Mr. Eddie Downey:

What has been clearly stated is that the dairy sector is vital. A major opportunity has come along for farmers who have been operating with their hands behind their backs for 30 years. Farmers could not expand their enterprises. We came late to the European Union from that point of view and, therefore, we were disadvantaged. In the intervening period, farmers in New Zealand increased output four times over while we stood still. That is the reality.

The removal of the milk quota has made no difference to the price. The price has increased by 0.8%. That is not the issue. As was quite rightly pointed out, what have affected us are global changes such as, for example, those in the financial sector, what has happened in China and America, falling oil prices and, of course, the Russian ban. We trade in a commodity which must be traded at a world price. It is how we manage the givens in the market and get it to deliver a sustainable situation for the family farm units here that is at issue. We pride ourselves on our family farm units. We do not want to see them disappear, nor do we want them to become huge units. We want to continue to have family farms. That is why we put forward our policy.

Everyone has identified the banking system as being critically important, which it is, but we need flexibility in it. Every time I met the banks, I made it clear that we want sensible lending to farmers. We want the lending stress-tested properly and we want to know if the farmers will be able to make the repayments. We have no ambition to end up with a situation such as that in New Zealand, where debt levels have gone through the roof, or the Netherlands, where debt levels are at €18,000 per cow, which is unsustainable. We do not want to arrive at such a point, lumbering our family farmers with that type of debt level.

We need a sensible approach to lending. However, there is also a responsibility to manage the loans sensibly. The banking system has to provide more flexibility to deal with short-term problems. No one built a milking parlour for one year. I do not like it when a farmer starts jumping up and down saying he is going to go broke. My view is very simple. The farmer built a milking parlour for 20 or 30 years. We want parlours to be built for 20 or 30 years and we want sustainable industry. I met a man at the ploughing championships. He told me he is after taking out a lease on land at €300 an acre for the next ten years. He says that the milk price is going to break him but his problem is not the milk price. We need to get that message back to farmers and I will happily live with that. We also have to get the message back to the farmers on the ground to be sensible with the measures they take.

The other big issue is volatility. We have proposals in our budget submission. We need to examine them and see if we can get something that works sensibly, which will allow a farmer, if there is a good year, to put a few euro aside in a tax account or wherever and bring it back in later. No tax will be foregone because the averaging system will take it out of it in any event. Let us allow the farmer the power to manage his business and use it in the most efficient way. I think that can be done.

Another big issue raised concerns oil prices, which are down. Grain prices are also down. Is this a short-term problem? How long will we be seeing low prices? The problem is that grain prices continue to be low. When grain prices are low, American farmers drive milk production and will continue to do so. They also have forward contracts for milk, which will potentially elongate this problem. Political intervention is required. There has been a complete failure on the part of Commissioner Hogan and his team to examine the intervention system. They keep telling us that it will take eight to nine months before they review the system and are at the other end of it. We need to start that eight or nine month process. This should have happened and we should be two months or so into it already. Everyone in this room has stated this fact already but the key point is that this is a commodity which is being traded by commodity traders.

Commodity traders do not come into a market when a price has fallen. They stand back. By not looking at intervention, the signal has been given that we are going to allow the price to fall. If we had put our hands up and said we were going to look at the intervention system, the signal would have been clearly given that there is a floor and that we had better get back in and buy the product we want for the next number of months. Traders would have re-engaged. That is the position that should have been taken and why there has been such a failure. It is not that intervention would have had a huge effect. There would not have been a huge buy-in or laziness on the part of the co-operatives to buy into the intervention system at an increased price from where that intervention is as of now. The markets are stronger than it. We want the intervention system and the prices to take account of the current cost structures. It is as simple as that. We want that put in place.

The cost of doing business, including the costs of energy and fertiliser, is another issue. Four major companies control the fertiliser market. Is there a cartel in operation? The market has four major companies and a levy, which protects one major player, on imports into Europe. This is crying out to be examined. One major company in Europe is protected by a levy to stop other product coming in. This is manipulation of the marketplace which is placing extra costs on farmers and needs to be examined.

Investment, banking and flexibility are important issues but farmers must take responsibility as well. We cannot simply say that the industry is wrong or that the price is wrong.

Farmers have to make good solid investment and that means having good quality advice from Teagasc. Farmers have to be advised of the level and the cost of borrowing at which they can operate. The co-operatives need to be efficient and farmers together with the co-operatives need to co-operate in generating more efficiencies. Given the size of the milk pool, there are certainly question marks over the number of co-operatives.

Russia made a political decision to stop the export of European products into Russia. It was a political decision to put that ban in place. The consequences of that political decision are clearly being felt on family farm units all over Europe, particularly in eastern Europe. The political system in Europe needs to stand up and take responsibility for that and make good decisions. The failure on intervention stands out as a failure.

It was AIB bank which came up with the phrase "Better before Bigger". We are absolutely clear that is how it should be. If a farmer cannot make money with 50 cows, he should not have 200 cows. Farmers should start and get the processes right and then build up from that point. We want to build the industry. It involves sensible banking, good control of costs and Government intervention by way of taxation and other supports.

My colleague Mr. O'Leary will add to my contribution.