Dr. Ailish Byrne:

We introduced our dairy farmer toolkit at the beginning of this year in anticipation of a low milk price during 2015. The toolkit gives farmers an interest-only option or an increase to their working capital facilities or both, depending on where they are in the investment cycle on their individual businesses. We take a long-term approach to the milk price issue and assess long-term investments at a milk price of 28 cent per litre plus VAT and constituent bonuses. That is to reassess long-term loans today, given that the milk price in 2014 was hitting 40 cent per litre. That has always been our approach to our medium- to long-term outlook. For 2016, we are asking farmers to prepare cashflow budgets on a base price of 22 cent per litre, plus VAT and constituent bonuses. We are using a low milk price, but we do not have a crystal ball. We do not know that milk prices will fall to that level, but we would hope that this was the bottom of the cycle. We are asking farmers to prepare for a worst-case scenario and to look for support at that level for a full 12 months. We will put the facilities in place to support the business at that milk price for the year, once they can demonstrate long-term viability and sustainability at a milk price of 28 cent per litre. That is our approach in terms of our dairy farmer toolkit.

We are actively trying to interact with our farmers at the moment. We are asking them to contact us now, particularly if they are spring milk producers and have cows dried off, because they should have time now to prepare cashflow budgets and to know their costs of production, rather than waiting until next spring, when they find themselves under pressure with cows calving and so forth. They will not have time then to sit down and do this type of financial analysis. That is the key message to our farmer customers. The key points are the 28 cent per litre base price for the long-term outlook and 22 cent for next year.