown that there is an increase in suicide and psychiatric and other emotional conditions. We would urge the Minister to respond to that need and increase the funding. We again refer to the precedent exercised by the Minister for Social and Family Affairs, Deputy Mary Hanafin, who has given in the region of €11 million extra to families to deal with the interpersonal crises in relation to people affected by the recession, particularly those who have been rendered unemployed. The unemployed are six times more likely to take their own lives than those in employment, and the young and middle-aged have a higher propensity to commit suicide in those circumstances than other groups. I appreciate the time I was allowed by the Ceann Comhairle to raise these two issues.