Mr. John Comer:

I thank the Chairman. I want to bring in some of my colleagues. I will be as brief as I can. Many of the questions overlap and I will try to take them in order. One would want a fair brain to go around to everybody and try to attribute each question to everyone.

The major question is intervention price, which is not as straightforward as it might seem. Of course the concept is what we would call very pragmatic. The idea behind an intervention price is to ensure the price is not below the cost of production. Therefore, when the markets are in a downturn, we ensure we do not lose critical mass in terms of the production base across Europe. The intervention price is currently at 20.4 cent, which is based on 2003 costs. The costs have increased. One can argue a cent or two either way, but let us assume that the figure is 28 cent. Therefore, it would follow through that the intervention price should be available at 28 cent a litre.

Farmers are not fools. We understand clearly that when the market starts to recover, that product in intervention still has to come back out and that will slow down the recovery. However, it will stop insolvencies at farm level because it will keep farmers ticking over and it is to be hoped they will be there for the recovery. The alternative to intervention only helps factory farm structures, whereby the weakest are picked off. Denmark is one such example. About five years ago, there were 18,000 dairy farmers there but that figure has decreased to 3,000. The average milk produced per farmer was 300,000 litres, which is roughly where we are at now, and it is now in excess of 1 million litres. The 3,000 remaining farmers are still running into solvency difficulties. Is that a model we want to let happen in Ireland? It will happen. As individuals we cannot deal with those challenges. Milk will always be produced, but will farmers increase their herds to 500, 600 or 700 cows because they picked off the guys who went broke? Intervention is a useful tool, and although it is not perfect, it is all that is available now and should be invoked. We need to be more imaginative about tools in the future.

Deputy Deering referred to it being a cashflow issue. I beg to differ. It is a cashflow issue in 2015 because the average was not so bad. If prices fall below the cost of production, the bigger guys will hit the deck because scale will cripple smaller farmers. If farmers are making 0.5 cent a litre, scale will help them, but as soon as prices fall below the cost of production, cashflow is no longer the issue. It is fundamental to solvency. Sometimes it is misperceived as a cashflow issue. Currently, it is a cashflow issue. By early spring of next year, given all the costs and low solids, it will be more serious and there will be systemic solvency issues. It can happen that fast.

There were several questions about borrowings, and perhaps the general secretary will comment on it. From my recollection, the banks structured repayments at 29 cent a litre, but we are back to 24 cent. This means people cannot repay their loans. Banks have built in six-month moratoriums into newer loans, which is a recent development. People can go interest-only for six months at 29 cent a litre, but we are back to 24 cent. Young progressive farmers who bought into what Deputy Ferris referred to as euphoria are affected.

If one goes back through the records - Deputy Penrose referred to other things and he should have looked at some of the previous records - the ICMSA was always pragmatic, as I would have said, and considered by others to be ultra-conservative. I never thought we were. It is a natural thing for a farmer or any business person to want to grow and expand his or her businesses and improve his or her lot in life. If everyone does it together, it is obvious what will happen.

The crash in 2009 came when we had quotas. I always said that quotas were never fit for purpose, were not flexible enough and left us even more vulnerable.

However, the total free market is not the answer for a perishable product that has such a long lead-in. The global dairy trade price was down today by 7.4%. That is going to send another shockwave through the industry. It is a question of the position at a human level and to where the mind goes. A farmer may receive a price of 24 cent per litre on a given day and might then hear that the GDT price has gone down. All the while, he may have built up a sizable debt. No farming organisation or politician has personal debt of this nature. They might give the advice or it might be the Teagasc people and it may all be well-intentioned but it is the individual who ends up carrying the debt and that is a strong concern for him.

I was asked by Deputy Ferris whether the beef forum was a talking shop. Certainly, I think it was well-intentioned. It was a tricky negotiation process given the involvement of beef processors, farm representatives, Bord Bia and the Minister for Agriculture, Food and the Marine. We were happy with the conclusions but we were absolutely up in arms with the follow-through. We do not think it was in any way appropriate because we were given commitments for five different points, none of which have transpired into reality. The direct answer is that in retrospect it seems to have ended up as a talking shop that did not deliver.

Deputy Deering asked where we stand on borrowings. We have dealt with that question and the scale of it. We dealt with the question on the abolition of quotas as well.

Senator O'Neill asked about the farm organisations and the banks. We have dealt with that. Our organisation believes in incremental steps to growth. That is the only way to proceed. It was suggested here that we would be back in this situation again in six years' time. I do not believe it will take six years. I have absolutely no doubt that milk prices will rise to 39 cent or 40 cent per litre again. There is an underlying good news story, that is to say, the nutritional value of our product is now recognised internationally through science. The body of the science is behind it. This is a temporary thing but the question is how temporary. Is the temporary element going to be long enough to cripple the family farm structure? There is a duty of care to the consumer as well. Any consumer who is surveyed throughout Europe will say that the family farm is the vehicle they want to supply them with food. However, they do not realise how vulnerable the family farm is in such a volatile environment. We need to explain this to people as best we can.

I hope the members will forgive me if I have left anyone out. I cannot read my own writing at times. Senator Ó Domhnaill referred to Tesco and where we could go with the legislation and the squeeze. I do not blame Tesco for squeezing farmers. In fact, it is the duty of the multiple to do that. It is a plc and must answer to shareholders. Otherwise, it would be in breach of corporate governance requirements. However, the legislation must counteract this such that the multiples are not in breach of any law. I believe this must be done at European level. There is no way a member state the size of Ireland or any other member state, even Germany, can deal with this alone. Certainly, we have to be creative in our representations and we must ensure people are well-informed. We can set the seeds here for sure, but I do not believe we can do much at member state level.

My colleagues may wish to contribute presently because I have probably left out something. Anyway, Senator Mary Ann O'Brien asked how we get out of the commodity cycle on international markets. Of course we do not have a market like Germany or France. We must export 90% of produce. However, the reality is that much of our produce is not commoditised. The GDT price reflects the spot markets on commodities. What we are supposed to be reflecting in our milk price is the value-added premium product created by the investment that farmers have made in concert with Bord Bia and by coming up with robust innovative products that have value-added. It is not even reflecting commodity prices. The current price reflects a value-added price. I will leave it at that. I apologise if I have left out anyone's direct question.