Éamon Ó Cuív (Galway West, Fianna Fail)
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I thank Mr. Cotter for making his presentation to the committee. The issue of concern that started us on this round of engagements was the effect that volatility in the market will have on farmers. If the market price drops, processors figure out their margin and will drop the price to primary suppliers. The problem is, however, that farmers cannot drop the price of fertiliser or inputs. Ultimately, therefore, in this see-saw operation, a farmer at the bottom will bear the weight of depressed prices.

It is great to tell us that, in the long term, prices must rise if the population increases and the weather becomes worse. That is like telling us that oil prices must rise over time, but we all know that.

However, if one was investing a few years ago, who would have predicted that oil would be at $49 per barrel now? If one had invested on the basis of $100 per barrel, one might not be around to enjoy the $200 per barrel that will probably be the price in the long term.

With all of this ongoing volatility, our concern is about how many farmers will get so squeezed that they will not be there to rise again. On average, 18,000 farmers and 54,000 members of households are affected by this issue. It is not enough, therefore, to say that we can sell more of the product. The price at which the product is sold or, more importantly, the price the farmer will get for the product will determine the profitability for the farmer. One of the concerns we must have is that more of the product with increasingly tighter margins for the primary producer and less room for error might produce a great deal more to sell and be very good for Ireland Incorporated's exports, but it might make the farmer far more vulnerable in the long term.

What message can Mr. Cotter give us in respect of how the scenario he is painting will affect the farmer? We accept the importance of processors and so forth in this situation, but our main focus on this arose from a concern for farmers and particularly for young farmers who might have invested a good deal in the dairy industry in recent times on the basis of expanding quotas and good prices for milk, be it by getting into dairying as a new producer or by rapidly expanding what they already had. They might be very easily affected by volatility and might find their profitability impaired to the point of not being able to sustain their farms.

Our understanding from the Irish Dairy Board is that New Zealand, Australia and the US have special arrangements or trade deals with China. Would it be possible for Ireland to get a similar trade deal or would it have to be a Europe-wide trade deal? Our understanding is that those countries have preferential access and, as Mr. Cotter said, China is a very important market. Could he also outline the price at which China is buying? Unlike many of our other industries such as beef, vegetables and so forth, where much of the product is going on the European Union market, this is traded worldwide. Will we therefore be subject to world prices for the vast majority of our sales in the dairy industry? At present, world prices are not sustainable for the Irish dairy industry. I understand it would be equivalent of 20 cent per litre to the farmer. When we get into these third markets what determines the price to the farmer and what price does Mr. Cotter consider sustainable over the next 12 months or two years? There is a break even point and if it drops beneath that, given the large amount of third country exports this country has, would we be very vulnerable in terms of price?