Mr. Mick O'Dowd:

I thank members for the questions and comments. I will start with Deputy Corcoran Kennedy's question on the programme. There is a logical flow to it. Our farmers and supply base, whom we talk to regularly, have repeatedly said that they do not have sight of the future potential of the dairy calf at present. The quality coming from the dairy herd has declined somewhat with the rush to focus on milk. Mr. Ryan may address that later. They have also said that there is no predictability about price. They start to feed cattle over two years with no predictability about the price that they will get. They have also highlighted the difficulty of accessing cashflow throughout the production cycle of those animals.

We felt that farmers coming together with our leadership, investing in genetics and raising that standard so that there is a certain threshold that dairy producers have to adhere to will bring more predictability to the performance of that calf. If that is coupled with a technical support package, then the targeted finishing specification for that animal becomes much more predictable for us as a processor. As a result of that, we can then bring more certainty to the farmer at the beginning of the production cycle when they register those calves for the programme. That is the logic of it. By being able to bring that pricing predictability to the farmer, since Finance Ireland is supporting the programme, the farmer can go to Finance Ireland, and once he or she is credit approved, he or she can get finance for each of those animals and have a cashflow coming through throughout the lifespan of the animal. We repay that loan to Finance Ireland and pay the balance to the farmer at the end. That is the logic of it. The Deputy asked about the name of the programme. That comes from a 2020 vision and it has been described by the Minister for Agriculture, Food and the Marine as visionary and pioneering. As Deputy Martin Kenny said, it is a solution but not the only solution, which we realise.

As Deputy Cahill said, this represents 50,000 animals after three or four years. That is our target. It is less than 3% of the overall kill. We are not trying to claim that this programme will solve every problem. We have gone around the country since we launched the programme and run information nights where we have presented for approximately an hour and then fielded questions from an average of 100 farmers at each information night. The questions have been like some of the questions members have asked. We have since been inundated with expressions of interest in the programme. Our target of 6,000 animals in the first year is already oversubscribed. Farmers obviously feel that it is a solution that can help them.

Deputy Martin Kenny mentioned the mushroom industry. This is built on the market. When farmers register calves in the programme, they know that they will always be above the market when they slaughter that animal. That is guaranteed. That is why members will see in our brochure and the statement that we made that, in a falling market, we are supporting the price even more because it is rising from 15 cent to 25 cent.

Deputy Cahill mentioned the R grade. We appreciate that. We know better than anyone the amount of O grade and P grade cattle that comes from the dairy herd. We are doing this programme to try to increase that standard. We are not saying that we will bring every P grade up to an R grade, but through improved genetics and technical support, we fully believe that we will increase the standard. That is for a small cohort of animals in this programme.

The Deputy also asked if the protocol bonus is replacing the quality pricing system.

We are saying that because we are investing in it upfront, for the first two years all grades will be entitled to the 12 cent because of our belief that, through the programme, we will raise the standard of production and bring more animals into the category to which this will apply.

On Senator Paul Daly's question on the arrangement, this is a collaboration between the two of us to try to help. We are rooted in agriculture. Our founder had a great link to farming. Our Kepak farm, which this committee visited last year, is used as a knowledge transfer centre for our supplier base, our customers, and Teagasc-led discussion groups. We are listening to farmers, more than 1,000 last year, and one of the things they are saying is that they are looking for big companies to come up with solutions. That is what this is. This is a solution for the industry. It is not the complete silver bullet for the industry, but it is a start. There is absolutely no arrangement between us other than to try to help with a solution, to get more predictability into the system for us, and to bring more predictability to the farmer. These are the opening comments to some of the questions that have been raised, and I am happy to take more.