Mr. John Comer:

It is always good to have an opportunity to address people of influence, particularly on matters pertaining to our industry and business. Approximately 18,000 Irish dairy farmers supply 6 billion litres of milk annually, with the capacity to grow further, if their solvency is not hindered by the current milk price. With all this expansion and milk production, there are large borrowings at farm level, and all the associated anxiety that results from the trough in the milk price in global markets. This is having a major impact at ground level in the confidence of our members to invest further and to fulfil the ambitions of Food Harvest 2020 and Food Wise 2025, and all they envisage doing for the overall economy, particularly the rural economy. As we know, agriculture reaches into every parish across the country, and if it is not nurtured well and if the policies do not ensure we maintain the Irish family farm model, it will be a great loss to us all.

Irish farmers are selling milk below the cost of production. Our scientific body and others estimate that the cost of production is approximately 28 cent per litre. Glanbia pays 24 cent per litre. It does not take Pythagoras or a mathematician to work out that this is not sustainable, by any stretch of the imagination, into the future. In the past year, the average price was probably above the costs of production and the price of milk solids is high. However, major anxiety is building in rural Ireland about what the price of milk will be next February and March, when the cows calve down and the solids are poor. Farmers will probably receive less than the base price of 24 cent and could receive approximately 22 cent or 23 cent per litre for milk. This will not last, even in the short term.

My organisation has always been concerned about how we could mitigate this volatility. We are producing a product that is oversupplied in global markets, and correcting it might not be a simple matter. In the long term, can the Irish family farming model survive in an unregulated global market? Policies are deficient in equipping farmers with the tools to mitigate the volatility that has the potential to cause insolvency to individual farmers across the State. There is a three-pronged approach. Each farmer must become as efficient as possible within the farm gate. Everything else is outside the control of the farmers, and they must look to national and EU governance to provide them with tools to offset some of the ruinous volatility. The intervention price is structured around 20.4 cent per litre, and it is not acceptable. The concept of the intervention price was to implement a floor price close to the cost of production. While it was probably close to the cost of production when it was first implemented, the cost of production has spiralled upwards since then, while the intervention price has remained the same. This is a significant deficit, although the concept is still as valid as ever.

There are issues around aids to private storage, APS, or private storage aid, PSA, as some call it.

I compliment the Commission and the Commissioner for improving the terms and conditions around PSA. While modifications were made to it, there are still issues around the PSA for cheese where the allocations are not adequate for Ireland. We have only got 1,835 tonnes of cheese in there and we need to have better tonnage. In relation to cheese, in particular, it is hampering to some degree.

One must ask if there is a better way of doing business. One wants to be careful with the words used, but as a sector, both in Ireland and across Europe, we must ask ourselves if there is a better way of dealing with a crisis. In my view, with all the information available to us, and all the technologies available to analyse markets in the future in terms of the milk market observatory at European level, it would not have taken a genius to forecast at least a year ago that we would be in this position. Why did we wait for the crisis to develop and then go looking to the Commission and the taxpayer for funding to offset some of the crisis? To my mind, that is poor in terms of policy. We must explore better tools than those currently in place, such as export refunds. There are moral implications to export refunds. In my view, export refunds will never function again because they will not be tolerated morally across the globe. Then one has got the APS and after that, one has intervention. With all the governance and all the policies, all the huffing and puffing - for sure, everyone is well meaning and I am not casting aspersions on anybody - the reality is the end product is not fit for purpose in helping us as farmers maintain a supply chain that will serve consumers well in terms of the family farm in the future. Perhaps we could have provided an incentive so that some of this production would not have happened, particularly in the eastern bloc countries. Six months ago, funding could have been used as an incentive to those producers, especially in the eastern bloc countries, not to be producing milk at 16 cent or 17 cent a litre. Of course, the influences include the Chinese economy and the Russian ban, but we need to have better policies in place that help offset some of the turbulence that certainly is out there.

In farming or, indeed, any business, net margin is the only important figure. We have reached a stage, in Europe and globally, where our costs are certainly not within our control. There are few global companies dealing in fertiliser, which is one of our biggest costs. It appears a cartel has developed. There is very little competition. Traditionally, when oil prices were coming down, fertiliser prices followed them down. It did not happen this time and one would have to ask why one of the biggest costs on farms - second or probably equal to feed costs in terms of meal - has not come down at all. In fact, it has gone in reverse and all the indications are that it will go up further.

Second, there are interest rates. We have clear statistics that show definitely that the extra cost in interest in a year on Irish borrowings, pertaining particularly to Irish farms compared to our competitors across Europe, would be in the region of €80 million. Irish farmers are paying €80 million more per annum in interest than our counterparts across the European Union. When one benchmarks that against how much talk there was about the superlevy fine of this year and other years, that exceeds those particular figures.

The Commissioner, Mr. Hogan, made us a lot of promises and commitments on "legislation" - I use that word because in the past week or two it has been diluted somewhat in some of the commentary from the Commissioner himself - to deal with the power of the multinationals. As individual business people, as is the nature of farming across all of Europe, it is almost impossible to compete with the power of the multinationals.

Some multinationals that operate in this country have a turnover in excess of €32 billion or €33 billion, to take Tesco as an example. They can structure and organise in a way that does not suit primary producers. The clear evidence is that, irrespective of the price of beef or milk, the primary producer has been taking a smaller percentage of the final retail price, year in, year out, since the 1970s. This is a point we have to address and committee members all have a responsibility as legislators to grapple with it. Our percentage of the final retail price has been decreasing. Whether milk is at 25 cent or 50 cent per litre, we are getting a smaller percentage. That is not happening by accident. It is happening because we are individuals who are easily manipulated and extremely vulnerable because of the fragmentation in the way we have to do our business with the growing power of the multinationals. Some measure must be put in place to guarantee fairness in margins. The price to the farmer in the last year is on record as having reduced by 35%, while the price to the consumer has come down by 2%. Something is happening. We need to be cognisant of that. We do not need to be afraid of it and we cannot shy away from it. We have to find ways of dealing with it, and we have to call it as it is.

EU state aid rules have to be looked at as well. There is scope to make policies more fit for purpose for individual member states, rather than abroad brush policy across the EU 28. The farm management deposit scheme was cited. This was a good scheme. The concept was well-received by the Ministers, Deputies Noonan and Howlin, but they said they might be hampered by state aid rules. There should be an examination of these rules.

What is coming from Europe at the moment is market-oriented policy. That means that the only way to cure low prices is by a round of insolvencies at the primary level, to curb production to match demand, or an extreme weather event. These two variables make it almost impossible for us, as business people, to second-guess markets. We find ourselves in a position where there is a three-year lead-in from the decisions we make today to when that product is ready for the marketplace. We have to guess where the markets will be in three years' time and when we have produced the product, it is extremely perishable. We are vulnerable on both fronts. It is not like other commodities. We make no apologies for saying that we need to think outside the box in terms of honing a specialised policy on food production. Everybody in the world has an interest in food production and it is of critical importance. Consumers are more astute and tuned-in than they are given credit for sometimes.

In respect of the funds coming from Europe, our proportion of the €400 million left over after €100 million went to marketing would be €13.7 million. We were given indications by senior politicians, who will not be named, that this would be matched at national level. We hope that will be followed through. In that case, our preference would be that it would be brought to the farmers who are in most need as soon and as directly as possible, as in a single payment per farm. Some kites are currently being flown about it being skewed towards young farmers. The ICMSA is very clear that it would certainly like to see young farmers and would encourage them from every angle. However, from an analysis of the crisis that has developed at farm level, it is very hard to differentiate between somebody who has just turned 40, and has young children and more dependants, and a young farmer. We should not put one farmer against the other. There should be equity in the distribution of the funds, whatever the final figure might be.

GLAS was available for dairy farmers in the past in REPS.

That is almost useless to dairy farmers. Technically they can access it, but in practical terms it is not functional. I do not know of any dairy farmers who are currently in it.

I cannot go without mentioning the beef forum. There are 1.2 million dairy cows in Ireland that all have a calf and they all end up as culled cows. Because of that, we say that we produce over half the beef in the country. The beef forum was reasonably good in terms of the commitments given, but we were disappointed that the commitment to have a full review of the grid was not honoured even though there were clear commitments there. There was a clear commitment to get every animal from a quality assured farm a quality assured bonus. That did not happen. There was also a commitment to deal with the 30-month age limit, but that was not addressed. In 2016, there will be 150,000 extra head of stock in this country but we will find ourselves in the same position as last year if we do not take note of those extra animals and make sure that we have followed through on some of the commitments.