Mr. Ciaran Dolan:

To follow on from what has been said, I wish to focus on possible solutions to the difficulties facing liquid milk producers. Mr. Helen referred to a change in the law. No doubt, the main thrust of the committee's consideration is the relationship between processors and retailers, but I wish to focus on the relationship between producers and processors. In Ireland there has been major consolidation in terms of the number of purchasers of liquid milk. There has also been a change in the corporate structure from a co-operative dominated to a company dominated one. Mr. Helen referred to his colleagues in other EU member states and this issue has been under consideration for a long period, including by the high level group for the milk sector. There was a change in legislation in March 2012. It might be no harm to read an extract from the preamble to the regulations because no farm organisation would be able to write better on the issue of defending farmers' rights. Recital No.14 of regulation 261 of 2012 reads:

In order to ensure the rational development of production and thus a fair standard of living for dairy farmers, their bargaining power vis-a-vis processors should be strengthened which should result in a fairer distribution of value-added along the supply chain. Therefore, in order to attain these CAP objectives, a provision should be adopted pursuant to Articles 42 and 43(2) of the Treaty to allow producer organisations constituted by dairy farmers or their associations to negotiate contract terms, including price, for some or all of its members' production with a dairy.

The document goes on to describe how that producer organisation should be registered and places a limit of 3.5% of the total EU pool, which is considerable, or 33% of the national pool. That is EU law. It is also significant, from the point of view of the work of the committee, that every single one of the heads of the national competition authorities objected to this and said it would be a wrong move. They said it would result in an improper rebalancing. Nonetheless, the European Council and the Parliament approved the legislation.

Our first suggestion is that it would be very useful for the committee to get the view of the Competition Authority on this EU law. I am not criticising the authority, but rather than making an observation on competition law in Ireland, it has shown a strong willingness to use the full force of competition law against farmers who endeavour to strengthen their hand.

France has by law established a monitoring system whereby detailed information about margins are available. From my experience, it is not possible to talk about a properly functioning market if there is no readily available flow of information, including price and margins. We know from published data that the French supermarket and hypermarkets enjoy a 2% net margin but we have not got a clue what the margin is in Ireland. The French do this and Spain is drafting legislation to do this not just for liquid milk, but across the entire spectrum, so the committee might consider the need for legislation on this to strengthen the hands of both farmers and consumers.

The regulation I quoted from also provides for the sector, at farm, processing and retail levels, and at consumer level, to come together in what is known as inter-branch organisation. That would be very useful in Ireland and a possible home for it would be the National Milk Agency, without interfering with its core activity. We have covered this detail in our submission.