Éamon Ó Cuív (Galway West, Fianna Fail) | Oireachtas source

I welcome the opportunity to say a few words about the outcome of last week's Council of Agriculture Ministers meeting. It is fair to say we are at a crossroads as regards farm incomes and, in particular, the continued viability of the family farm model. A few years ago we were told that dairy farming was the new gold, ór nua, and that if people invested large sums in expansion, it was a good bet. The reality is that 17,000 farmers are facing very precarious times, with an average milk price of approximately 25 cent per litre, including the VAT rebate. This is below the cost of production. Ornua, the Irish Dairy Board, has forecast an average price of about 24 cent per litre for 2016. The reality is that farm incomes were down by 9% in 2015 compared to the figure for 2014, while average dairy farm income dropped from about €68,000 in 2014 to €48,000 in 2015, according to the Teagasc Outlook 2016 report.

There is a perfect storm. Difficulties in the Chinese market, a Russian ban and a high tax bill in 2014 have all contributed to the current situation. As I said, when the Minister was constantly referring to expansion, I warned that it would be particularly precarious for young farmers with limited experience and high borrowings if there was a downturn in the market. I did not realise it would be so severe and rapid.

I refer the European Council meeting last week.

There were some welcome measures but we need more concrete measures, and we are particularly worried about milk supply management measures. The problem is that if the crisis continues, the supply that comes in voluntarily today could become mandatory in the future. A reality reduced production will not solve the crisis. I understand that France was heavily demanding that the Commission would introduce supply management measures by invoking Article 222 of the Common Market Organisation Regulation. The French position is very different from ours because they have a large internal market of 60 million people. However, if we were to go down the supply reduction route, it would hugely affect exporting countries such as Ireland and those in which milk exports are a major revenue earner. Some 90% of our milk is exported, and we produce 5.5 billion litres per annum. Dairy exports are worth approximately €4 billion. Therefore, supply measures, as the Minister stated, do not make sense because when an upturn happens we will be behind the curve with respect to world competition. Also, as the Minister has continually pointed out, year on year over the longer term the world market for dairy increases by 15 billion litres per annum, which is approximately three times our production.

Our concern is not about the voluntary measures but that this is a step-by-step approach because that is normally the way Europe works. We are concerned that if the market deterioration continues, what is voluntary today will become compulsory or they would levy over-production in Ireland, as they would see it, to pay or compensate continental farmers for reduced production. The Minister might say that is not in the conclusions. I know that, but this is only one round of what might be a number of rounds, and once we start giving in on the approach of supply reduction rather than other methods, we will be going down a slippery slope.

We welcome the measures agreed at last week's EU Council, including the increase in intervention quantities for skimmed milk powder and butter, a new private storage aid scheme for pigmeat, financial tools to support farmers and a new model of export credit insurance. We very much welcome the increase in state aid ceilings. I have felt for many years that state aid ceilings and various de minimisrules are way too restrictive. The increase of €15,000 per farmer per annum, compared with €15,000 over three years, which is €5,000 per annum, is certainly welcome. That will allow us to come up with flexible solutions such as farm taxation methods to allow for income averaging without breaching European Union laws.

I do not agree with the Minister, or Europe, that the lack of an increase in intervention price is a good idea. Intervention in terms of world prices is a contradiction because if we get the product at a world price, we get it anyway. The product is quite saleable at that price. Intervention prices should reflect basic production costs. We are not and have not been looking for any more. We should continue to seek a review, and the French approach should not dominate all the time.

We must also convince our European counterparts to introduce measures to ensure market stability. We believe the basic support should be increased from 21 cent to approximately 26 cent per litre.

An issue of major concern to us is the failure once again to get a deferral of the superlevy. One would have thought that would have been an easy win, but rather than collecting the superlevy that arose in the final year of milk quotas, the European Union is insisting on this levy being collected in the current crisis. I regret very much there was no consensus to remove fertiliser tariffs, which would have benefited all farmers.

I welcome that the Agricultural Markets Task Force will deliver conclusions and legislative recommendations in autumn to improve the balance in the food supply chain. In fairness, the Joint Committee on Agriculture, Food and the Marine in the previous Dáil did a great deal of work on this issue. I have done a lot of work on this issue as well, and I believe it is one that must be tackled urgently at a European level. We need first to find out who is getting what in the food chain. Is it the farmer, the distributor, the processor or the retailer, and how does that change over time? There would appear to be strong evidence in the liquid milk trade, according to the market agencies' figures, that the percentage the farmer is getting has dropped dramatically. The price of a litre of milk has dropped dramatically since 1995.

We believe also that EU legislation should make it mandatory on food retailing firms that exceed certain thresholds to supply information and data on the gross margins. If we had that information, it would allow us take subsequent corrective action. A major deficiency is that this country has been slow to deal with this issue. Britain, France and many other European countries have moved ahead in getting information on who is getting what from every euro the consumer spends in the supermarket.

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