Éamon Ó Cuív (Galway West, Fianna Fail) | Oireachtas source

I welcome the witnesses here today. This subject goes way beyond farmers. If there is no fresh milk on the supermarket shelves some winter, many people would ask why we did not see this coming. It is interesting the National Milk Agency was set up in response to a problem.

It was not mentioned but I would like the witnesses to comment on the fact that part of the leverage the supermarket multiples have is the importation of milk that is produced at a lower cost from Northern Ireland. The amount of milk coming in has increased to 26% of the milk now being sold in the liquid milk market.

Why can they produce it at a lower price in the North? I also understand their peak to trough ratio is much lower than ours. Milk production is spread out more evenly over the year. Why is that? If there was a single island economy, with the same cost base North and South, it would not be as easy for multiples to exert pressure.

It was said there is a loss of 9 cent per litre. To me that means in simple terms a producer loses more the more he produces. There is no incentive to produce more; there is an incentive to get out of the business completely. How is that calculated? Does it include the single farm payment and the other grant payments? Is it just the actual production and sale of a litre of milk? Presumably that would include capital write off, where a producer must keep reinvesting in the business. Perhaps that could be explained without going into complex accountancy exercises.

I looked at the National Milk Agency report. It was interesting that between 1995 and 2011, the percentage that goes to the producer has fallen from 43% to 32%, with the figure dipping under 30% in 2009 and 2010. It has fallen from 40% plus at a steady level down to 30% give or take. That is a huge fall. Has that been caused by the importation of milk creating this leverage? How was that allowed? The National Milk Agency looks at the contract and the relationship between the processor and the farmer. Since the 1990s, the power has shifted from the processor to the multiple and those are more powerful now, along with the leverage they enjoy from the imports. Is that where the power has shifted? Is that the reason for the overweening power of the multiple to push down the price?

Does it make a difference that the number of processors has decreased radically? Is it a challenge or is that irrelevant? Is it a major problem that the multiples are now the biggest purchasers and power is concentrated in their hands? We have had the multiples in here and they gave their side of the story, although Dunnes Stores did not come in so we do not know its side of the story.

This committee wants answers; we want to resolve the issue. We can hear the problems but we want legislative proposals to solve them. We will be looking at the issue in depth to see if it is possible within the new EU legislation for us to act. We face the challenge from the Competition Authority that the price for the consumer must be reduced at all costs and it does not matter what the collateral damage is over time, even if that means leaving the consumer without winter milk.