Jackie Cahill (Tipperary, Fianna Fail) | Oireachtas source

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I welcome Mr. T. J. Flanagan, the CEO of the Irish Co-operative Organisation Society, ICOS, and Mr. John O'Gorman, its dairy committee chairman.

Before I ask Mr. Flanagan to make his opening statement, I note Senator Lombard and I have been lobbied on this by individuals. We find ourselves in a very unusual scenario where financial institutions were pressing fixed-price contracts on people, especially people who had a significant amount of liabilities with them. The contract has serious shortcomings in that it was purely based on milk price prediction and had no prediction regarding costs. When these contracts were first formulated there was a trigger there that would have input costs included. That was taken out. We can blame whoever we want but some people felt their contracts were too complicated. I suppose they would not mind how complicated they were now if that trigger had been included in them. From where I and others who have been lobbied on this equation standard stand, we now have a scenario where the primary producer seems to be the only one who is going bear this huge escalation of costs no-one saw coming. The milk price is rapidly heading for 50 cent per litre and is going to go significantly the other side of it, which is going to help the dairy farmer to offset the huge increase in costs that is there in the industry currently. However, ICOS has a significant amount of producers and I ask the representatives give us some background on this. We are by no means here to have a bash at the society. We are glad of the representatives coming in to give us information on it that might enable us to lobby various people to see can we get some compromise solution to the situation we are in. How many suppliers are affected? There are a number of co-operatives that have and some others that have not. What is the percentage breakdown? How many people have over a third of their milk in it? How many have over 50% of their milk in it? I suppose if you are under 10% or 15%, while it will be painful, the pain will probably sustainable enough but if you have a high percentage of your milk and are stuck at 32 cent per litre with costs probably going north of 40 cent it is an untenable situation.

We are appreciative of ICOS coming in to give us the background to the situation. As I said, there are a number of people in the chain. There is the primary producer, the processor, the person who is purchasing off the processor and then the retailer. There are four links in the chain and unless some mechanism is found for sharing that financial pain or dividing it then it is going to be very difficult for the man who has a significant amount of his milk on a fixed-price contract to survive. That is where we are coming from. As I said, we have been lobbied and we felt it was better to give it an airing here and discuss it. I hope we can then go the Minister or to the Department and see can they knock heads together to see if we can get some compromise that allows dairy farmers to get through the unenviable situation they find themselves in.