Mr. Donal Kelleher:

Deputy Éamon Ó Cuív mentioned the decrease in the number of processors. Kerry Group exited liquid milk production, apart from its last remaining outfit, Killarney Dairies, which accounts for only approximately 12% or 14% of its original liquid milk pool. That is very frightening for such a great and strong organisation and it probably shows how sick the liquid milk industry is in this country. I assume that is why it exited because if there was money in it, Kerry Group would stay. That bothers me somewhat. That fewer players are involved in the business could have two effects - those who are left might say they would sell their product better to the multiples because there are fewer of them, but then they could be accused of colluding which no doubt some genius would assert, even if they were not. From our point of view, as primary producers, were we to have more purchasers in the marketplace, it might create more competition. There are several angles. I am not saying it is good or bad, but it worries me that Kerry Group exited the business. I cannot speak for it, but I can only assume that it knows, as the rest of us know, that there is not enough money to be made in this business to stay in it.

New Zealand and town milk suppliers were mentioned.

I read something recently about Australia having similar problems. The multiples have now realised they have created a problem for themselves and consumers in Australia and are trying to find methods of fixing the situation to ensure they have supply all year round.

We talk of bank contagion. The previous speaker mentioned the situation in the UK. In the 1990s things were flying. There was deregulation, following which it had two good years. The supermarkets realised how to manage the situation. They waited in the long grass and waited for quotes to come in. They took their time and realised companies would try to outbid each other, and they would be able to have things their way.

They introduced private labels. A huge volume of milk is sold under private labels. The current price is €1.49 for two litres which, by any standard, is low enough. Multiples have their labels. When they renew contracts every 12 months they can say they are not supplying brand-name milk, rather, private-label milk is being supplied. The consumer does not know from where the milk comes and does not need to know.

Multiples have the option of telling a supplier a quote is too high and they can get milk from outside the State or from somebody else for much less. There is continual downward pressure, despite what they might say. I appreciate that is the free market but, whether we like it, we are at the receiving end. We have a certain relationship with the supermarkets. The IFA liquid milk committee, of which I am a member and was chairman in the past, meets multiples a couple of times a year to outline our situation. The current incumbent outlined the situation we faced publicly and privately to all supermarkets.

The increase in cost was established as a matter of fact by Mr. Joe Patton of Teagasc who runs a farm in Johnstown Castle specifically established to emulate a liquid milk farm. He does not do book work; he has on-farm experience. He has quantified the figures, which showed that we got nothing. We got 1.25c which the processors provided out of their coffers. The wholesale price that retailers pass back to processors did not move and has not for the last number of years. If I were to continue the discussion, I am sure another organisation of the State would haul me over the coals for doing so. I gather I am under privilege.