Brian Ó Domhnaill (Fianna Fail) | Oireachtas source

I welcome the representatives here today to speak to a key issue facing the dairy sector and the 18,000 farmers, as the witnesses noted. There are two big issues. The first is what multinationals are paying for milk, and on the other side we have the international commodity markets. It is very difficult to deal with both. We can take Tesco Ireland as an example. Its financial statements for last year indicate that it is working on a net margin of approximately 1.5% overall of what is turned over in the supermarket. It makes money in that regard, but it and many other multinational supermarkets make their money when paying for the goods. They pay after 90 days but the goods would be bought today and paid for by customer within seven or eight days. They make 3% or 4% in the intervening 80 days, holding the money in accounts. They are using agriculture and every other sector in doing that. They can really squeeze small suppliers, and I know some examples. Tesco Ireland is squeezing suppliers as tightly as possible because it makes money on those suppliers. It is wrong, but how do we deal with that?

There is something that can be done from a legislative perspective in both Houses.

The groceries order is one issue, but other measures can be introduced to deal with this.

We have seen huge volatility in prices on the international commodities market since January 2007. Oddly enough, until then the milk commodity price was fairly stable. It is probably reflective of the international global economic situation and of supply and demand issues. The commodity markets work on fear and opportunity and supply and demand driving fear and opportunity. The battle will be very difficult and I agree with Deputy Penrose. Many people have invested in the milk sector on the basis of quotas being removed, but unfortunately this leads to an oversupply in the market and we have seen it in the price volatility we have now. How this can be addressed is a key issue, as is how to address and reduce the €80 million in borrowing costs. There is an efficiency bedrock and all farmers, including dairy farmers, strive to get these efficiencies. One can only get so much through efficiencies. I am not sure what the rate of borrowing is, whether it is 5% or 10%, but if it is approximately 10%, then €80 million in agricultural borrowings means a cost of close to €1 billion. Are these borrowings only within the dairy sector?