Micheál Martin (Cork South Central, Fianna Fail)
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To ask the Minister for Agriculture, Food and the Marine his views regarding reports of farmers who are supplying the liquid milk trade losing money due to pressure from the multiples; the action he will take to deal with this issue; and if he will make a statement on the matter. [48275/12]

Simon Coveney (Cork South Central, Fine Gael)
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I am glad to see Deputy Martin showing interest in the liquid milk market.

Éamon Ó Cuív (Galway West, Fianna Fail)
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It has a big effect in Cork.

Simon Coveney (Cork South Central, Fine Gael)
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It certainly does. I see that Deputy Kelleher has also joined us for the discussion.

Prices paid for products in the marketplace are a function of a number of market forces and the negotiation of commercial contracts is essentially a matter for the contracting parties. The National Milk Agency, which operates under the aegis of my Department, was set up in 1994 to regulate the supply of milk for liquid consumption. All farmers supplying milk for liquid consumption in the winter months do so under contracts with processors that must be registered with the agency. The agency does not have a role in setting the retail price of milk, but farmers supplying milk in the winter months are paid a premium over the price paid to farmers who only produce milk in the spring-autumn period. This premium reflects the additional costs of producing milk in the winter months.

The programme for Government contains a specific commitment to enact fair trade legislation in the retail sector so as to ensure a balance between various players in the grocery goods sector. I assure the Deputy that this legislation will be produced by the Minister for Jobs, Enterprise and Innovation, Deputy Bruton, before the end of the year or early next year. It will introduce a legally enforceable mandatory code of conduct between large multiples and the people from whom they source food and milk. The contracts will be respected.

There is a broader problem across Europe in terms of the percentage of the final retail price that farmers get for their produce, including liquid milk. Ten years ago, they would have got an average of 30% or more of the price, but they are now getting less than 20%. The Commission is examining this issue to try to find solutions. If Ireland tries to implement solutions on its own, retailers will simply source from elsewhere, which is not what we want.

Éamon Ó Cuív (Galway West, Fianna Fail)
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I thank the Minister for his answer and look forward to the fair trade legislation, which is urgently needed. As the Minister knows, the Oireachtas committee intends to investigate not only the question of liquid milk, but also the wider issue. It is a major concern. Given the squeeze on liquid milk producers, we might need to import winter milk at some point. This would be a tragedy for what should be the dairy island. Will the Minister support the committee's investigative efforts and will he undertake to give serious consideration to any proposal made by same?

Has the Minister raised this issue at European Union level and will there be a co-ordinated effort to deal with the power of the multiples? Most if not all of the major multiples are multinational companies. Will the Minister briefly outline the policy direction that Europe intends to take to limit what it views as competition between multiples but what I view as their control?

Simon Coveney (Cork South Central, Fine Gael)
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On the Deputy's last question, he might well see supports trying to do that under pillar 2 of the Common Agricultural Policy, CAP, reform process. For example, producer groups would be supported so that farmers could negotiate prices collectively and more effectively. This should and could happen in the beef, sheepmeat and lamb sectors, where farmers should be negotiating in a more structured way. This is generally not as great an issue in the dairy markets, as farmers own their co-operatives and, therefore, have an input into pricing models. However, farmers are more exposed to the marketplace in terms of liquid milk.

The Commission is examining this issue, but there are no simple solutions. The idea that we could set margins or prices for any product is unrealistic, but we could certainly examine ways of examining the hand of primary food producers when they are negotiating a fair price for their produce.

Ireland's competition Bill will primarily focus on ensuring that retailers honour contracts with food producers and that people are not exposed to the significant negotiating power of multiples.

Éamon Ó Cuív (Galway West, Fianna Fail)
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I am disappointed by the Minister's answer on the EU. It was quick to create a plethora of competition law. An effect of competition and below cost selling is that liquid milk producers are being squeezed to the point of not making any money. The EU could very simply introduce legal controls and regulations to avoid this becoming the end result of unbridled capitalism and competition between major multiples and multinationals.

During the Minister's Presidency of the agricultural Council, will he ensure that this issue is addressed? It should be dealt with through the application of legal controls and European regulations. Thousands of them are passed every day. Could a single regulation to protect primary producers not be introduced as well? Without those producers, we would all go hungry in the long run.

Simon Coveney (Cork South Central, Fine Gael)
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I am not quite sure what the Deputy is seeking. Does he want the Commission to start setting milk prices across Europe?

Éamon Ó Cuív (Galway West, Fianna Fail)
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No. I am seeking controls.

Simon Coveney (Cork South Central, Fine Gael)
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We must have a functioning, competitive marketplace. In this context we must find ways to increase the negotiating power of primary producers of food to ensure that they are not solely price takers when they go to market. To help us in this regard, the EU has proposed that the producer group model be supported. It is active in other parts of Europe but not as active in certain parts of Ireland's agrifood sector. We can help to finance it, but there are no simple solutions unless we start setting margins and prices. That would fundamentally undermine the competitiveness of Irish producers.

Éamon Ó Cuív (Galway West, Fianna Fail)
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Under competition law, there are rules against overdominance in the market.