Professor Gerry Boyle:

It is challenging.

I will pick up on a few other points. I will let Dr. O'Dwyer talk about the dairy side.

I am glad to have the opportunity to address the issue of sheep research, because there has been a lot of misinformation. The basic point is that the location of the beef farm will have no impact, good, bad or indifferent, on the sheep programme in Athenry. That land was not Teagasc land. As members know, it was compulsorily acquired by IDA Ireland, which then rented it back to us. We are renting it at the moment. We did not have productive use for that land. We took the opportunity to locate a commercially run beef farm with the best available research on one site alongside what we think is now a highly successful sheep demonstration farm. The main point is that there is no encroachment on the capacity of the sheep programme and there never was.

I take the Deputy's point on hill sheep. We have looked at different ways of delivering our research services. We have a number of hill sheep farms involved in what we are calling our Better Sheep programme. These are actual commercial farms on which we are doing highly applied research.

We believe that this is an adequate way of dealing with and responding to the needs of hill sheep farmers via the better farm programme.

I completely agree with the Deputy's assertion in respect of branding. We are involved with the Mayo lamb and Kerry lamb groups to which he referred. I visited the Kerry lamb project, which has proven really successful and which illustrates the beneficial role Teagasc can play. The organisation acts as a sort of honest broker in the context of bringing people together and organising them into groups. There is scope for more of these groups to be established, but it must be noted that a great deal of management and co-operation are required in respect of them.

I could not agree more with the Deputy in the context of what he said in respect of accounts. I was trying to make a specific point earlier in the context of our experience with the seminars we hosted just over a month ago. We produced a one-page cashflow plan for those seminars and it encouraged farmers to engage in a way that surprised me. We found ourselves reminding the farmers who attended that they have to pay their tax bills and that this should be included in their accounts, as should information relating to any of their children who are attending university or college. This might seem quite elementary at one level, but it was the first occasion on which people had the opportunity to put it down on paper. What happened at those seminars was an eye-opener for me and we learned a lesson from the experience.

I take Deputy Pringle's point about colleges and SUSI. We bend over backwards to try to accommodate our students. In view of the massive amount of information with which parents and students must deal, I accept that they can sometimes be misdirected.

Grass-rich production is obviously a cornerstone of Teagasc's research and advisory programme. In answer to the specific question that was posed, I must state that there is massive potential in this area. Unfortunately, however, the challenge lies - I have been hearing this for 40 years - in realising that potential. We reckon that 15 tonnes of dry matter per hectare can comfortably be produced on most Irish grassland. On dairy farms the average rate of production is 7 tonnes, but there are some exceptional performers. The challenge in respect of this matter is massive and it also gives rise to a puzzle. When I speak to farmers who began with very poor knowledge about how to manage their grasslands, I am surprised by the length of time it takes to develop expertise. It could take up to two years of intensive effort and participation in discussion groups in order for them to learn a completely different management approach to the use of, for example, concentrate feed.

I agree with what Deputy Pringle said in respect of Northern Ireland. The evidence is there but it is sometimes difficult to obtain information from the North of Ireland. However, we have assembled it and made comparisons. The competitiveness of the Northern Ireland dairy system is certainly in question on foot of the fact that those involved in it have drifted away from grass. As a result, there definitely is more capacity.

I agree wholeheartedly with Deputy Deering's assessment. It is my personal view - I think this is backed up by research - that the driver of rural development must, first and foremost, be agricultural development. There is no question in my mind in that regard. Unfortunately, we can sometimes get locked into a discussion about rural development which tends to focus on schemes, and that then defines our approach. Schemes are very important supplements and complements, but if there is not a vibrant agricultural sector supported by upstream and downstream sectors, then it is difficult to identify from where the injection of economic activity is going to come. That is one message which emanated from the report of the Commission for the Economic Development of Rural Areas, CEDRA. We know from our research that it is vital to have the necessary infrastructure in place. The road network has been improved substantially and this has made a major difference in the context of transport costs, access to urban areas, etc. Obviously, broadband is a big issue - and increasingly so - in many parts of the country.

On the beef industry, our position on bull beef is consistent. We have carried out research and the results we obtained are very clear. The slaughter of very young bulls, which was an issue in the middle of the crisis, just does not pay off financially.

That was our finding and we presented it to the committee some time ago.

As far as I am concerned, all of our analysis stands up to scrutiny. There are some exceptional beef farmers who can produce bulls which can be slaughtered at a very young age, namely, 15 or 16 months. The producers in question really are exceptional and they prove the rule, which is that the extra period on grass is required in order to make production economic. As the Deputy noted, however, everything has changed in light of the situation with regard to price and we have moved on. We have consistently informed farmers that they need to discuss the types of animals they are producing with their local factories and, ideally, they need to obtain contracts. There is an issue in respect of consumer acceptance and we are doing a great deal of work in respect of this. Again, our evidence indicates that there is no great differentiation on the part of consumers in respect of very young bulls and those which are 22 months or older. Perception is everything in the marketplace. We have been informed that the real issue relates not to taste but rather to the size of the cut. As far as the economics are concerned the message is very clear: with grass systems - which are the most sustainable from an environmental and economic point of view - it is very difficult for most farmers, even those who are really good at what they do, to produce bulls efficiently at anything less than 22 months or so.

I already dealt with the issue of form-filling and I reiterate my view to the effect that the position in this regard is going to change. In the context of the New Zealand experience, the one thing a person learns in the context of agriculture is that averages are very deceiving. I have only just returned from New Zealand and I can state that there is a great deal happening within the average in question. For example, there are some exceptional performers and there are some very poor ones. There is no doubt that the poor performers have got into serious debt. The south island of New Zealand is very similar to Ireland. The winters there are somewhat harsher and many farmers are obliged to house animals during the relevant months. My observation of the position in New Zealand is that people are depending a great deal on the continued appreciation of land in order to justify their investments. From recent experience in other areas, we are all aware of the difficulties to which this kind of approach can give rise. If I was in their shoes, I would really be worried about the over-dependence on land values. As is the position here, one must unpick the average. Debt is certainly a major issue.