Mr. Seán O'Leary:

The president has covered many points. Senator Ó Domhnaill mentioned in his contribution that dairy farming is a commodity business. Largely that it is true. As an exporting nation we find ourselves more exposed than other countries. However, it is not just a commodity business and Ornua has been working on developing the brand - developing the Kerrygold brand - and moving it up the value chain. That investment which had already taken place did in some ways shield us from the worst effects of the fall in milk prices. The effects of the fall in prices happened faster in Europe and in New Zealand where they had a higher cost base. To a degree, as has been said around this table and in the report, volatility was not a surprise. It will always be part and parcel of milk production. The timing was a surprise, with the quick fall from the high prices down to the current price level.

Teagasc has said that one third of dairy farmers will lose money in production this year. The fall in prices in the middle of an expansion phase is the major part of the problem. Farmers invested from cash flow, maybe through lack of the financial products. This was obviously a mistake, as investment should be longer-term. A number of issues have made this problem worse. The valley of the trough went lower and is lasting longer than we expected. It is not the normal 12 months to 18 months cycle of highs and lows. That is another lesson for which we have to plan. Senator Ó Domhnaill asked what we were going to do about that level of volatility. The president referred to solutions to deal with volatility. What has also helped some farmers in some processor areas is the ability to lock in margin. Glanbia has done this. Other co-operatives have developed fixed price contracts, not tying in the margin.

What we were pushing for at the forum was that the Minister would push the industry toward looking at further long-term volatility coping solutions. We are a small country in the overall scheme, however, we have a number of plus factors and our structure is good in terms of farmer ownership. We have the power and we have to push it in terms of getting co-operatives working closer together and developing products. Initiatives are being taken by Ornua in terms of developing a hedging index, which will allow farmers to consider hedging as well as developing products so that they can hedge forward at an industry level and by extension tie in milk price over a period. That will give farmers some security. That is not for everybody. All of these options come at a cost and we cannot lose sight of that. However, when farmers who are heavily exposed in the level of debt they carry, and the new entrants in particular, can tie down their input costs and the margin in general it will give them a far greater coping mechanism.

This is something we have to measure.

Referring briefly to the issue of intervention, the Commissioner has taken a steadfast position against it. He has said to leave the market do its work and that we will be out of the downside more quickly. We have stated consistently that there should be a review of emergency levels and have called for a review. The Commissioner has said such a process will take too long. There will be another volatility crisis in the next number of years followed by others. It is provided in legislation that the EU must review the intervention levels to reflect the costs of production and the market at a point in time. We need this to happen. This is not just about the response but is something that has to happen and will bear fruit further down the line.

I will not deal with the issue of the retailer and the middleman and who gets the margin, which is more Mr. Cashman's area, except to say the milk sector would be more exposed to the problem. Mr. Downey has dealt with most of the other issues. Mr. Cashman might deal with the issue of liquid milk and where the margin goes, which is an area that has to be examined.