Séamus Kirk (Louth, Fianna Fail)
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I thank the Ceann Comhairle's office for the opportunity to raise this important issue. It goes without saying that we all welcomed the end of milk quotas on 1 April. It provided an opportunity for the dairy industry to expand and reach its undoubted potential, given Ireland's natural advantages in grass production, know-how, technique and climate. This is a new era for production but, unfortunately, a legacy of the old regime has seen quite a number of farmers being badly hit by steep superlevy bills. The total cost to the industry is approximately €69 million, a significant sum that will ultimately come out of the production cycle in the dairy sector.

Varying amounts are due to be paid. With the European Commissioner, Mr. Phil Hogan, the Minister has endeavoured to provide a facility whereby the bills can be paid over a three-year period, but I have discovered that the superlevy bills of a number of farmers are such that three years would not be adequate to meet their needs. Many of these farmers are in heavily borrowed situations, having expanded in anticipation of harmonising with the new regime from 1 April, and they now find themselves with exceedingly large bills.

I was a Deputy when the milk quota regime was introduced in 1983. Its restrictive impact on the expansion of the dairy industry over that time is known by us all and has been articulated many times in this Chamber. In a European context, the amount of overproduction in Ireland is relatively modest. I do not have the statistics in front of me, but I suspect that other member states are under their production thresholds. There must be a case for revisiting this issue with the Department and then with the Commission, having regard to the serious and profound implications for a sizable number of dairy farmers across the country.

My information is based on the experience of several producers in the north east. They are genuine producers that started on a small scale, expanded rapidly and are now significant enterprises. If the future sustainability of these enterprises is jeopardised by large superlevy bills that must be paid over a relatively short period of 36 months, the issue must be revisited.

I exhort the Minister to speak to his former colleague in this House, Commissioner Phil Hogan, to see whether this matter can be revisited in the overall context of some over-production in Ireland and some under-production in other EU member states. There is a very strong case to be made for such an approach. It is certainly worth trying. If the Minister succeeds, he will do a great service to the many farmers who will be seriously adversely affected by an excessively demanding superlevy bill.

Simon Coveney (Cork South Central, Fine Gael)
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I thank the Deputy for raising this issue and thereby giving me an opportunity to provide the House with an update on this important issue and clarify a number of aspects of it. The milk quota regime ended on 31 March 2015. The overriding sentiment throughout the country from farmers to processors and along the value chain is that the abolition of the milk quota presents a massive opportunity for the Irish dairy sector. While it is obviously unwelcome that producers will face a superlevy bill in respect of the final year of the milk quota system, it is unavoidable at this stage. The first thing I would like to clarify in terms of the Deputy's issue as it has been outlined is that revisiting this issue is not possible. The rules governing the imposition of a superlevy were set by regulations agreed at EU level. It is not possible for me to adjust the superlevy rules on a unilateral basis.

In the years leading up to quota abolition, I proposed action at EU level on numerous occasions to mitigate the impact of a superlevy. The mechanisms I proposed included an adjustment to the butterfat coefficient, a front-loading of quota increases, a reduction in the superlevy or a type of EU flexi-milk arrangement which would have operated as long as overall EU production was within quota. The last of those proposals involves the kind of thing the Deputy has just outlined. In light of the opposition of a significant number of member states, it became clear as we approached the end of the quota era earlier this year that there was no realistic prospect of any agreement on these proposals. I assure the Deputy that we pushed this in an aggressive way at Council of Ministers level to try to achieve what we were seeking. We had a majority of countries supporting us but there was a blocking minority of countries insisting on no change.

In the absence of any agreement among member states on my proposals, my focus switched to mitigating the effects of the superlevy by facilitating staged payments by farmers in a year in which cashflow would be of utmost importance due to expansion costs coupled with current market pressures. In this context, I welcomed the agreement of arrangements with the Commission, following consistent requests from Ireland and other member states, to allow member states on a voluntary basis to permit the payment by milk producers of the superlevy liability in three annual instalments without interest. The first instalment must be collected by the milk purchaser in the normal way and paid to my Department before 1 October 2015. The two subsequent payments must be paid by the same date in 2016 and 2017 respectively. I recognise the burden that is being placed on milk suppliers because of the high superlevy levels. For that reason, I have decided to avail of these new voluntary arrangements here in Ireland. Officials in my Department are finalising procedures for the collection of the first instalment before the end of September 2015 and the introduction of a scheme to collect the remaining instalments at the end of September in 2016 and 2017. I expect to announce the details of the scheme in the near future.

The Deputy can read for himself the remainder of the answer, which comprises a broad assessment of where the dairy industry is currently at. Of course I recognise that many farmers are under pressure on this issue. It is also true to say that many farmers have already paid a significant portion of the superlevy fine that will apply to them. It has been collected by their co-ops as they have delivered milk over the last 12 months in anticipation of the development of a superlevy problem. Many farmers have paid a significant amount of the superlevy fine already. Others will now be able to plan on the basis of three interest-free instalments over the next three years. They are working with their co-ops to do that in a way that makes sense from a cashflow point of view. Having spoken to those involved in the industry at processor and farming levels, I believe we have made the best of a difficult situation in terms of superlevy pressure.

Séamus Kirk (Louth, Fianna Fail)
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I thank the Minister for his response but I have to say I am disappointed with it. I note from his script that it is intended to bring in new regulations to cover the three instalment payments. I put it to the Minister, on the basis of the figures I have seen on a number of individual farms in various circumstances, that a three-year period will be simply inadequate for them. I ask him to go back and see if it is possible, at a minimum in the extreme cases, to get a much longer period for these repayments. If he can achieve this, he will do a very good service for a number of progressive, hard-working and expanding dairy farmers in this country. It would be a good day's work for the future of the dairy industry. This problem is not confined to the north east, it is found across the country. While the number of individual cases is not huge, I am aware of people who are concerned that this will push them over the cliff. If that happens, it will do a great disservice to the industry as a whole.

Simon Coveney (Cork South Central, Fine Gael)
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I come from the southern part of County Cork, which is one of the dairy heartlands of the country. I have spoken to many dairy farmers about this issue. We need to be honest about a couple of things here. The superlevy is not a surprise. Farmers knew it was coming. Many farmers factored it in last year in the context of the price they were then being paid for milk. They calculated that they would have to pay some amount of superlevy in the context of their expansion plans. Many farmers who were being paid over 40 cent a litre last year, by the time bonuses are taken into account, factored in a superlevy fine of 28 cent a litre for some of the extra milk they were producing beyond quota. Obviously that is a much more difficult prospect now because milk prices have come back substantially since then. I recognise that. Of course there is an obligation on co-ops to work with dairy farmers who were expanding, investing and factoring in the cost of the superlevy, but are now under some pressure, to ensure they manage their cashflow in a way that makes sense for the repayments they have to make and the superlevy they have to accommodate over time. My understanding is that such arrangements are being reached within co-ops at the moment to ensure those farmers who are encountering difficulties have a plan to work those difficulties out within their co-ops.

Rather than telling people what they want to hear, I have to be honest with them. The deal we have now, which was outlined by the Commission and into which countries can buy if they want, involves a three-year interest-free staged payment. The Minister for Agriculture, Food and the Marine has to pick up the tab for financing that deal so that farmers can actually manage it on an interest-free basis. That goes way beyond what the Commission has ever done before in terms of facilitating a superlevy. I would have liked the Commission to have gone further. It has been suggested that months after this decision was made, we should fundamentally change it now just for Ireland. I do not see that happening without getting a significant number of countries to support it, which I do not think will happen at this late stage.

I suggest we should focus on the practicalities that are now facing farmers. They are trying to work through those financial practicalities with their co-ops to make sure nobody goes out of business.