Mr. Gabriel Gilmartin:

I am grateful for the opportunity to contribute to this important debate on TLT. Our first concern is the immediate difficulties faced by farmers and marts owed money. For a farmer, the exposure is traumatic. This is also a time for mart managers and committees. The early indications are that the bulk of the debt is owed to marts. While there is considerable speculation about the scale of the money owed to individual marts, much of it has been based on wild guesses. Assuming they have been diligent in managing credit level and in pursuing moneys owed to them, we expect that the marts have been run profitably for several years and will have the financial resources to ensure business as usual. We must be careful to avoid exaggerating the extent to which marts are exposed or, worse, speculating on the position of individual marts. Confidence in the marts is vital to the livestock trade just as confidence in the financial system is vital to the economy.

The marts affected by the TLT issue continue to trade. While concerns understandably arose when the story broke, farmers continue to bring stock to marts. In the past few weeks it has been business as usual. The fact that the marts are paying their clients promptly is reassuring. Some of the marts involved have confirmed that they have put reserves in place. That is an important step in rebuilding confidence. Demands that the marts should publicly declare what they are owed are premature. Mart committees need to tread carefully in any public statements they make. A blanket statement to the effect that a mart is owed thousands of euro is meaningless unless it is set in the context of the mart's overall financial position. A mart's financial position is best understood when the auditors lay the full accounts in front of an AGM. A loss of €50,000 could have entirely different effects in two marts, depending on their underlying viability. In due course, each mart will be accountable to its shareholders at its AGM but, in the sort term, the interest of shareholders are best served by ensuring that mart managers and their committees take steps to maintain confidence in the mart by paying promptly for livestock.

The immediate worry is how farmers and marts will get what they are owed. The receiver who has been appointed by the bank will follow the regulations, which provide that the receiver and the banks are paid before everybody else. There will be lingering doubts about whether HSBC made its biggest mistake in advancing credit in the first place or in being too hasty in appointing a receiver. An argument can be made that the best way to ensure the maximum return to all creditors would have involved an examinership or a more gradual wind-down of the credit facilities rather than a receivership, which has wiped out TLT without hope of recouping all of the moneys owed.

In the broader context the question that exercises most thought concerns the impact on live exports and the cattle trade in general. I am concerned that the impact of the TLT closure has been understated, particularly in political circles. There is reason to be hopeful that demand for livestock in Europe and North Africa will remain constant and that the slack will be taken up by other Irish exporters. However, it would be naive to think this will happen easily. The directors of TLT built up a base of customers over many years and there is no obvious reason to expect these relationships to be readily taken over by another Irish exporter. Its influence on the Italian market was particularly important for suckler farmers, who have bred top of the range weanlings. Moreover, the credit terms required by continental buyers are not going to soften just because of the TLT experience.

The credit facility of €3 million which HSBC made available to TLT is now off the table and marts have an exposure of up to €3 million. That means we will have to find €6 million elsewhere. Regardless of the marts' exposure, they are likely to be much more cautious in the foreseeable future, with the consequence that we will either have to develop an export trade based on payment up front or find a better way of financing the sector. Neither option looks simple. I have heard it said that TLT deserved to go under because it paid €50 too much on average.

However, if the trade to Italy is undermined, by how much will top grade weanlings fall in 2014? The progressive suckler farmer breeding top grade weanlings has no scope to take lower prices.

Farmers will be concerned also that any reduction in live exports will be a silver lining for the meat factories. Recent years have demonstrated that beef price and levels of live exports are linked. The higher level of dairy calf exports in 2013 has been welcome after the collapse of 2012. There has also been a positive reaction from farmers to new live cattle export markets out of Europe to places such as Libya and Tunisia, some of which involved TLT. All of this ensured that cattle were scarcer for the meat industry here, and scarcity equals firmer prices. It must also be remembered that TLT was involved in live sheep exports and, again, the concern is that less live exports means lower factory prices for sheep farmers.

It will be this time next year before an accurate assessment can be made. Fortunately, Irish beef finishers have been strong customers for weanlings in recent weeks. However, the key for any mart and for the wider sector is to ensure that there is a strong trade over the full 12 months. The whole episode is a huge wake-up call to us all. ICSA believes very firmly that unless there is competition on some sort of an equal footing between live exports and the meat factories, the future for sucklers in particular is very bleak.

It seems absurd that a deficiency of perhaps €6 million could completely undermine the potential for expansion as set out in Food Harvest 2020, but that is the reality. It is not long ago that a key player in the Irish meat processing sector got into difficulty with exports. The Government at the time seemed to believe that regardless of the cost, the export of beef had to be supported. The question we now face is whether the Government of today understands and is committed to the importance of live exports. I am not suggesting that TLT should be bailed out. However we must examine what needs to be done to support the rest of the live export sector, the marts and the farmers who produce export grade weanlings. We also need to be concerned that a significant reduction in live exports could impact on the shipping service provided by Celtic Link.

In the final analysis, the overall debacle again raises the question of the availability of credit to the livestock business. Just as cattle and sheep farmers have found credit being squeezed by banks, TLT discovered that the banking sector seems to be intent on continuing to reduce its exposure to the sector. It is also time to consider whether a different model can be developed to support live exports, one which does not depend on a small number of essentially small limited companies taking risks to drive the business.

Is there a role for export credit insurance? How would this be funded, especially given State aid rules? Is there a role for a co-operative structure? Can we deal with the financing required and what are the credit options that do not leave marts or farmers exposed?

It is easy to pontificate about the risks that marts take in extending credit. But in the real world, credit is an integral part of most commerce across Europe, and the EU Commission has been to the fore in pushing for credit terms of 30 days. Marts have played a crucial role in supporting a policy in favour of live exports that has been enthusiastically backed by farm organisations, politicians and farmers. In most cases, marts did not provide extended credit facilities to any individual company, but are caught by the fact that one good sale involving as little as seven days' credit can involve tens of thousands of euro. The Minister for Agriculture, Food and the Marine needs to realise that the future of live exports is now an urgent issue and at minimum needs to be treated in the same way as the closure of a large scale employer. A task force to examine the way forward for live exports might be a first step. I thank the Chairman. Mr. Eddie Punch and I are open to questions.