Mr. Denis Murphy:

On the question about the future of the all year round milk supply model, the position is that it is vulnerable and at a tipping point, but one of the speakers referred to the fact that there is an 18 month buffer in this process. The liquid milk producers put their cows in calf in December 2012. That milk will be available for the winter of 2013. The big challenges facing into the winter of 2013 is whether they will put their cows in calf to provide milk in 2014. That is the year they are heading into the abolition of EU milk quotas.

That is the real threat overhanging it because a number of liquid milk people will consider the option of switching to manufacturing milk, and that is a serious issue at present. As for the legal position regarding the adequacy of compensation and the agency, the contract the agency considers is one that has been negotiated, discussed and agreed between producers and processors. The agency, as such, does not determine the price of milk. It looks at the whole position as to whether the contractual arrangements made are assuring a supply of milk for consumers in the winter period. This situation has materialised in recent years, in that there has been no shortage of winter milk. I believe another member raised this question, but the cover for winter milk supplies has been approximately 20% in the winter period. However, that is based on historical circumstances. The winter of 2013 may change radically the thinking of many liquid milk producers on foot of what they have suffered.