Paul Bradford (Fine Gael)

I move:

That Seanad Éireann:

--- recognising the crisis facing the dairy industry and the threat posed to the future viability of the sector;

--- considering milk prices have fallen to a low of 20 cent per litre, significantly short of a break even point for suppliers;

--- noting the value of the dairy industry, with 2008 exports worth in the region of €2.02 billion to the economy;

--- considering the negative contributory factors of an overproduction in milk globally, a fall-off in south Asian market demand and the global economic downturn, which have added to the domestic crisis; and

--- recognising the immense financial pressures on farm families and the consequent danger that many dairy farmers will be forced to abandon production;

calls on the Government to:

--- deliver a comprehensive framework in consultation with industry to bring about the restructuring necessary to deliver long-term viability to the sector;

--- introduce export credit insurance measures in line with other EU member states;

--- seek co-operation from financial institutions in adopting a flexible approach which is cognisant of the current difficulties facing the sector;

--- take real action to bring down input costs for producers; and

--- negotiate more aggressive market support measures at EU level to deliver a price above the cost of production for Irish dairy farmers.

I am pleased to present this Fine Gael motion to the House. It is disappointing that we have to bring the crisis in the dairy industry to the attention of the House once more. I am sure the Minister for Agriculture, Fisheries and Food recognises the profound crisis in the industry. We are speaking about the industry at a time of general economic crisis in the country. Many jobs are being lost in all sectors. There is serious concern about the future of the economy and the sustainability of the way of life enjoyed in rural Ireland for generations. We should recognise the key role the dairy industry plays in sustaining the economy of rural Ireland. Most importantly, from an industrial perspective, it creates jobs in rural Ireland. It forms a major part of Ireland's economic picture and accounts for a significant proportion of our export figures. I note with the gravest concern the scale of the current difficulties in the industry which faces a real crisis of finances and confidence.

Each day those of us who come from rural constituencies listen to the fears of the people of rural Ireland about where the dairy industry is going. Sadly, the facts and figures speak for themselves. The bottom line is the price of milk. Milk is now being sold for little more than 20 cent a litre, which is neither economically nor financially viable. Almost on a daily basis I hear from dairy farmers about their grave personal concerns for the state of their family finances. Many doubt whether the farm family unit can continue to be viable.

Great work has been done in recent years to plan the development of a new generation of farmers. I refer to the establishment of the installation aid grants scheme, for example. Various advisory courses and Teagasc programmes have been designed to assist the next generation of farmers and farm families. However, many believe their sons and daughters have no future in the dairy industry. Herds of dairy animals are being offered for sale on the classified pages of the daily newspapers and, sadly, the Irish Farmers' Journal, as people leave the industry, the land and rural Ireland. The ultimate price is being paid as a result of the current crisis in the industry. All of us, particularly the Minister and his Government colleagues, face a big challenge if we are to ensure programmes, schemes and policies are put in place domestically and at EU level. That is necessary if we are to halt the alarming drop in milk prices and restore confidence and hope in the future of the industry.

This debate is taking place in a multifaceted context. The milk quota regime is one of the main issues to have been debated in this House and at all levels of the Oireachtas in the last ten or 15 years. When milk quotas were introduced in 1983, before I entered politics, they represented a new departure from an agricultural perspective. Huge concerns, worries and objectives were highlighted at the time. The milk quota regime has worked to a certain extent in the last 25 years. It has provided for a degree of certainty and stability and allowed people to plan ahead. However, we are now reaching the end of the regime. The difficulty associated with that process is another source of doubt that will have to be faced by the farming community. A significant degree of long-term planning will be required to that end. The crisis about which we are speaking can be summarised simply. In asking dairy farmers to sell milk for 20 cent a litre we are asking them to do the impossible. Every litre or gallon of milk sold at that price level is being produced at a loss, which is unsustainable in the long term. The Minister needs to recognise the need for the Government and the European Union to seriously step up to the plate by drawing up policies and plans and putting in place a foundation on which we can build. There needs to be a response to the crisis at EU and national levels, as well as at local level in conjunction with the co-operative movement.

I tried to frame my motion in a positive and inclusive manner and I am slightly disappointed that the Government has tabled an amendment to it. I challenge any Senator on the other side of the House to disagree with anything contained in the motion. We are trying to be positive as we call on the Government to respond to the crisis in a realistic manner. For example, we want it to "deliver a comprehensive framework in consultation with industry to bring about the restructuring" needed. We have called on the Government to tackle the issue of export credit insurance and co-operate with the financial institutions. We want it to take action to reduce the input costs of producers and negotiate more aggressive market support measures. The five proposals that form the core of the Fine Gael motion would produce the response required to give hope and confidence back to the industry.

The first part of the motion calls on the Government to reflect on the need for restructuring within the industry in order that it can be viable in the long term. We have all favoured restructuring in the past 20 years. I am aware from the Dairygold experience in north Cork that restructuring can have negative effects such as the streamlining of creameries and co-operatives, as well as job losses. Milk must be processed in a more efficient, cost effective and modern manner. However, it needs to be done in a balanced fashion to ensure the restructuring, while boosting income, does not destroy rural economies in terms of job losses. The Minister has been to and made aware of the crisis facing towns such as Mallow and Mitchelstown which has stemmed from the massive job losses and redundancies in Dairygold on foot of restructuring. While one can argue with some of the policy decisions taken, one cannot argue against the need for ongoing restructuring to ensure competitiveness and economies of scale are achieved. However, it must be done in a balanced fashion, directed, where possible, by departmental thinking. I am interested in hearing the Minister's views on this aspect.

We call on the Minister to progress export credit insurance measures, although I appreciate that he is trying to take steps in this direction in conjunction with his EU colleagues. He knows more than I about the urgency attached to making progress on the issue. Unless progress is made in the near future, the future will remain not only bleak but also devoid of hope for thousands of dairy farmers. I ask the Minister to put an enormous effort into trying to progress the issue.

I believe we speak for all parties in the House in urging the financial institutions, including banks, building societies and credit agencies, to recognise the scale of the crisis in the dairy industry and try to deal in a most generous and flexible fashion with their customers in the industry. I refer to the farmers with whom they do business. There has been a tremendous record of engagement between dairy farmers and the banks, building societies and other financial institutions since Ireland joined the European Union. The co-operation between banks and farmers has resulted in significant developments in the dairy industry, including massive on-farm investment in dairy equipment and modernising dairy farms. Much of the work was grant-aided, which I welcome, by the Minister's Department and the European Union, but, sadly, thousands of dairy farmers are to the pin of their collars in trying to meet their financial repayments. They are facing Armageddon. Flexibility is required from the banks and other financial institutions. At a time when the State and the taxpayer have come to the aid of the financial institutions, we ask but should demand that the financial institutions be flexible, to the maximum degree, with their customers and, in the context of this motion, farming families to enable dairy farmers and the agriculture sector in general to continue to survive. It is in everybody's interests, not least those of the financial institutions, that credit facilities to the maximum possible degree be made available to ensure the viability of the dairy industry.

In the context of the motion, we ask the Minister to tackle input costs for producers. He is very much aware of the increase in the cost of feed and fertilisers in recent years. The rate of increase has probably eased recently, but a graph of input costs in recent years would show a significant and steep upward curve which has caused serious financial difficulty. A meeting of the Joint Committee on Agriculture, Fisheries and Food today considered the issue of product prices, supermarket prices, etc. One of the major difficulties facing farmers is that, at one end of the chain, product prices have fallen dramatically. The prices achieved by farmers, be they dairy farmers or farmers involved in any other sector of the industry, have fallen dramatically, but, on the other side of the chain, input costs have risen dramatically. That equation is not sustainable. A strong engagement by the Minister and his Department is required to bring a degree of balance to the farm input cost side of the equation and to give hope and confidence back to the industry.

I want to reflect briefly on the final part of the motion which calls for market support measures at EU level to deliver a price above the cost of production. It is a simple sentence to repeat but a difficult equation to which to respond. The Minister must accept that we need to take our policy argument and powers of persuasion to a new level on the EU stage to make progress. There has been a tradition at times of extreme crisis in the dairy industry and other sectors of Irish farming, particularly in 1982 and 1983 when the milk quota regime was introduced, of the Minister for Agriculture and the political establishment led by the Taoiseach engaging profoundly at EU level to bring about a resolution and restore hope and confidence to the industry. I hope the Minister and his Cabinet colleagues up to the level of the Taoiseach will take on this challenge to the top echelons of the EU political machinery as help is needed at that level. We need programmes, schemes and support from the European Union to ensure the dairy industry remains alive. I appreciate it is a big challenge, but it is a prize worth seeking. Our industry, its viability, the futures of the tens of thousands who depend on it and the billions of euro worth of exports that flow from it are at risk. I ask the Minister and his Cabinet colleagues to put their shoulders to the wheel and work with the industry, my party, the political establishment and at EU level to stem the tide. When we meet dairy farmers, they are almost devoid of hope. They are genuinely concerned about the future. They see no future for their sons and daughters in the industry. We need to reverse the problems and begin to march forward.