Jackie Cahill (Tipperary, Fianna Fail) | Oireachtas source

I thank Mr. Callanan. Usually I open up to the floor very quickly but I have a good few things to say on this subject. I am a dairy farmer. We farm on the basis of the derogation. This derogation is extremely important to the economic viability of my business. It is cutting deep.

These negotiations have been going on for a while. I am disappointed. I feel there is a view that a reduction in our derogation level is inevitable. There is a defeatist attitude in the Department. As Mr. Callanan stated, we have taken new measures in the past 12 to 18 months which are putting extra onus on derogation farmers but will bear fruit going forward. The farming independent was published yesterday. It covered the Moorepark Open Day 2023 and included a two-page spread on nitrates derogation. The headline stated any reduction in the nitrates would be absolutely disastrous for all sectors of farming, not just dairying.

It is a few short years since the abolition of quotas. Serious incentives were given to farmers and processors to increase production. To say the sky was the limit would be an understatement. Production increased rapidly. There was huge investment in processing facilities, etc., and at farm level to cater for the increased cow numbers. Dairying is the driving economic force of rural Ireland; without our vibrant dairy industry, rural Ireland would be a seriously poorer place.

If we fail to secure 250 kg/ha of organic nitrogen, it will have a serious impact on our processing industry. This point is probably overlooked in much of the debate. It will add significantly to the cost of processing milk, which will impact every dairy farmer. We could do estimates of what it will add to the cost but, conservatively, with the banding introduced this year and if we have a reduction in the organic limit, it will probably add 2 or 3 cent per litre to the cost of processing, which would seriously impact all farmers’ incomes.

I have been researching the issue and talking to many people. I will give four examples of the impact a reduction to 220 kg with the banding would have on family farmers. The first is a farmer in west Cork. I will not mention his name, although it is in front of me here. He has a family farm. He farms with his wife and children and his brother helps out. He carries a significant debt level per cow at €6,000 and has invested heavily in expanding his farm and the infrastructure on it. If banding and the reduction in the derogation come to pass, his income will be reduced by 51%. He has expanded his cow numbers by 46 since the abolition of quotas. He is farming in band 3.

The second farmer is farming in band 2 on 209 kg/ha of nitrogen. He is farming with his son, who is taking over the family farm this year. He has not made a major expansion since the abolition of quotas. He has expanded his herd by ten cows. His family farm income will be reduced by €33,916, or 27%.

A farmer in County Cavan who is farming with his partner, with expanded cow numbers of 28 cows since the abolition of quotas, which, again, is an average farm family, would see a cut of €43,343 in farm income or a reduction of 18%. The last example I will give is that of a farmer in the county where I live, who is married with two children, with no expansion in cow numbers since the abolition of quotas, farming in band 3, whose milking cow numbers at present are very modest in modern terms at 47 cows. However, the reduction that would hit him if this comes to pass would be a reduction of 32 cows, which is a savage reduction in his farm income of 41% or €54,000.

We are talking about water quality, but the economic impact of what will happen cannot be underestimated. The average age of dairy farmers in this country is 59. To attract young people into an industry, they have to see a career path and career progression. The examples of the four family farms I gave all concern young farmers, with some just taking over the farm and others married with young children. All face very serious economic challenges. Thankfully, a member of the next generation is starting to farm with me. If I tell him next week we will have to reduce cow numbers by 10%, 15% or 20%, I dread to see what his reaction would be. No young person likes to take a step backwards. It will have a huge psychological impact on our industry.

I have a good few questions to ask but I will not hog the meeting completely. I will come in again to ask specific questions on the EPA and how its information is being dissected. The family farm structure that we pride ourselves on, and those family farms that are farming in derogation, are the ones that will get really hit by this. Mr. Callanan said we will probably be the only farmers in Europe who will be farming in derogation, but we are the only farmers who produce our milk from grass. The Danes make a big play of having their cows out for 120 days a year, but they just let them out for a little exercise and allow them to walk back in again. Our cows are at grass, in any reasonable year, for virtually 300 days out of 365. We have a very sustainable pattern of milk production.

I am not saying that to secure this derogation will be easy. I understand that when you are an outlier there will be difficulties, but it is important to our industry. Water quality and the steps that have been taken at farm level will show dividends in future. The core of our argument with the Commission in Brussels has to be that we are taking steps and we are modifying our practices. Those practices are starting to bear fruit. They will impact on water quality as we go forward. I do not think anyone will argue that it takes a very significant amount of time for changes and practices to impact on water quality and to show a significant return on water quality. This is a very important issue for our industry. I am not saying my opinion is uniform, even in this room but, as I said, and I state my status clearly, I am a dairy farmer. We pride ourselves on the production of the food we produce. Yes, we have to mindful of water quality. We have seen the introduction of restrictions on chemical nitrogen. It is hoped that as research on clover and mixed multispecies swards continues to increase at a significant pace, our dependency on chemical nitrogen is something that we will be able to reduce.

As I said, I have a few more specific questions to ask. However, I cannot stress enough the huge economic importance of this process for rural Ireland. It would be devastating. The future of some of our processing co-ops will be threatened if we are not able to hold onto the derogation. That is not an alarmist statement. I am speaking from a fair background of experience and knowledge of the dairy industry. Some of our co-ops will not survive if we have significant and spare capacity. A plant is being built by Tirlán at present, which is diversifying into European cheese. With the threat of Brexit, we saw the urgency of the need to invest in other markets. That is a very significant investment. Tirlán would be one of the areas hardest hit by any changes in derogation. It is hard to see the increased capacity there being met if these changes happen.

As I said, I have been dealing with this level of politics for a very long time. This is probably the biggest threat facing our industry. We had quotas for a long period that brought our industry to stagnation and had its own significant impact. However, if we tell our young farmers that the door is closed on them as regards moving their farms on, and not even the door being closed but farmers having to contract their farming enterprises, it will be a serious death knell for an awful lot of our family farms. It is difficult enough to attract the younger generation into this industry, which is so vital for us. I have not asked any specific questions but I will ask questions later on. I just wanted to outline where I see this issue and its huge implications not just for the dairy industry but for the whole rural economy.

Senator Lombard who, like me, is a dairy farmer, wants to get in.