Simon Coveney (Cork South Central, Fine Gael) | Oireachtas source

It is important to be accurate. Teagasc has stated it thinks the average price next year will be 27 cent a litre. Everybody is predicting that prices will get stronger at the back end of the year, but the price might fall below 27 cent a litre. On the basis of what Teagasc is predicting, this might not be the bottom, but it might not necessarily come to pass. There has been a slight increase in some of the quoted milk prices in New Zealand in the past couple of days, from which I would not get too much encouragement, but we will see what happens. We will see quite a significant price change across Europe in January. However, we will wait and see.

It is not about whether one is a big or a small dairy farmer. Many of the bigger guys have taken on huge debt. While they might have economies of scale, they also have debt management issues. Many highly efficient small dairy farmers who are running very good family operations on 40, 50, or 60 milking cows have done well in the past couple of years. Deputies should not forget that farmers have seen the upside of price volatility in the past two years. The highest milk price ever seen was achieved during that timeframe. We are now potentially looking at the downside of price volatility. That is why we need to consider new pricing models for milk. This is already starting to happen in the industry. If farmers agreed to lock 40%, 50% or 60% of their milk into a medium-term pricing contract, that would take the peaks and troughs out of price volatility. It was very difficult to get farmers to do this in the past couple of years when prices were at an all-time high. They are certainly looking at doing it now. That is happening in grain markets also.

At a domestic level, we need to make sure the banks show the necessary flexibility to keep dairy farmers in business. Over a five year period practically every dairy farmer in the country will be profitable and running a good business. As I have said to Deputy Éamon Ó Cuív, we are pushing hard at European level for the Commission to be open to using the tools available to it. It will be very difficult to use export refunds because it is such an expensive approach. It is very unpopular outside the European Union because it is essentially seen as involving the dumping of produce. Any effort that can be made in terms of intervention pricing and aid to private storage can be of significant assistance in bringing pricing balance and a price floor to the market

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