Pat Deering (Carlow-Kilkenny, Fine Gael)
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I welcome the delegation from the IFA. We spoke about the sheep farmer being the poor relation with the previous delegation but as a dairy farmer, I know what it is like to be the poor relation at the moment. This time last year, in advance of the abolition of the quotas, I was one of the first to suggest we produce a report at the beginning of the year, following consultation with all of the stakeholders. That was very important.

I disagree with Senator Ó Domhnaill when he said that most dairy farmers did not expect a huge drop in prices. I felt there was an expectation, but perhaps I was living in dreamland, that even though the long-term outlook was quite positive, the short-term outlook would be difficult. As has been said here again, what was said at the time was that there were opportunities and challenges going forward. The biggest challenges existed last year. In my opinion, the superlevy situation was the biggest challenge. This year we were faced with the biggest superlevy bill to come our way in quite a number of years. That bill was the biggest challenge we faced in the short-term because the people who had invested heavily would be the same people who would have to pay back the superlevy.

There are still massive opportunities. During the summer or late spring, I attended the opening of a new Glanbia facility in Belview in south Kilkenny, as I am sure some of the delegates did. Some people might say it is in Waterford but it is in south Kilkenny. A point was made that day which I will not forget for a long time. I think it was Mr. John Moloney who made the point that there are 75 milk producers in Ballyragget, County Kilkenny, who will over the next period put an extra €10 million into the local economy of Ballyragget due to the extra milk they will produce. That is a huge financial contribution to make to a local area. That is the positive side of the development but there are challenges as well. It is important to note that there are plenty of small areas with 75 milk producers that can develop in the same way over the next period.

As I said at the start of my contribution, we produced a report last March.

We brought in all the main stakeholders, the IFA, their colleagues in the Irish Creamery Milk Suppliers Association, ICMSA, the banks, processors and so on. The dairy forum was up and running last week, which is very important. It was probably born as a result of our deliberations at the time. It is important to review where we are now in light of our report. Before this meeting, I suggested that over the next few weeks, we should bring in all the stakeholders again, particularly the banks. They have a huge part to play. Several new producers are coming into the system now, such as young farmers, who may have borrowed heavily and will require assistance. Someone suggested payment holidays or extending payment plans. This time last year, I attended a Bank of Ireland briefing in advance of the abolition of quotas. The bank was very proactive in telling us what it had on offer and that it would be able to handle volatility in the future. I am not certain that is happening. The dairy farmers I talk to are not entirely happy that what was promised last year has been delivered. We need to investigate that. There is only so much we can do in Ireland on this issue. We are now playing with the big boys in the world market and we will have to get used to that. We will have to get our house in order before we can play away.

Twenty years ago we were getting 20 cent per of milk but now we are getting 26 or 27 cent. The cost of production has increased by 50% in those 20 years. That is why we must look at where the costs are and what we can do to reduce those costs. Energy costs have increased a great deal, although they have reduced a little in recent times. We must analyse where those costs come from and whether we can produce milk more efficiently. Milk farmers are very efficient and produce a very efficient product but we must analyse that 50% again and how it can be pared back.

That is why I think it is important to have the processors in as well, when we have the opportunity. Are they in a position to give a better price for milk? They will probably say "No", but we must see what exactly they can do. Our report mentioned the New Zealand lesson and people mentioned this from time to time and the Northern Ireland lesson. We must learn lessons from them. New Zealand was in a similar position to us 20 or 25 years ago, producing probably the same amount of milk as we did pre-quota and the prices went through the roof. There have been serious consequences there, such as animal welfare and mental health issues. Farmers there did not go down the efficiency road and analyse where the costs arose. We must learn from that. There was a similar situation in Northern Ireland. There are obviously issues that can be dealt with at European level, which would be very helpful. The package of measures that was announced was helpful to a certain extent, as was bringing forward the 75% of the single farm payment. The downside of that, however, is that there is only 25% left at the end of the year, making coming into springtime challenging. There are pros and cons. There are huge challenges but there are also huge opportunities.