Willie Penrose (Longford-Westmeath, Labour) | Oireachtas source

I thank Mr. Forde for his informative and comprehensive presentation. He outlined the stark reality facing dairy farmers in the next year or so. Some months ago I read, with deep apprehension, about what lies ahead for people who have recently entered the dairy industry. A lot of people are availing of the abolition of the quotas and everything else and existing farmers are planning ahead, all of which will increase the level of production.

As Deputy Deering has rightly stated, 60% of farmers have manageable debts but 40% of farmers will have challenging debts. One of the big issues is the cost of funds in Ireland when compared with the ECB rate and the differential margin charged by the associated banks and other lenders. The Government must look to funds being made available to the farming industry by a strategic investment bank or somebody else, but particularly to the dairy industry in the years ahead.

Deputies Ó Cuív and Deering are correct that the years ahead will be very challenging and competitive. We are in the midst of a perfect storm. We have had a very significant increase in supply at our own level but we must get rid of 90%. There is also a declining world market as evidenced by the reference made to the Fonterra 20 cent market. We are heading towards an equilibrium price which is what the board is trying to achieve but I am worried that some farmers have not paid attention. I have read that some of them will plough ahead but I think they should hasten slowly. That is my advice to farmers and I used to deal with a lot of them.

There must be a reduction in the superlevy but there is a pathological resistance to doing so at EU level. We debated this matter here intensely about 12 months ago but nothing has moved. Unless there is a move this matter will form part of the perfect storm. Everything else has fallen and now the superlevy will be removed as well. It is the worst confluence of circumstances to face the industry.

Deputy Ó Cuív made a point about grass-based production. I agree with what Deputy Deering said about quality. I agree with him that quality is critical, that people pay more for quality and that we should promote our quality product. The American beef market has been opened but the Americans want full grass-based production that is done without using concentrates and everything else. Therefore, in terms of a designation and demarcation zone, the board will have to ensure that Ireland is presented as being green and organic which will give us a competitive edge. The Irish Dairy Board will have to focus on how we can achieve that competitive edge for the foreseeable future.

These issues need to be addressed and I thank the board for drawing them to our attention.