Pat O'Neill (Fine Gael) | Oireachtas source

I thank the IFA dairy representatives. It is important that we ensure that the industry continues to grow at a sustainable level and that farmers can make money. We received a briefing document before the meeting, the first line of which is a post by Oliver Moran on Ireland, which is on the Agricultural and Rural Convention website. He states: "Having had a massive economic crash in 2008, one driven in part by an unsustainable property bubble, Ireland seems to be rushing headlong into another potential troubling bubble called milk." While the prices over the past few years were not unsustainable and it was great that everybody benefitted, five or six years ago, milk was 18 cent a litre. We are relying on a world market. The price of a barrel of oil is currently less than $50 a barrel whereas it cost almost $200 a barrel less than 18 months ago.

We need to examine how we provide support to ensure people remain in the industry. When we joined the EEC, people over-extended in the late 1970s with their investments and banks took possession of their farms eventually. We cannot allow that to happen again. As Oireachtas Members, we can make statements and lobby the Minister but when the IFA, as the main farming organisation, meets the banks, it must ensure they are honest and truthful in the way they deal with farmers. They extended the hand of friendship, brought them in and gave them the money they wanted. As Deputy Deering said, when bank officials appeared before the committee to discuss the expansion of the dairy industry, they could see problems coming down the line. The briefing document refers to the European Milk Board and reports from France, Spain, Italy, Portugal, Ireland, Germany and even New Zealand highlighting problems. I hope these are short-term problems but the Russian situation is causing a major issue for the dairy industry while China's lack of economic growth is causing another issue. We have opened all the markets we can and farmers cannot deliver more efficiencies. We have the most efficient dairy farmers in the world at this stage and that has been borne out by Teagasc figures. Farmers have delivered the efficiencies and it is now up to us, as legislators, and the co-operatives, which are controlled by shareholders, to make sure the primary producer is not squeezed. In every agricultural sector, the retailer is taking the profit and we have to change that.

Senator Comiskey mentioned the supports the EU Commission has provided for the dairy industry and he said he would like an increase in the intervention price.

The price is now 22 cent per litre. If we increase it to 35 or 36 cent, it will make the co-ops lazy. They would see they had a level at which they could sell into the market at 25 or 26 cent and, accordingly, would not try to market it. We must ensure all markets are exploited. It is all about efficiencies. Regarding the banks, we cannot see people who are overextended being closed down. I hope this is only a minor blip and the view is that the price will return. It might not return to the level of 43 or 44 cent a litre, but if it gets to 30 or 31 cent, it will be all about efficiencies. As farmers have geared up for higher production, they are producing more, perhaps at a better price. We have the most efficient dairy farmers in the world such that they cannot cut their costs anymore. We must, therefore, ensure the cost of imports such as fertilisers and oil is not allowed to rise in the world market.

The Government has supported agriculture for several years, particularly in the past two budgets through the farm partnership scheme and tax breaks. I agree that farmers should be allowed in their tax income to put funds away in good years for investment in poor years. The Department of Finance has to examine that issue.