Simon Coveney (Cork South Central, Fine Gael) | Oireachtas source

That is a fair point. I have met all the banks in Ireland on multiple occasions to discuss this issue. Many farmers in New Zealand are effectively working for the bank rather than themselves. We cannot allow that to happen to a new generation of Irish farmers with the excitement around quota expansion. Ironically, in some ways the weakening of dairy prices forces dairy farmers to ensure that their business plan is robust. In terms of investment proposition and increasing output, anybody can build a business on 40 cent a litre, but can this be done on 30 or 28 cent a litre? I have said to all the banks, and they say they are listening, that they should insist on business plans on the basis of 30 cent a litre and no more. Some are looking for plans based on 28 cent a litre. If milk has a higher price than that, which I hope it will have, then all the better, but that should be the basis for the business plan.

There is also a big job for us to do in training new dairy farmers, and that is why we are investing significant money in knowledge transfer, discussion groups and education programmes. Our plans for expansion will, in my view, be realised.

Along with the Taoiseach and a few others, I had the privilege of opening some new facilities for Dairygold during the week. The total value of the investment in the two projects in Mallow and Mitchelstown was about €120 million. As a farmer-owned co-operative, Dairygold has direct access to information from the farmers, and based on this it is planning for a 57% expansion in volume in the next five years. This is because Dairygold comes from a part of the country that can do that. Glanbia will have similar figures, somewhere around 60%. Dairygold and Glanbia will probably have the highest figures, but the others are not a million miles behind. Even in Deputy Ó Cuív's part of the country they have very ambitious plans for growth and expansion. The key is for them to operate on the back of good business plans as opposed to having inefficient systems spending money that they do not have, and to put pricing models in place in the dairy sector that can insulate farmers from the price volatility that will undoubtedly happen.

Prices will weaken for the next six to eight months, but I think they will strengthen again after that period. We will get weather patterns that will result in crop failures, and grain and milk prices will increase again. That is the kind of pattern that we have to get used to. We are very well placed to insulate ourselves where possible from that price volatility because of the steadiness of grass production systems in terms of input costs and because we are developing a premium brand around Irish dairy. This is no longer about commodity trading of skimmed, semi-skimmed and whole milk powders, although we have some of that. It is now about premium cheeses and butters - we produce the premium butter in the world in Kerrygold - as well as infant formula and nutrition, sports nutrition and so on. All of that premiumisation of the dairy industry helps to insulate us from the price volatility that exists when one is trading commodities.