Mr. Tadhg Buckley:

Yes there are a couple of issues related to land lease costs. We have seen a significant increase in land lease costs over the past couple of years. In Munster, for example, it is estimated that costs increased by 12% in the last year alone. That is being driven by a number of factors and is not just the result of increased demand for ground in the dairy sector. Changes to the single farm payment scheme have also led to an increase in the requirement for land and recent legislative changes also favour a movement towards land leasing over the 11-month lease or conacre option.

Where this goes in the future will very much depend on the sentiment within different sectors. The more profitable a farmer is, the more he or she can pay for land that comes on the market which is available for lease. On average, dairy farmers have been operating more profitably than other farmers, which gives them a competitive advantage in terms of what they can pay to lease land, particularly if that land is adjoining their milk production platform. Such land will give them the capacity to increase their milk production in an efficient way by increasing the amount of grass they graze or grow on their platform. I cannot see land lease costs reducing in the short term. The supply of suitable land is relatively limited while demand is strong and is likely to continue to be so for the foreseeable future.

In terms of demand from the other sectors, the Deputy raises a valid point. It is not just all about dairy farming. We have commercial farmers in every sector. In the area I cover, for example, we have some of the best commercial cereal farmers in the country and they are very important customers of ours. Similarly, in the dry stock sector and the pig sector, we have a significant market share. The same principles apply to pig, dry-stock and dairy farmers - it is about efficiency and ensuring that the farmer has the capacity to repay any borrowings. When we are lending to these guys, we must lend to them on the basis that their cashflow can support their repayments.

The Deputy referred to the single farm payment and changes to that scheme mean that we now have visibility in terms of where it is moving over the next five years. Therefore, if we are lending on a medium-term basis - and much of our lending now is for capital investment - we build in the reduction in the single farm payment over the next five years. We factor that into the cashflow calculations.

On market insurance and fixed prices, I did some research on this in the past. In the Chicago Mercantile Exchange in the US there are fixed price options but only 20% to 25% of US dairy farmers avail of fixed pricing even though it is available to all farmers. That said, it is a very important tool that farmers should have available to them. At the moment Glanbia is offering that option and it is interesting to note that even during the period of high milk prices, there was strong demand for that fixed-price scheme. I know that Connaught Gold also offers a fixed price and I am aware that the dairy industry as a whole is examining this area. It is important that the fixed-price option is available to all farmers. Farmers should look at such schemes as giving them the opportunity to reduce the potential risks in periods of high price volatility. They should even consider entering into fixed price arrangements during periods of high market prices in order to cover themselves for future price drops.