Michael Creed (Cork North West, Fine Gael) | Oireachtas source

It is because of that acumen and ability that the processing sector has equally prospered, as they are the same people who populate the boards of our dairy co-ops the length and breadth of the country. I take my hat off to them. When it was not the sound bet for the banks that it might be today, these people were prepared to put their money where their mouths were and invest in their industry.

The fundamental ambition for the industry must not be to consolidate around the 17,000 or 18,000 farmers, but to remember the 65,000 who had ambitions in the early 1980s to be part and parcel of the dairy industry and to try to reopen opportunities for them. I welcome the fact that there are new entrants, but we can facilitate even more.

I wish to make a number of points on the expansion in the dairy herd, although I am conscious that the clock is ticking more quickly than I would like. If managed through the advisory service, for example, there is a significant opportunity to create an alternative model for beef production. If policy in the dairy sector has been inextricably linked with quotas for too long, policy in the beef sector is inextricably and almost exclusively linked with the suckler cow. The suckler cow has played a tremendous role in improving quality, but there is a need to develop a model of beef production that is parallel to suckler cow and bull beef production and is tied into the opportunity presented by the expansion in the dairy herd.

What is the hallmark of the global dairy market in the post-quota era? That the tenor of this debate has been largely positive is welcome. The positivity is well founded. If one considers the market, one's first conclusion must be that it is growing by approximately 15 billion litres annually. That is three times what Ireland produces in any year. One could say that much of the growth in the market is far removed from us geographically, but we are well positioned with our low cost base to tap into it.

When Teagasc published its report last year, a cloud gathered over the industry and there was a bit of uncertainty. The message that dairy farmers know better than anyone else is that, post quota, volatility will be at the heart of the industry. It is a question of managing that. Like Deputy Deasy, I thank the Minister for taking on board our suggestion of a dairy industry partnership. Farmers and processors have established track records. The Irish Dairy Board should also be involved, as should the banks. Its membership should not just include the Glanbias and Dairygolds, but be representative of all processors. Farmers' representatives should be included, as should the advisory service.

They can track trends and anticipate global developments, including political developments, for example, in the Russian market and outline what policy measures need to be put in place in that regard. They can anticipate consumer trends and analyse how the processing industry needs to shift if necessary. That is the advantage of such a partnership. The Deputy referred to the beef forum. This would be more of a partnership because it has a more harmonious construct than the forum, which is understandable given who owns the processing plants. Farmers have a stake in processing and that is why this could be much more productive.

Much comment has been made about banks. I met bank officials along with Deputy Deasy in anticipation of the debate and average figures were trotted out. Average debt is low at €24,000; average debt in the dairy industry is low at €62,000; and average debt among those in the industry who have borrowings is low at €92,000. I am not worried about average debt but I am worried about individual cases because that is where the problems arise. We need to explore the possibility of providing cheaper credit to the dairy sector, although I welcome the availability of Strategic Banking Corporation of Ireland funding, which is cheaper. Our money is expensive in an international context and it should not be. The banks must be included in this partnership because we need to be prudent about lending. We need to be better dairy farmers before we are bigger dairy farmers. There was almost a headlong rush into expansion because of an artificial deadline created by quotas ending in early 2015. A farmer can expand at any time but the prudent time to do so is when he has maximised the output of his current operation and has potential to expand. Perhaps the necessary rein on the enthusiasm of banks to lend could be provided within that partnership and could encourage farmers to be better before they are bigger. Deputy Kirk made a constructive point about cash flow problems on farms and banks are key to solving that this year. Cash flow issues will arise because of the super levy, preliminary tax liabilities and falling incomes. The Minister needs to work with banks in that regard.

There is a legacy issue primarily, although not exclusively, in the agriculture industry in Cork, relating to the withdrawal of the ACC banking operation. A substantial number of farmers in the county find that their capacity to borrow is restricted. The ACC has surrendered its licence and these farmers cannot get credit from other banks without moving their banking facilities lock, stock and barrel. They could do that at the risk of losing the lower cost of funds they currently enjoy. I find it incredible that a bank can surrender its licence and operate in such a cavalier fashion towards its remaining clients. The Governor and the Central Bank should examine this, given it is putting a handbrake on development in the sector, particularly for a handful of farmers in Cork.

Cork County Council commissioned a study, to which Deputy Deasy referred, which was carried out by CIT. The council has no axe to grind and there was no political agenda. The impending change is perceived by the researchers as a win win scenario with caveats inside and outside the farm gate, with growth in jobs. That is what this is about for the economy and rural Ireland, in particular. There is potential for 4,000 jobs in Cork alone. We need to manage the volatility. The partnership structure, which is key to this, is the way to do that with all the stakeholders on board.

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