When I reported progress an hour ago, I was endeavouring to put the dairying industry in its proper perspective. I pointed out that the fact has been established that our dairy farmers are getting the lowest prices of any dairy farmers in Western Europe for their milk. We are getting the lowest prices of all milk producers in Western Europe.
Our dairy produce is commanding premium prices on the export market. I have given the figures in relation to butter prices on the British market. The price that is being commanded now for "Kerrygold" butter is second only to Denmark. There is the same story in relation to cheddar cheese. According to the latest figures, that I have been able to obtain, British home produced cheese is making £270 a ton; Irish cheese is making £245 a ton; New Zealand cheese is making £240 a ton; Australian cheese is making £225 a ton and imports into Britain from other countries are making about £200 a ton.
While this situation exists, I believe that we have a tremendous commercial advantage in so far as the marketing of our dairy products going on the export market. I believe that there is no need, as I have already said, for any panic measures to curtail milk production. When an industry with a record of performance like the dairying industry can command these prices on the export market, we should continue to encourage our dairy farmers to improve their farms and to improve their herds thereby getting a maximum output from their farms.
Since the Minister for Agriculture and Fisheries recently announced the new increase of 1d a gallon on the first 7,000 gallons and since he announced the new beef subsidy, the impression has been created abroad that it is important for many purposes that an effort should be made to curtail milk production, and that the idea of 1d on the first 7,000 gallons has been done with a view to encouraging larger milk producers from further expanding.
I wish to present the facts in relation to the dairy industry as I obtained them from the official statistics and from the various researches that have been carried out. I have advised dairy farmers in my constituency to continue in milk production and not to be misled by cries of over-production or the fact that the export markets are collapsing. I do not believe there is any need for fear at the present time. As I have already pointed out, the increase in milk output in the last two years, which has been described as dramatic, was envisaged in 1964 when the Second Programme for Economic Expansion was being formulated.
If the Government were doing their job and if the Minister and his Department were doing their job, they would have taken steps long ago to ensure that the capacity of our milk processing plants was adequate to cater for the increased milk output. If this had been done, the appalling and completely indefensible situation that arose last May and June need never have arisen. I am referring to the fact that millions of gallons of skimmed milk had to be poured down the drain because of the fact that the capacity of the processing plants was not adequate and that there had been difficulty in marketing skimmed milk powders. Admittedly, there was difficulty but those difficulties would not have arisen if a proper and flexible policy had been introduced to divert that milk into other products and despite the fact that last May or June, the market for skimmed milk powder had more or less collapsed and the price fell from over £100 a ton to as low as £40 a ton. A few months later, skimmed milk powder is commanding from £80 to £90 a ton.
It is now extremely doubtful if we shall have adequate supplies of skimmed milk powder to meet our export market commitments. That is particularly so in relation to the Mexican order negotiated by An Bord Bainne for in the region of £62, £63 or £64 a ton. I am informed that An Bord Bainne are seriously worried about the adequacy of the available supply of milk powder to meet this order. If this is so, it is a scandalous state of affairs. It indicates no planning and no initiative. It indicates very bad management if we allow this situation to develop.
The reason for the recovery in price for skimmed milk powder is that, in the dairying countries, there was stock-piling of skimmed milk powder and, when the price drops below a certain figure—I understand the figure is around £40 per ton—skimmed milk powder then becomes the most economic source of protein for animal food. As soon as the prices dropped on the Continent, the animal food compounders bought up all available supplies and incorporated it in the animal food ration with the result that stocks in Western Europe, particularly in the dairying areas, became eroded. The price therefore recovered.
Our situation is that we may not be able to fulfil our market commitments for skimmed milk powder. Surely this indicates that something is wrong here? Skimmed milk powder is dealt with at length in the recently-published report of a survey conducted by Messrs. Cooke and Sprague, two American consultants engaged by the Department of Agriculture and Fisheries to examine the question of the rationalisation of the creamery milk industry. This report should have been issued to all Members of this House. At Question Time a few weeks ago, the Minister said a copy of it is available in the Dáil Library. As far as I know, every Deputy receives copies of the reports on all types of surveys. The Cooke-Sprague Report has been eagerly awaited. It is a very important document. It is deplorable that Deputies should have to queue up in the Library for it. As a result of all that, I have had to depend on the study by the Irish Agriculture Organisation Society of the main recommendations of the Cooke-Sprague Report.
Let me come back to the problem product, as it is now known in the dairying industry—the problem of skimmed milk powder. Prices are now recovering. I have not access to Departmental information on this subject, but I want to go on record as saying that the outlook is excellent provided certain steps are taken to expand the capacity of the milk processing plants to convert the skimmed milk into powder during the 1969 season. The prices for skimmed milk powder in the past few years have been very good but they dropped this year due to exceptional circumstances. I gather that this is a cyclical event and that it will not recur for three or four years. Recommendation No. 6 of the Cooke-Sprague Report, which I find here on page five of the Memorandum on that Report by the Irish Agriculture Organisation Society, says that in view of the strategic importance of dried skimmed milk powder in the evolution of the dairying industry it is recommended that the Government establish and maintain a price floor under skimmed milk powder at a stock-loss level of around £65 per ton.
I understand that discussions have taken place between the Department and those engaged in milk processing and that agreement is about to be reached whereby this minimum floor price, this break-even price, this stock-loss price level of around £65 per ton will be guaranteed. I understand a certain sum of money will be made available — whether by way of grant or loan I do not know—so that, when a situation occurs again such as that which occurred last May or June when the price dropped, there will be this fund which will be utilised to maintain the price of skimmed milk powder at this minimum level of £65 per ton. On the other hand, when the price would go beyond a certain level, the milk processing company would repay the amount drawn from the fund when the price was low. This is a very good idea. It was discussed as long ago as two years and I am pleased the American consultants have brought it forward again. I am also pleased that, in reply to a question I asked him a couple of weeks ago, the Minister announced that discussions had taken place and that a formula was being worked out.
Some Deputies referred to our external trading relations, particularly those with Britain, and certain suggestions were made in relation to the EEC. I have often heard it said, and we are led to believe, and the general opinion certainly seems to be that our farmers lag behind the Danes and the Dutch and other farmers in Western Europe. It is interesting to note, however, that butter production costs here in 1967 ran at £470 per ton whereas in the EEC countries butter production costs ran at £800 per ton and the butter which cost £800 to produce in these countries is being sold at £100 per ton on the export market. I challenge anyone to forecast how long any country or how long the EEC can continue selling at £100 per ton butter that costs £800 per ton to produce. By an extraordinary coincidence in yesterday's newspayers we read that a meeting of the Agricultural Ministers of the EEC had decided to take steps in regard to butter production in the Community countries. This, of course, is yet another argument in favour of our continuing to produce milk and continuing to encourage and assist our dairy farmers to produce milk as efficiently as possible. We are the lowest cost milk producer in Western Europe and we can continue in production when others go out. Another way of saying that is, of course, that our dairy farmers are getting the lowest price in Western Europe for milk produced for manufacturing purposes.
The Minister, speaking recently in the mini-Budget debate — he spoke for a couple of hours; it was the usual tirade and the usual crossfire and, as usual, it was highly publicised — tried to defend the penny per gallon increase granted in the Budget. He tried to argue that the income of the dairy farmer had increased this year; although yesterday, speaking on this very same subject of farmers' incomes and particularly those of dairy farmers, he admitted that costs had increased in the past 12 months. When I spoke on the mini-Budget some weeks ago I spelled out these increased costs in detail in the same way as I tried to put the dairying industry in its proper perspective. Certain newspapers — one in particular; it was not the Irish Press— did not consider the speech I made worthy of even one line. One of the ironies of debate here is that, if one starts to hurl abuse at a Minister, that will get the headlines in the morning papers.