Jackie Cahill (Tipperary, Fianna Fail) | Oireachtas source

I thank Mr. Santini. I will raise one issue with him. He talked about producers having forward contracts. These contracts are being promoted very strongly here by dairy processors. It is actually a very serious situation for dairy farmers now, some of whom have three-year contracts. The price of the product they are selling has gone up by 25% to 30%. They are losing roughly 10 cent per litre on the price of those contracts and they now have the full impact of this very significant increase in the cost of production. They have the worst of both worlds being in fixed-price or three-year contracts because they have the price as it was in 2021, which is fixed for three years going forward. They are now operating on a higher level of cost of production.

I sit on a board of a co-operative. We discussed this matter the other night. There are serious questions about these farmers' viability. Their price is fixed at approximately 30 cent per litre. These contracts were set at 30 or 31 cent per litre. The milk price now is approximately 40 cent per litre. They are, therefore, losing very significantly on the price. As we said, the cost of production has increased very substantially. These farmers find themselves in a very unenviable position where they have a fixed price with costs having escalated beyond anyone's expectation. Mr. Santini can comment on that later.

I will open the floor up to members now for questions. Senator Lombard was the first speaker to indicate.