Mr. Bernard Condon:

There is no doubt that volatility is a key issue. Since 2007 the levels of price fluctuations in dairy products were previously unknown. They are being driven by a number of factors. In Europe the reduction, if not abolition, of many of the market protection mechanisms has left us more open to global trade and its impact. Outside this, a considerable amount of milk is being produced in regions or areas in which we may believe it should not be produced. Known as "marginal production regions", these areas are heavily dependent on irrigation and piped water. Any minor weather issue impacts disproportionately on their production, meaning that minor fluctuations in supply and demand can have a disproportionate effect on pricing. This trend is being exacerbated by hedge funds which have identified this volatility as a route to higher margins and become involved in trading dairy products on future markets. The speed of information transfer has also had an impact.

Volatility has become a major issue. Before 2007 the variation in dairy price was minimal, whereas fluctuations in the price of the products we sell can range in any given year from 30% to 50%. That is the world in which we live and it is difficult for us and farmers to build a business against that background. To try to mitigate this volatility, we have become involved in futures trading and now trade on the CME stock exchange in the United States and the Eurex exchange in Europe. The more product for which we can have a brand, the lower the impact of the general dairy trade volatility. We are acting on this issue.

Strategic relationships with customers that work from a milk price forwards or work off fixed milk prices would help us to manage volatility. It is important to note, however, that volatility is a double-edged sword. If we mitigate volatility in terms of the downside, we also do so in terms of the upside. This must be recognised throughout the dairy industry.

We are very interested in South America, not specifically Argentina and Brazil, the markets of which for dairy goods are in surplus, but Venezuela, Mexico, the Dominican Republic and Costa Rica which are very large markets.

We have an office in Mexico and we are expecting to grow our business into that region quite significantly. We are planning to open an office in, as we call them, the "Stans", by which we mean Iran and the surrounding region, which is a very big butter importing region. With the expected growth in butter production in Ireland, it will become a more important region for us.

To supplement the answers on the China question, I am involved in the dairy trade and ingredients side, which is the non-branded element. For our product portfolio, China is a relatively limited opportunity, primarily because of the free trade agreement between New Zealand and China, which makes us uncompetitive for exporting into that market. If we were looking globally at where we see the opportunities, sub-Saharan Africa would have to be top of the list.

On the question of turnover, the Irish business currently turns over approximately €800 million but that is the Irish business alone, which is the Irish dairy product part of our total business. We would see that growing at a minimum to €1.2 billion by 2018 to 2020, although we would actually expect a little more than that.

We are not directly involved in manufacturing so we cannot comment directly on the assistance that individual manufacturers might require to increase their processing capacity. What we can say is that over the milk flush in any given year, there is no excess capacity on the island so every single litre of incremental milk production from 2015 will have to be manufactured in enhanced or new plants. It is a very real investment requirement if we are to grow the business.