Pat Deering (Carlow-Kilkenny, Fine Gael) | Oireachtas source

I welcome the ICMSA delegation. This is all about cashflow as far as I can see and we are in a perfect storm with price reductions.

The superlevy for this year and the next three years for those who are in that situation has caused and will continue to cause that particular difficulty. There are 18,000 milk producers in the country. Will the witnesses give the committee a breakdown of those who are new producers and existing producers and those of the 18,000 who may have borrowed substantially in the past year or two to increase production? There are many strands to the problem, apart from the very low price base line of 24 cent per litre which is below the cost of production. Farmers have borrowed substantially on the basis of a potential income in the high 20s per litre but it is now only 24 cent per litre. The banking and borrowing issue is probably as major an issue as the cashflow problem. If those figures are available, I would be interested to hear how many members of the ICMSA are in those particular categories?

I note on the front page of the Farming Independenttoday an article about the increase in milk production. Dr. Pat Dillon, head of Teagasc at Moorepark research centre, expects us to far exceed our 50% increase in production well in advance of 2020, which was the initial target. This year alone we are 1.1 billion litres ahead of 2009 which was a bad year for milk production from a price point of view. Despite the fact the price is low, there appears to be continual expansion. Given that farmers were planning, prior to the abolition of quotas, for a certain amount of young stock to come into the herd, one cannot decide suddenly to turn them away. Within the industry there seems to be a reasonably progressive attitude that the position will improve and that if they continue to produce this extra amount of milk, it will compensate for the drop in price. Would the witnesses agree with that assessment?Obviously the extra milk being produced this year will compensate to a certain extent for the drop in price.

I mentioned the banks. Have the witnesses had dealings with the banks about some of their members who may be in difficulty?

The issue of the multinationals was mentioned by Deputy Martin Ferris and Deputy Éamon Ó Cuív. We did much work in the committee on legislation in this regard. I agree with their point of view. Would it make a difference if legislation were in place, at European or national level, to deal with this issue? There is no doubt supermarkets in Ireland use milk as a loss leader and have done so for many years. Certainly four supermarkets in the one town will not charge the same price for a litre of milk. The majority of our milk products are exported. While I agree there is a need for legislation, would it make a substantial difference in this issue? We depend on exports and are always seeking out new markets, but the markets we had hoped to get into, whether in China or Russia, are under pressure. I would welcome the opinion of the witnesses on this issue.

Ireland is a small fly in the ointment from a milk production point of view and is dependent on outside sources to survive. While the witnesses have outlined some of the national issues that could be dealt with, including the commitment to €13.7 million, I agree with Deputy Martin Ferris who made the point that €800 or €900, though a small sum, is welcome to a dairy farmer who may have serious difficulties.

I was, and I remain, one of those people very much in favour of the abolition of milk quotas on the basis that they held back production over many years. Mr. Comer noted in his presentation that one would not need to be Pythagoras to understand there would be an issue. Certainly, this time last year, the vast majority of people knew this issue would arise to some extent. Perhaps we did not expect it to be as bad as it is, although some might have predicted it accurately. We are now in the middle of the storm and trying to get out of it. The wind is blowing in all directions and in some cases it is a tornado. The question is how to achieve a balance, but the problem is that what has happened will happen again, even if we get out of it next spring or next summer. In five or six years' time, the same thing will happen again, as sure as we are all sitting here today. We do not know how many of us will still be here in five or six years' time, but the same discussion could well be taking place no matter who is sitting around the table.

Learning from what has happened must, therefore, be the main concern. We must put structures in place for the future to enable us to deal with the volatility in the market and the cashflow issues facing farmers. The superlevy has contributed to a huge cashflow problem in this country. In fact, the people most seriously affected by that levy are possibly the very people who would have liked to produce more but have been held back to some extent for financial reasons.