Milk (Regulation of Supply) Bill, 1994 [ Seanad ]: Second Stage.

I move: "That the Bill be now read a Second Time."

The purpose of this Bill is to provide for the dissolution of the Dublin and Cork District Milk Boards, for the sale of their ancillary businesses and for the establishment of a new national milk agency.

The Dublin and Cork District Milk Boards were established in 1936 and 1937 respectively by orders made under the Milk (Regulation of Supply and Price) Act, 1936. The boards' primary function was to ensure an adequate all-year-round supply of milk for liquid consumption in the country's two biggest urban areas. This was achieved through the boards' power to ensure that producers received a minimum price for their milk. Because milk production in Ireland is highly seasonal and before the boards were established, the producer price of milk sometimes fell below the cost of production, there were occasional shortages of milk for liquid consumption during the winter months.

The milk board regime provides for a "production district" from which dairy farmers supply milk and a "sales district" in which the pasteurisers and distributors must have registered premises in which to prepare milk for the consumer. In Cork, the sale and production districts are the same; an area within a radius of about seven kilometers of the city centre. In Dublin, the sales area is Dublin city and county together with the urban district of Bray, while the production district comprises most of Leinster.

Basically, only milk supplied by producers within a board's production area who registered with the board could be used for the production of milk for liquid consumption within a board's sales district. Milk could be brought in from outside the production area under licence in times of scarcity but this was the exception to the general rule. The milk board's regime worked well over the years and although it has legal backing only in the Dublin and Cork areas, it provided a model for arrangements put in place in other parts of the country. Thus, despite the highly seasonal nature of our production, winter shortages are a thing of the past and the activities of the boards were generally regarded as an important contributory factor to our high level of milk consumption.

As a result of complaints from milk processors outside the board's areas, the European Commission examined the position and formally notified the Department of Agriculture, Food and Forestry that the board's activities were not in accordance with European Union law. The restriction of access to the market for drinking milk in Dublin and Cork to parties within the board's areas who were registered with the boards, the licensing of any milk coming in from outside the board's areas and the fixing of minimum producer prices, were contrary to European Union rules of competition and contravened the rules for the common organisation of the market in milk and milk based products. On the advice of the Attorney General it was decided not to challenge the Commission's view.

There followed extensive consultations with the Commission on what measures might be put in place to ensure a steady supply of good quality drinking milk for our customers despite the highly seasonal nature of our production while keeping within the bounds of European law. There were also extensive consultations with the dairy industry. The fruits of this consultative process are set out in the provisions regarding the establishment of a new National Milk Agency.

Apart from their statutory functions of regulating the supply and price of milk for liquid consumption, the boards, over the years, were involved in supplying services to their milk producers. These services include artificial insemination of cattle, milk recording and mastitis control. As a consequence of these activities, the boards acquired considerable assets and built up a staff of more than 130 employees. However, as time went on, due to developments on other fronts there was a decline in demand for the services the boards provided. They began to lose money and it became clear that they were significantly overstaffed.

When it became apparent that the boards could no longer continue on their present statutory basis the Government decided they should be wound up and their ancilliary businesses sold as going concerns. To facilitate this sale, it was obvious that the staffing would have to be rationalised.

After protracted negotiations between the Department of Agriculture, Food and Forestry and the union representing the staff, an agreement was reached in January this year under the auspices of the Labour Relations Commission which fully protects employees' interests in the context of the boards abolition and the sale of their ancillary business.

Broadly, the terms of the agreement are as follows: some five or six staff who will be required for the new National Milk Agency will be recruited from among the boards' staff, always provided, of course, that a sufficient number of suitably qualified candidates apply for these posts; some 70 staff will transfer to the private sector on the sale of the ancillary businesses as going concerns. They will have safeguards in relation to their terms and conditions of employment including, in certain circumstances, a right to return to employment in the public sector. The agreement also provides that some 50 staff will be granted voluntary early retirement on terms similar to those which applied in the Public Service in the 1987-88 period. Finally, the Exchequer will take over the board's pension funds and the State will assume full liability for pensions for the staff concerned in respect of their employment with the boards, on the same basis as it does for civil servants. To fund the staff rationalisation programme and meet costs associated with the sale of the business, a sum of £1.5 million has been provided for in the Vote for Agriculture and Food 1994.

Having dealt with the broad considerations underlying this Bill I will now outline its provisions in greater detail.

Section 1 contains definitions of certain words and phrases used.

Section 2 provides for the establishment, by ministerial order, of a National Milk Agency. The basic role of the agency will be to ensure that a reliable supply of good quality, reasonably priced milk is available to consumers throughout the year. The agency will have a part-time chairman appointed by the Minister and representaties of milk producers, pasteurisers, distributors, retailers and consumers.

Section 3 provides for the dissolution, by ministerial order, of the Cork and Dublin District Milk Boards and the sale, which will be by competitive tender, of their ancilliary business. It also provides for the possibility of transferring that business to an interim board.

It will be noted that the order which abolishes the boards will, at the same time, replace them with the new agency. The intention is that the ancilliary business should be sold at that time also. However, as a precautionary measure in the event of a delay in the sale of the business, the Bill has provision for an interim board, comprising three persons to be nominated by the Minister, to take over the general direction of the business until such time as the sale can be finalised.

Such a transfer of assets would be technically liable to stamp duty under the 1985 Finance Act, so it is necessary to provide a statutory exemption in keeping with the realities of the situation.

Section 4 deals with superannuation for the board's staff. Essentially, it provides that, when the boards are abolished, the administration of their pension schemes will become the responsibility of the Department of Agriculture, Food and Forestry. It confers the power to amend these schemes. In practice, the schemes will be amended to make it possible to discharge the terms of my Department's agreement with the staff — to provide enhanced severance payments as well as their entitlements under the redundancy payments legislation for temporary and seasonal staff who may be granted voluntary early retirement, and to provide notional "additional years" of service for permanent staff in the same circumstances. Also, as provided for in the agreement, former and present members of these schemes or the surviving spouses of deceased members, will be afforded the opportunity of acquiring spouses and children's benefit.

In this latter regard, it is necessary to amend the Milk (Regulation of Supply and Price) Act, 1961, and this is being done by subsection (7). Since all pensions will, from then, be guaranteed by the State, subsection (8) provides for existing pension funds to be taken over by the Exchequer.

Sections 5, 6 and 7 deal with the central purpose of the Bill.

Section 5 makes it an offence to sell pasteurised milk for liquid consumption unless it has been prepared from raw milk produced on foot of a contract registered with the new agency. There are a few necessary minor exceptions to this rule. Section 6 contains the rules of the registration of a contract with the agency. Basically a contract must be for a minimum period of 12 months, the raw milk supplied must be at least of the quality prescribed by law and the purchase price must, in the opinion of the agency, be adequate to compensate the producer for continuing in production during the winter months. Section 7 requires that the agency keep a register of milk producers, processors and the contracts made between them.

Section 8 requires that a levy be paid to the agency in respect of every litre of milk acquired by a processor under a registered contract. The rate of levy will initially be set by the Minister and may subsequently be altered by the agency with the Minister's consent. By this means it is intended that agency will be completely self-financing. The section also deals with matters incidental to the payment of the levy, such as the requirement to furnish full information on the quantity of milk supplied so that the amount due can be calculated and it provides penalties for furnishing false or misleading returns or for non-payment of the levy.

Sections 9 and 10 lay down the requirements for records to be kept and information to be furnished to facilitate the agency in its work of regulating milk supplies. Section 11 distinguishes between information which may be published and that which must be kept confidential. Sections 12, 13 and 14 deal with matters such as the alteration to or cancellation of registration and the admissibility of registers as evidence in the courts.

Sections 15 to 23 are termed "miscellaneous" provisions. They contain no new substantive material, their function is to provide powers and impose obligations to ensure that the foregoing provisions can be efficiently and effectively implemented. They also cover a number of necessary legal technicalities.

The Schedule to the Bill sets out detailed rules for the establishment and functioning of the new agency: I have already alluded to the most important of these.

I trust I have given Deputies a clear outline of this Bill and I commend it to the House.

I welcome the Bill. This debate has been struggling to get up and running for some time. When the Milk (Regulation of Supply) (No. 2) Bill, 1991 — the phrase "No. 2" has been dropped from the title of this Bill and I can only assume this is the third attempt to legislate in this area — was debated in the Seanad on 11 December 1991 I made the point that this Bill was replacing the Milk (Regulation of Supply and Price) Bill. Will the Minister indicate in his reply the niceties involved in dropping the reference to "price" from the title of the Bill? I suspect it was dropped because our European colleagues felt uncomfortable, during a time of deregulation and open competition, at the idea of our legislating for price control.

Under the Bill the agency will largely be able to control the prices paid to producers. There are good reasons for doing this — it is important to reward liquid milk producers particularly during the winter months when they incur extra costs. As an aside, why was the word "price" dropped from the title of the Bill? I think I am correct in assuming that this is our third attempt to enact legislation to abolish the Cork and Dublin District Milk Boards and replace them with a milk agency which will cover the entire country. Fine Gael has no major difficulties with the Bill, which I envisage will have a fairly smooth passage through the House.

I wish to refer to aspects of the overall milk collection system which concerned me in 1991. I hope the Minister can give me an assurance that these matters have been rationalised to some extent and are not as chaotic as they were at that time. In my contribution in the Seanad I naturally referred to the situation in Wexford. Although Wexford would be perceived as far as removed from Cork and Dublin, many Wexford milk producers supplied excellent quality milk to the Dublin District Milk Board, which covered all of Leinster. These producers must be commended on their high production standards. I also referred at that time to the suppliers to Snowcream Limited, which has now moved to Waterford, Wexford Creameries, whose product was new on the market in 1991 and which has since carved out an excellent niche in the Wexford market and further afield, and Slaneyside Farm Dairies.

I made the point that there was an urgent need for rationalisation in terms of the milk collection system and the supply of liquid and manufactured milk to outlets. I pointed out that lorries from co-ops and creameries were passing each other going in opposite directions, lorries on the way to the Dublin District Milk Board were passing milk lorries on their way to Waterford. At the end of the day the consumer, who in most cases is the housewife, has to bear the extra transport costs involved. Can the Minister give me an assurance that the transportation system has been rationalised since then? Were such problems evident in other areas? Given transport costs, particularly for bulk milk lorries, rationalisation in this area is urgently needed. Has the Minister a role to play in this area?

I ask the Minister to say how the position in the 26 counties will relate to that in Northern Ireland once we enact this legislation. How will our liquid milk production system compare with that in the North? Will there be a conflict of interest? Am I right in saying that the legislative position of milk suppliers in the North will change next spring and there will be no regulation of this sector generally? What is the thinking of the Northern authorities who apparently are going in a totally opposite direction from us in terms of this legislation? Having regard to the climate in which we are living, should consideration not be given to dealing with agriculture, agricultural production and the interests of consumers in agricultural products on an all-Ireland basis? Given the importance of the quality of the product to the consumer and the very strict qualitative criteria rightly demanded to safeguard the health of milk consumers, would it not make sense to negotiate with the Northern authorities to ensure that we are both doing the same in terms of liquid milk production?

I would appreciate if the Minister could develop the point in regard to the unions so that the present position is beyond doubt. Many people, mainly men, have served the Cork and Dublin District Milk Boards extremely well and efficiently since they were set up in the 1930s. We should put on the record our thanks to them for their work. They were responsible for ensuring a supply of liquid milk to consumers in Cork city and Dublin city during the winter months. Prior to the setting up of these boards difficulties were regularly experienced in supplying high quality milk to consumers during the winter months — producers could not be enticed to produce high quality milk during the winter when they incurred more costs. On behalf of Fine Gael I wish to record my thanks to all those people who staffed and operated the Cork and Dublin District Milk Boards and the ancillary services. Many farmers had occasion to avail of the excellent AI service provided by the boards.

The Minister referred to the other ancillary services provided by the boards. What is the present position in regard to the sale of the ancilliary services? Has the private sector expressed much interest in purchasing these services? The Minister said that 70 staff will transfer to the private sector on the sale of the ancilliary businesses as a going concern and that they will have safeguards in regard to their terms and conditions of employment, including in certain circumstances a right to return to employment in the public sector. Will the Minister develop the concept of "certain circumstances"? Obviously the Minister has considered this point and discussed it in depth with the unions. He must have in mind a scenario where it might be necessary to absorb these staff back into the public sector. Will this concept create a precedent? I find it interesting that a public sector business can be sold as a going concern to the private sector together with public servants and a clause can be included in their terms and conditions of employment under which they can be reabsorbed into the public sector if necessary. This is an interesting provision and I would like to know the circumstances in which the Minister thinks they might be reabsorbed into the public sector.

I commend our colleagues in the Seanad who have undertaken the bulk of the work on this Bill, rendering our job unusually easy. Normally a Bill begins in this House, the initial donkey work being done by us, before it goes to the Seanad. The excellent work done by Senators on this Bill renders our job much less onerous than we might have expected.

I welcome the provision of contracts of a minimum of 12 months duration to ensure continuity of supply of high quality milk for the liquid milk markets generally. Given the trading of quotas, converting assets to value on paper, in terms of contract and right to produce, will the Minister say whether such contracts will be tradeable in their own right as distinct from only when there is a sale of the dairy production facility by the farmer. In other words if a farmer wants to get out of liquid milk production and has a two-year, three-year or five-year contract to produce liquid milk, can he trade that contract to another producer who already meets the necessary criteria, in liquid milk production? I should like clarification of that point as it has been brought to my attention that the matter is likely to arise with the registration of contracts generally.

I note that in the Seanad the definition of "heat treated milk" for liquid consumption was extended from the narrowest interpretation to include flavoured and fortified milks of all types. It goes without saying that this new agency must bear responsibility for the quality and manufacture of all milk drinks. Certainly I welcome the improvement effected in the Bill in that respect in the Seanad.

In advance of Committee Stage I am not sure I need to go through the sections in much greater detail. I have had no indication of when Committee Stage will be taken in this House or by the Select Committee on Finance and General Affairs. Perhaps we can be informed before proceedings conclude this evening.

Fine Gael support the Bill which has been awaited for some time. We appreciate the importance of controlling the quantity and quality of the liquid milk supply to our consumers. We have the highest consumption of milk per capita in Europe and the second highest consumption world-wide with the exception of New-Zealand. It is in the interests of all those involved in milk production, distribution and retailing that this continue to be the case.

While dairy production was in difficulty for some time because of medical and scientific concerns about increased consumption of fats generally, particularly dairy fats, it would appear that the scientific world is having, if not quite a change of heart, a second thought on that. Certainly, there are differences of opinion but, given the importance of milk to children, women and others to whom the intake of calcium and all of the other benefits conferred by the consumption of milk are absolutely essential, this is an aspect of food production and supply that must be strictly controlled. We must ensure always that there is milk available to the liquid milk market, particularly during the difficult winter months, and that milk is produced in quantity and of a quality to meet the demands of consumers. I should appreciate the Minister answering my queries when replying.

I congratulate the Minister on this important Bill and assure him of my party's support for it. Ultimately everybody's wish is that consumers obtain the purest quality milk and that producers be adequately compensated.

The provisions of this Bill are broadly agreed. The need to establish a new National Milk Agency and replace the long-established Dublin and Cork District Milk Boards arises from the competition rules of the European Union. As the very successful operation of the liquid milk market here over the years has demonstrated the vital role proper regulatory agencies can play, it is entirely right and proper that some agency which would ensure the supply of good quality milk for human consumption at all times of the year at a reasonable price should continue to be guaranteed to individual consumers. I understand that will be the responsibility of the new National Milk Agency. The successful record of the old milk marketing boards in maintaining year-round supply, very high standards of hygiene and reasonable price, has set the standards that must be maintained by the new agency.

We must remember that the marketing and distribution of milk for household consumption is a major industry here, accounting for approximately 10 per cent of all milk produced. It involves approximately 40 pasteurising dairies nationwide, employing approximately 5,000 people, and its overall value is approximately £300 million. Of course, another key group is the liquid milk producers who comprise approximately 4,500 farmers. When all of these people and their livelihoods are taken into consideration it brings home the necessity for a properly regulated market in the more competitive environment now part and parcel of our membership of the European Union.

In measuring the success of the old Dublin and Cork District Milk Boards we must bear in mind the major seasonality problem encountered in milk production here given that much higher levels are produced in the summer months than in winter. Nevertheless, the proper regulation of the liquid milk market over the years has ensured a constant milk supply all year round. Farmers did not receive a premium for producing milk for the liquid milk market but, given the extra costs and inconvenience incurred in winter milking, such was entirely justified. The seasonality problem highlights the need for reasonable regulation of the liquid milk market. The ever increasing demand of consumers for top quality, hygienic products for human consumption also underpins the necessity for proper national standards to be rigorously enforced in the production and supply of such a basic commodity as milk for human consumption.

I presume the proper operation of the National Milk Agency will ensure the continuation of very high standards in the liquid milk industry through the registration of all milk producers and dairies stipulating specific technical standards along with guarantees of year-round supply. The old district milk boards served this country well. The best we can hope for from the new National Milk Agency, once established, is that it will continue to maintain the very high standards and uniformity of milk supply, at a reasonable price, on an all year-round basis achieved by the old district milk boards since their establishment in the thirties.

We are very fortunate since the thirties to have had a secure domestic liquid milk supply system which has served us very well. It has been a success story and any change must lead to even greater improvement.

The setting up of the Dublin and Cork District Milk Boards ensured continuity of supply. With the changes being forced on us by the European Union Directive there is an onus on the Minister to ensure there will be no breakdown in the system resulting from milk supply being affected by seasonal factors. It needs to be recognised that trends in production have been in this direction despite all the exhortations of Ministers for Agriculture, the Department and the European Union. We have to have an even distribution over the year and it is a matter of some concern that the trend is now in the opposite direction.

One central responsibility for the new milk agency will need to ensure there is a regular supply of milk of the highest standard. In the past the provision of liquid milk has created opportunities for thousands of farmers and ancillary workers to live a farming life and to provide for their families. This feature of Irish agriculture has been subject to great change. A NESC report, due to be published shortly, points out that whereas 20 years ago the average dairy herd size in Ireland was ten cows, it is now 25 cows. In 1966 there were 77,000 small milk producers supplying the dairy co-operatives while in 1986 there were only 25,000. This may make sound commercial sense but it has its effect, particularly on rural life and on the rural environment which must be taken into account.

How this agency performs in that context will depend, in part at least, on its composition. We have only the vaguest indications from the schedule attached to the Bill, stating that the number of first and subsequent ordinary members will be nominated by a processor, distributor, retailing, consumer interest and that these would be appointed by the Minister. This is far too vague and does not indicate the central role that producers and consumers must play in the new agency. At this stage the Minister should define the appropriate number. He has a responsibility to ensure that producers, who are a key element in the agency and consumers, upon whom, at the end of the day its success depends, are significantly represented.

One of the features of the large dairy co-operatives is that they have been systematically deconstructing the relationship between co-op and farmer, upon which the movement was originally based. This relationship has now become that of supplier and food processor, which is an entirely commercial relationship. Clearly there may be points of disagreement in this new agency when it comes to setting milk prices for producers and other issues. In the past, in relation to retailers, there was a concerted effort by a multiple chain to engage in a price war which could have had devastating consequences. Under this Bill the Minister has an obligation to ensure that where there is disagreement an arbitration system is in place to allow for the possibility of agreement.

The registration of contracts is one of the most important provisions in the Bill. Registering contracts for at least 12 months between processors and producers ensures a constant match between supply of quality raw milk and demand for drinking milk. The Bill further provides that contracts must offer adequate recognition for the increased cost faced by liquid milk producers, which is a guarantee for producers. Such guarantees must be honoured in this new partnership.

We only have to look at recent events in Government to see that the principles of partnership are vulnerable to being undermined. In view of recent events in the semi-State sector, at TEAM and Irish Steel, it is worth noting that this Minister took well over two years to resolve the staffing and redundancy difficulties and rightly so. If the end result was to overcome problems of redeployment to the satisfaction of our workers — and as public sector workers they are our workers — then the time was well spent. I too have a question in relation to any of those who may return to the public sector: will they return without loss of status or seniority?

It is interesting to note how the definition of milk has changed since 1991. The range of forms of milk has been allowed for in the Bill to ensure that all liquid milk sold to the consumer is governed by proper regulatory controls. Nowadays the consumer expects high standards and is entitled to them.

Will the Minister clarify whether the new technology which produces super or double pasteurised milk is covered in the Bill. Super pasteurised is the technology of the future. It will have a dramatic effect, certainly across the European Community, in the way milk is stored and sold. The need for refrigeration will be reduced enormously and this will have an impact on transport and the retailing of milk particularly since the problem with after taste has been sorted out. Rapid change is a fact of life. Will the Minister confirm that this treatment, while it may not have direct application at present to the Irish market, may well have in the future and will he ensure that the legislation is not out of kilter with scientific developments?

We all support the main purpose of the Bill — to ensure a year round supply of drinking milk in the country as a whole. Existing arrangements were declared illegal under European Union law as there was deemed to be a restriction of market access for drinking milk to registered producers, processors and distributors located in the areas concerned. The EU also outlawed the arrangements for establishing a minimum milk price for producers.

This Bill proposes to set up a new agency to represent producers, processors, distributors, retailers and consumers of milk. The Bill does not specify the number of members from each of the interests, only that the appropriate number as prescribed by the Minister by order, will be appointed in each case. This is a major weakness. At the very least, the Bill should lay down the relative proportions from the various interests.

The agency is to ensure that producers are given "adequate compensation" for milk supplied under the contract throughout the year and particularly during the winter months. The key relationship which determines the overall structure of the industry is that between the farmers and the dairy co-operatives. The vagueness as to the composition of the agency board becomes critical because it is not certain which interests may come to dominate the industry. Comparative analysis of international trends shows that the industry squeezes farmers more and more. A concern is that processors and large retail interests may dominate at the expense of both producer and consumer.

I wish to ask the Minister about the omission in the Bill relating to the exclusion of imported milk from regulation. Milk can easily be imported from Northern Ireland. Any standard set by the agency must apply to imported as well as home produced milk. No consumer would thank the Minister if the imported milk is of inferior quality if, for example, it has been produced with the help of animal milk production promoters not used here. Section 5 (d) specifically excludes imported milk from regulation in the Bill. The Minister should state clearly that the interest of both producers and consumers will be protected.

The market we are considering is significant in terms of production and employment. The liquid milk market is worth about £300 million a year. Ireland has the highest level of milk consumption in the European Union. In world terms we are high consumers of milk. While the consumption of full cream milk is static, there is growth overall. Total liquid milk sales in 1990 amounted to about 490 million litres. In 1992 the figure was 511.8 million litres, the increase being shown in skimmed milk. It is in the interest of everyone to ensure that milk consumption is kept as high as possible. According to the CSO household budget survey, the average milk bill is about 9 per cent of total spending on food. Clearly Irish people drink a lot of milk and clearly it is good for them.

It is vital that milk is available to consumers at a reasonable price. It is also important that farmers receive adequate payment for producing milk and maintaining consistently high quality standards. The so-called "milk wars" may well benefit consumers in price reductions but ultimately, the consumer interests are not served by them. Equally, the processors can give large discounts to the multiples to increase market share. As well as this, the multiples can get three months' credit and have the milk delivered directly to the cold cabinets. The corner shops and the milkman do not get such favourable treatment. Yet many people will continue to want milk delivered to their door or to pick it up at the corner shop. Eliminating this trade will mean a poorer service to the consumers as well as an overall reduction in the milk market, which would be detrimental to both consumer and producer. We should remember that milk is an important food. Its nutritional value, in particular to growing children and to women to protect them against osteoporosis, is well proven. Milk also happens to be relatively cheap.

A point raised by the ICMSA relates to the election of the appropriate number of producer members. Those eligible to vote are registered producers, i.e., those farmers who have a registered contract of supply of milk for liquid consumption. There is no provision which deals with producers who may wish to get into liquid milk production. The ICMSA point out that this election procedure could amount to a closed shop in the sense that existing liquid suppliers, particularly in the old Dublin and Cork district milk areas, could dominate the representation of producers under the proposed system. Such a result could lead to the exclusion of liquid milk suppliers outside these areas. Perhaps the Minister would refer to that issue.

There is one important related matter which this Bill should but does not address. In line with EU Directives the Government will shortly be introducing a waste management Bill. The Department of the Environment is charged with the duty of legislating in this area. However, protection of the environment must be everyone's business, if we are to tackle the problems that are costly and damaging when left unaddressed. Good environmental practice dictates reuse instead of recycling or dumping. The milk bottle is a classic example of a reuseable resource which has the added advantage of being acceptable to the consumers. Consumers do not need to be introduced to the milk bottle. It is a familiar part of life, but we should not underestimate its importance. Tetrapak style packaging may serve the interests of the retailer but it is a step backwards in environmental terms. The carton is impossible to recycle because it is made up of two materials.

I understand that efforts are being made to bring in a biodegradable carton which is long overdue, but there is still a good solid argument for increasing the use of milk bottles. A bottle can be reused 20 to 30 times and then recycled. The economic argument against bottling has to take into account the environmental cost for the equation to be correct. With higher standards set by the EU, it is extremely expensive to provide landfill sites for dumping. Manufacturers will increasingly have to bear the real cost of production which includes environmental costs. In the liquid milk business, we have an opportunity to reduce the waste mountain which is not just wasteful in terms of resources, but costly in environmental and financial terms.

At present, only 11 per cent of liquid milk is packaged in returnable bottles. Yet returnable containers save energy, reduce waste, preserve raw materials and reduce pollution. Unlike current packaging, they can be made in Ireland from recycled material and thus create employment. In December last, the Minister of State, Deputy Browne, stated that Government support would be given to reuse in appropriate areas. Supermarkets — and indeed the free market — cannot be permitted to dictate to us on the protection of the environment. In other EU countries there are rates of up to 100 per cent on the use of returnable containers. Here in Ireland, we could begin to live up to the plethora of aspirations on this issue that have emanated from this Government and indeed from the last one.

The public good dictates that a national milk agency be established. Leaving matters solely to the free market without any controls would cause a shortage in winter and a glut in the summer months. Government intervention of this type makes sense. It made sense in the 1930s too, and served the country well over the years. In the 1990's, technological change has brought major advances. This creates its own challenge which affects the public good. By the year 2000, environmental factors will be part and parcel of the economic costs of production and manufacturing. In the publication of this Bill, allowance is already established for the seasonality of milk production. Allowance could also be made for good environmental practice which has both a cost and a benefit, but which cannot be ignored indefinitely. Such an opportunity is offered to us in this Bill. I hope the Minister takes it.

The Minister stated that the purpose of the Bill is to provide for the dissolution of the Dublin and Cork milk boards and for the establishment of a national milk agency. With the plethora of agencies and committees, already in place, I would question the need for a national milk agency. However, I would welcome the dissolution of the district milk boards.

The Deputy might put Jim Nicholson on it to satisfy the northern province.

The operations of the Dublin District Milk Board, particularly by the Dublin dairies have been a bone of contention for many since the mid 1980s. In 1936 and 1937 two district milk boards were set up to ensure an adequate supply of milk to the cities of Dublin and Cork. With the seasonality of production at that time, there was a scarcity of milk during the winter months and some of the milk coming on the market was not of a high standard in terms of hygiene. I recall back in the 1940s and 1950s 20 churns of milk being transported by rail — when we had a rail system in our area — from southern co-operatives to distributors in the north east.

As far back as 1985 the EC was of the view that the Dublin District Milk Board was operating in a monopoly position and that it should be disbanded. The then Government failed to respond to that observation. I recall pressing the then Minister for Agriculture for action in that regard on many occasions. For many years the Dublin dairies used the provisions of the 1936 Act to maintain a virtual monopoly on the supply and sale of milk to the largest Irish market, namely, Dublin city. On the other hand, they dumped their surplus supplies all over the country without let or hindrance causing serious difficulties for small pasteurising plants and distributors in the provinces, especially those in the north east. The Town of Monaghan Creamery was the first dairy outside Dublin to trade in liquid milk. The previous speaker referred to Tetrapak packaging, the Monaghan dairy was the first to introduce such packaging in the 1950s. While Deputy McManus made a case for the Dublin Glass Bottle Company, she should know that bottles have many drawbacks.

I know they have, but so does Tetrapak packaging.

A number of dairies, including the Town of Monaghan Creamery, endeavoured to enter the Dublin milk market but were blocked by the Dublin dairies. To make matters worse, to get their own back, Dublin dairies tendered for the sale of 60,000 gallons of milk in rural areas. A compromise was sought through the Department of Agriculture and eventually the Dublin dairies brought a High Court injunction against the Town of Monaghan Dairy which had the result of restricting the supply of milk in Dublin. In other words, the Dublin dairies could sell their milk in country areas but their competitors in the country could not sell their milk in Dublin. That ridiculous position lasted from 1985 to 1987.

With a change of Government in 1987 a more civilised approach was possible. Under section 32 of the Milk (Regulation of Supply and Price) (Amendment) Act, the Town of Monaghan Dairy applied for a licence and was successful. That enabled it to acquire milk from its registered producers in County Monaghan for resale in the Dublin area. The sorry saga is outlined in a letter which I sent to the then Taoiseach, Mr. Charles Haughey on the return of the Fianna Fáil Government to power in 1987 and which read:

I wish to draw your attention to the serious situation for Monaghan farmers which has arisen following Judge Barrington's ruling in the High Court Injunction against the Town of Monaghan Creamery which restricts their supply of milk in the Dublin City area.

This will mean a loss of 365,000 gallons per year, that is 1,000 gallons per day. When this is added to the 60,000 gallons which the Town of Monaghan Creamery lost to Dublin Dairies to supply to Monaghan Hospital, it creates a serious problem not only for the Monaghan milk suppliers but also poses a threat to employment in the Creamery and the future of this enterprising Co-op.

This situation has arisen as a result of the failure by the Government since 1985 to respond to the EEC Commission's opinion that the Dublin District Milk Board, who are operating in a monopoly situation under the 1936 Milk Act should be disbanded.

Urgent measures are now required in order to amend this outdated Act. In the interest of fair play it is necessary that prompt action be taken.

While preparing this contribution yesterday I was listening on my monitor to the Leader of Fine Gael express many pious aspirations. I then recalled the blatant monopoly position which lasted for years when he was in Government. While we called many times for the matter to be rectified, nothing was done until a caring Government who understood the position took office. The then Minister, Senator O'Kennedy, turned the cards and gave fair play to the small producers and pasteurisers in Monaghan and elsewhere.

Will the Deputy support that Bill? It will be interesting to see with whom he is paired when the vote is taken. Will he come into the House and follow the Minister through the lobbies?

I am more democratic than the Deputy.

The Deputy says one thing and acts another way.

Let the interruption cease.

Fianna Fáil Ministers ratified the position and I thank them for doing that.

The Deputy is satisfied with this Bill.

Deputy Doyle should restrain herself.

As long as the Deputy's colleagues in Monaghan know he is supporting the Bill all is well.

Deputy Doyle has already contributed to the debate and she should allow the same courtesy to the speaker.

I do not object to the establishment of a milk agency but I do object to setting up a large number of agencies and committees.

I agree fully with the Deputy.

In the milk industry quality must be of a very high standard. In the 1930s the quality of consumed milk was reasonable but the quality of milk was much lower in the separating processing for making butter. Standards have been raised in both areas because producers who do not meet a high standard will not be allowed to stay in business. Given the present stringent regulations I am satisfied that second grade milk is not produced and that all milk is suitable for the pasteurised milk trade.

There have been changes in the milk industry and there is now skimmed milk and low fat milk. The processing of low fat milk offloads additional butter fats on a butter market which is already experiencing difficulties. There have been many milk promotion campaigns and the Minister should organise more. Such a campaign was launched in the Dáil restaurant, but I do not know if it was a great success.

They drink it in the Dáil bar all the time.

I do not go to the Dáil bar. Milk consumption here could be increased by as much as 50 per cent. As a member of a health board I am particularly conscious of young people's health. Milk is one of the cheapest foods and if we consumed more it would be the best way to dispose of surplus production now that we operate under a quota system. The manner in which multiple stores marketed milk as a lost leader in the past was a cause for concern.

The role played by roundsmen in the distribution of milk is an important one. Twenty to 30 years ago they operated only in towns and cities, now they can be found driving flashy vans, on the narrowest boreens in isolated rural areas. A story was told about two scrawny cows looking over a hedge who saw a van pass displaying a picture of a cow promoting the sale of homogenised, pasteurised and sterilised milk. One said to the other, "Daisy, doesn't that make you feel inadequate". That story illustrates a changed pattern in milk distribution. It would be a bad day if roundsmen ceased to deliver milk because of an inadequate supply. That loss would be felt by many, particularly low income families. I welcome the introduction of this Bill but it is nine years overdue. It is difficult to understand and justify the long delay in the introduction of this urgently needed legislation. Its delay has frustrated many enterprising pasteurising and dairy plants.

The Minister made a case for the establishment of a milk agency, but I am concerned that future competition would lead to an inadequate supply. There are 4,500 supliers of pasteurised milk and milk usage is 179 litres per person per year, a very high milk intake, one of the highest in Europe. Of those 4,500 suppliers, a sizeable number live in my county mainly because many were the first to become involved in pasteurising milk. They delivered milk to Dundalk, Bundoran, Castlebar and Athlone. Those milk producers catered for an area eight to ten times the size of their catchment area. Having been involved in an agricultural milk co-operative I noticed the prosperity of farmers who became involved in milk production. Not only did they work seven days a week on a contract basis, they also branched out. A recent survey of disadvantaged areas in Monaghan highlighted that many milk suppliers were involved in a fairly substantive secondary agricultural project. Such agricultural projects include mushroom growing, poultry and egg production. Many milk producers received a good return on their milk and were able to invest in a second enterprise. Many people who consider such projects ideal enterprises for small farmers would be surprised that they are a secondary enterprise for many milk producers.

The milk industry is very important and must maintain a high standard. Producers say that the standard of milk is far higher than it should be because they find it difficult to analyse cell counts and conform with the regulations, but I believe the present quality will be maintained. The shift in the seasonality of milk supply to an earlier calving programme in December has resulted in the highest remuneration from the sale of milk being secured through the sale of liquid milk to the processing plants. That trend is based on the high monetary returns secured from milk production. It was important to abolish the district milk boards and I would have no hang-up about it if that were all. Today we got extensive documentation from the IFA on the advisability of support for this board.

Debate adjourned.