JOINT COMMITTEE ON AGRICULTURE AND FOOD debate -
Wednesday, 24 Nov 2004

Dairy Sector: Presentation.

Chairman

Before I welcome the delegation, I convey the apologies of Deputy Carty who cannot be with us today. I understand that Senator McCarthy may not be able to attend either, though he may come later.

I welcome from the National Milk Rights Group Mr. Donie Shine, chairman, Ms Rena Phelan, secretary, Mr. Larry Hollywood, public relations officer and Mr. Martin Desmond. Before I invite Mr. Shine to commence his opening remarks, I draw to the attention of witnesses the fact that while members of the committee have absolute privilege, this same privilege does not extend to those appearing before it. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside of the House or an official by name or in such a way as to make him or her identifiable.

Mr. Donie Shine

As national chairman of the milk rights group, it is a great privilege to raise with the committee the matter of modulation funds. Ireland received €1.3 billion in total funds under the single farm payment scheme, the last corner in which modulation funds can be got for dairy farmers. The dairy sector has fared poorly in the quota regime. Of a total agricultural production gross of €4.4 billion, milk accounts for €1.4 billion.

Of the €1.3 billion provided to the Department of Agriculture and Food under the farm payments scheme, the dairy sector received only €190 million. A breakdown of this figure shows that a farmer producing 50,000 gallons of milk per annum will receive €8,300. All other things being equal, farmers in this position should receive €19,300. This decision creates inequality. What will we do with what is left of the €34 million in EU modulation funds which will come on stream next year? There are between 22,000 and 23,000 farmers in Ireland. By the time the EU modulation funds kick in, this figure will have declined to approximately 20,000.

Two issues arise, namely, the survival of farmers and the quality of food he produces. The four representatives of the National Milk Rights Group present are dairy farmers. We are not being paid for the quality food we produce.

I ask members to listen carefully. If the current position regarding BSE is allowed to continue, it will damage our livelihoods and the younger generation will not get involved in farming. They will ask why the Government or the various agencies did not grasp the nettle.

We have made a submission to the Department. It is a matter for the powers that be to decide whether it is as good as we believe it to be. While the proposal will have to be checked out before it goes to Brussels for clarification, we have provided substantial details of how it can work. The bottom line is that it is farm friendly. We produce 31% of agricultural output but receive only 14% of the payback. We have proposed a quality scheme to compensate for the inequality in the allocation of just €190 million of a sum of €1.3 billion to the dairy sector, which will result in a farmer with a 50,000 gallon quota receiving €8,300. If dairy farmers are to survive the Government must address this issue.

I ask my secretary, Ms Rena Phelan, to enlighten members on how the scheme would work. It would be farm friendly and uncomplicated to ensure that farmers would regard it as easy to access and operate and participation in it would be good.

Ms Rena Phelan

With regard to schemes proposed in the past, I read alarming figures in this week's issue of the farming supplement of the Irish Independent. According to the report, €107 million of funding was returned to the Department of Finance. This is alarming given that farmers could use this money. Debt collectors are visiting co-operatives trying to have money from farm loans returned. The conditions of schemes being introduced are so stringent as to prevent farmers accessing them. Their requirements are set too high.

Last year, €40 million in funding under REPS was returned due to lack of participation in the scheme. We met the Department last autumn and, thankfully, REPS III is much more farmer friendly. We hope participation will be much higher. It is crucial that the requirements of schemes are achievable and farmer friendly.

We have a problem with high somatic cell counts. A co-operative has produced figures showing that 30% of its milk has a somatic cell count above 400,000 per millilitre. As a result, farmers are losing out badly in the milk cheque payments. The figure is increasing by 2% to 3% every year which is the reason we devised this food quality scheme. Members will agree that food quality is fundamental to the health of the nation — we are what we eat. This also applies to animals because we eat meat.

We want to introduce a five-year milk quality assurance and traceability scheme to ensure all milk meets standards. The scheme must be applied nationally and must, therefore, include every dairy scheme. We have fulfilled all the conditions and criteria. We wanted the scheme to be farmer friendly and decided it would be a five year scheme, as proposed in the Structural Funds division. The aims of the scheme would be to quality assure milk and establish traceability of elements. Farmers would have to have to fill out one form.

We know all about tagging and the requirement to have cards and we wanted a scheme which would be easy to access. The objective of the scheme would be to achieve higher milk quality. Under EU regulations we will have to meet current standards within two years. The raw material is milk.

Denmark has a high standard with a somatic cell count of less than 200,000 per millilitre and its farmers comply with it. If farmers have an incentive to meet such a level, it will be possible to have a quality milk product. Milk with a somatic cell count of more than 400,000 cannot be used to make cheese, which limits the number of products one can produce from it. In addition, the annual form, a draft of which we have supplied to the Department, would include information on the traceability of meal fed to calves. Elements would, therefore, be traceable and the calves produced would be healthy and meet quality standards.

The dairy sector is facing spiralling costs due to testing requirements, the need for milking machines and so forth. The sector is also labour intensive and demands dedication. There is a negative view of dairy farming which we want to change to a positive one. We argue that young farmers will not get involved in the sector because they would have to work a seven-day week. They will do so, however, if they are paid for it. It is possible dairy farming will be a part-time occupation. Dairy farmers should be paid and should have choice. If a farmer has 30,000 gallon quota, he deserves to have a choice to stay in business rather than being regarded as a number which, when removed from the equation, will be forgotten about.

Some dairy farmers have been working in the sector since the 1960s and want to remain in it. Some will be able to remain as full-time farmers with higher single payments. They deserve the right to continue in the sector because they were its foundation. One cannot simply argue that it is too bad, their farms are not viable.

We are trying to create a positive image and enable farmers to access the scheme and receive perhaps €2,000 over a five-year period. We will target rural development funds. The environment is important and farmers have been the custodians of the rural landscape from time immemorial. Why should we change that? We want to maintain the rural fabric and protect our identity. We do not want to change overnight. Why should the small farmer not be able to produce milk, as the medium and large farmer does, without discrimination? We will have factory farms, medium-sized farms and small farms.

If a farmer produces 2,000 gallons of milk per acre, considerable problems will arise with regard to slurry. Is this sustainable or will we have large lorries from Glanbia, Dairygold or another company collecting a large amount of milk at the front gate, while the farmer tries to get rid of the slurry at the other end?

One must consider all the issues. We want the environment to remain intact and we have a window of opportunity. Although time is limited, it is within our power to deal with the issue now. If the dairy door closes, it will be gone forever. The only time this happened previously was during the Mulder case which the plaintiff, Mr. Mulder, won. At that time, dairy farmers had an incentive to go back but that will not happen again. We can decide the future of dairy farmers and generations to come or we can change the rural fabric and ruin everything, as we will do if we do not support small farmers.

The schemes that have been submitted before 2 July closing date must be national schemes in which every participant is involved. The criterion to be met is that all farmers in the dairy sector must be involved. It is important to keep farm families supported. We must sit up and smell the roses. Things are getting very thorny out there and some kind of system must be put in place as farmers deserve the chance to be viable. We must get a scheme into operation which is accessible. Our scheme is farmer friendly and many farmers said they would not have a problem with it and that it is easy to operate.

Rural development funds totalling €98 million will become available and if it can be shown that the dairy farmer is in need of help then these funds can be used to give us €6,000 or €7,000 which would make a significant difference to the dairy farmer. It is a proactive approach to trying to deal with issues such as the inequality that exists within the single payment and it could provide a positive way to address the matter. That is where our group is coming from. As I said, we have tried to meet the criteria to the best of our ability.

We want future generations to have options and choices like other people in similar situations. If the job is going to be a part-time one farmers deserve to get a proper price. It has been said that milk prices will go down further so something else must come in from the outside. Since this money is available, why should we not access it? We ask the committee to look very carefully at our submission and help us keep things intact or it will result in a change to the detriment of rural Ireland.

Mr. Larry Hollywood

This scheme suits me. I built up my farm from a small beginning. I sold my calves every year which will now leave me with no entitlements. That is why the scheme suits me and many other farmers in similar situations. Like me, most of the lads here have no entitlements worth talking about. Ms Phelan referred to €8,000. I have an entitlement to about €3,000 per year and I only have that because of the slaughter premium I received when I lost my cows with BSE. I fully back this scheme for all dairy farmers like me who have virtually no entitlements.

Deputy Naughten

I thank the group for its presentation and for the document it circulated prior to that. I agree with the focus it has put on the issues of improved standards and traceability. This will be the way forward in future. I accept that recognition is not given to the quality of the food and price at the farm gate. The committee will examine this matter with the food promotion agencies to ensure the proper level of recognition is given.

Ms Phelan made the point that the somatic cell count is increasing at a rate of approximately 2% to 3% per annum. What are the reasons for this increase? Where is the current dairy hygiene scheme falling down, especially in regard to those counts? What response has been received from the Department to the proposal submitted to date?

What pool of funds is the group hoping to access? A total of €1.3 billion is coming from the EU under the single farm payment scheme. Is the group seeking a redistribution of that fund? If that is the case, over a five-year period it will be a voluntary scheme and the Department will have to set a cap on day one in regard to other entitlements. What will happen if there is not a full claim in the five-year period? Will that go back into the national reserve for redistribution or will it go back to farmers who lost out in the first instance when that is recouped into the Department?

Deputy Upton

I thank the group for making its presentation. How many members are there in the National Milk Rights Group? In order to get a fix on what kind of numbers we are dealing with by way of the modulation of funds, how representative are they of small farmers and larger dairy farmers? There is general agreement that dairy farmers and milk producers would have been the group that lost out most in terms of the single farm payment and I appreciate the group's concerns from that point of view. Regarding the suggestion that the consumer would benefit from a better quality product, is it not the case currently that we have a standard of product with which we are all happy?

Denmark was used as a comparative country for somatic cell counts. Farmers there are able to meet the target of 220,000, where as we are in the region of 400,000 which precludes the raw material from use in certain products. How can this be achieved in Denmark when we appear to be unable to meet it consistently here?

What is the group's view in regard to how other farming enterprises might be concerned? I accept it is not the group's responsibility to make the case for them, but all other farming enterprises will want their slice of the cake as well. What does the group envisage as a fair method of distributing the available funds and is it fair to other types of farming?

Deputy Ferris

I too welcome the group and its presentation. The third objective of the scheme is to benefit every milk supplier regardless of quota size. I have some difficulty with that, if my interpretation is correct, in so far as there should be an element of positive discrimination towards people most in need, in other words, the small and medium sized family farm so as to ensure their survival.

Some people with big quotas have had a tremendous income for many years. I nail my colours to the mast in declaring I have no concern for people with between 100,000 and 200,000 gallon quotas. My concern is for the farmers with 25,000 gallon quotas who are struggling to survive. I support positive discrimination towards those most in need as an objective of any scheme. What is considered a viable quota in today's standards for an average sized family farm? I speak of situations where there is a husband, wife and two or three children, taking into consideration all the expenses of that, including sending children to college and so on.

I fully support the concept of choice regarding the family farm. Farmers must have a decent income and the right to choose whether to stay on the land but they will need structured support if they decide to do that. Unfortunately, what we have seen in the past ten years in particular is that, in reality, small farmers do not have a choice. Their income is not viable and there are no supports for them so they are being forced off the land, thereby reducing the numbers of people who have contributed enormously to the quality of life in rural Ireland. I find that very worrying.

The group mentioned the environment and the modulated funds that will be invested primarily in rural development and regeneration. Some of this money should be allocated towards improving the dairy enterprise, be it through improved parlours, hygiene systems or storage facilities. I refer in particular to on-farm investment for those in the 25,000 to 50,000 gallon bracket who are trying to make their farms more viable. I fully support the delegates' position on traceability.

Mr. Shine

Three of the questions have the same answer. Some 60% of dairy farmers are producing approximately 40,000 gallons of milk. I reckon their wage would be slightly below the national average.

Deputy Ó Fearghaíl asked about the EU modulation funds. Some €34 million will be in the EU modulation funds in three or four years. We are only looking for our portion in respect of the dairy industry. This will amount to approximately €13.5 million. We want that amount to be put back in again, plus the modulated funds. The committee has said it will put euro to euro if the submission is good enough. That is basically what I was saying.

Ms Phelan

The other question related to the somatic cell count. The statistical evidence that has come to light in this regard has been outlined. BSE seemed to be a problem, especially among older animals, and the dairy herds were most prone. If there were a scheme whereby cows pertaining to 1997 and the preceding years, namely the cows which we call the brass-tag cows, could be removed from the system by way of providing some incentive, there might be a better somatic cell count. The older cows will have a higher cell count, as we know from being dairy farmers.

Given that costs are so high and given all the various developments, farmers really do not know what to do. They state that they might get €150 for a cow but that if they keep it on the farm, they could get a calf from it. This happens year after year. If the older cows are bought out and removed from the system, we might see a better somatic cell count.

We found that if such a scheme were put into place, there would be help for those who need it. Dairy farmers are losing money because of the lower prices being obtained for milk and because the standards are poor. These factors do not look good in the co-operative or within Ireland. We do not yet know if high somatic cell counts in milk have an effect on human beings because there is no statistical evidence to this effect. Having said that, consider the implications of a producer not being able produce cheese, and thereby a quality product, and the existence of a cut-off point regarding which some people will be considered good and others not.

In Denmark, the relevant authorities decided on a cell count to be met. They created a tiered scale beginning with an applicable cell count of 300,000. We hope to do that under the five year scheme, given that there is an incentive to farmers and the necessary help. Our group has advisers who would be highly qualified to help farmers to reduce the somatic cell counts in their milk. We would say to the producers in year one that they would have a 50% success rate if they achieved a figure of 400,000. This figure is at penalty level and producers pay a high penalty. They and the industry would get on better if the scheme were implemented. The producers would be able to avail of the aforementioned service free of charge to monitor their progress and achievements. The scheme would allow us to look forward to milk of better quality.

Obviously, the current system is not working, as we can see quite plainly. With the traceability of inputs, we have seen even recently that there has been a problem with regard to contamination. If traceability exists and proper labelling is used, we will be able to tell the consumer that he or she is consuming a quality product. The producer will gain because he will be compensated with the €2,000. It will work both directly and indirectly.

Mr. Shine

There was a question on the level of support for the scheme. Cork County Council, which claims it is the third political powerhouse in the country, has backed us, as has Kerry County Council. The dairy side of rural development and Teagasc have backed us and we also have massive support from the co-operatives. We will be on a roll if we can obtain the support of the Oireachtas.

Ms Phelan

There is the Dáil, Seanad and Cork County Council. Is that not how it goes?

Mr. Shine

That is the way we put it anyway.

Ms Phelan

It is the biggest county council in Ireland. We will be having a meeting with the Department next week. It has been in touch with us on numerous occasions.

The proposed scheme should be a national scheme and it is important that the small, medium and large farmer be included. However, it is at the discretion of the Minister to decide to cap it at a particular level. It is not for us to say as we cannot do so.

It is now said that one would need to have a quota of 80,000 gallons to be viable. Believe it or not, one organisation is saying that any farmer with a quota less than this should be wiped off the map. This is terrible because it is deciding the fate of farmers and not giving them the choice to carry on with the livelihood into which they have been born. Some know no other way of making a living. A decision should not be made for them; the choice must be left to them. A measure should not be implemented such that milk should decrease in price to 70 cent, and perhaps to 40 cent and 25 cent in the subsequent years, thereby forcing producers out of the market indirectly. They realise they would not be viable if the price were reduced to 40 cent.

Are there any questions that have not been addressed?

Deputy Naughten

Where do delegates see the dairy hygiene scheme falling down?

Ms Phelan

That is difficult to answer because we do not have any role to play in that regard. We wonder what has happened to the scheme given that things have become so bad.

Mr. Shine

The matter must be re-emphasised. Farmers must be made more aware of what is required. To generate awareness, money must be put into the kitty. If there were an injection of money, it would produce results.

Ms Phelan

Help should be made available to farmers to deal with the problem associated with the somatic cell count. Obviously, the system that has been in place all along is not working and farmers are paying penalties. Improvements should be made. After all, we will all have to honour the EU regulations that will be in place in two years. Why not put in place a set of requirements that can at least be met in the timeframe? We ask for nothing more than the EU regulation standards. Any other measures would be incorrect.

Mr. Hollywood

The package exists, but one has to spend €25,000 to do up one's milking parlour. Farmers with a quota of 30,000 or 40,000 gallons could not afford this and it would be better for them to leave the dairy sector. The target is too high — a lower target of 10,000 is the solution.

Chairman

Deputy Upton asked about the numbers in the group.

Ms Phelan

We have some from all backgrounds — large, medium and small farmers. We have not counted the co-ops yet because we have been so busy going to county councils and sorting things out. A large number are very interested in the scheme.

Mr. Shine

I was at a meeting with the IFA in Mallow last night and I received its backing. The organisations support us, there is no animosity towards us.

Senator Scanlon

I welcome the group. There is no doubt that REPS 3 is better and we should do all we can to make these schemes more farmer friendly. I agree also that the dairy farmers came out worst from the new shake up. They have my sympathy because I know a number of dairy farmers who are finding things difficult at present. Has the reference for dairy farmers been decided? Is it 2004-05 or 2005-06?

Mr. Shine

It is 2004-05.

Senator Scanlon

That is good. The organisation is applying to the modulation fund to support dairy farmers into the future. If funding is available, how will it be distributed? Will it be done on the basis of gallons or acres? How can the Department of Agriculture and Food decide how much each farmer will be paid?

Deputy N. O’Keeffe

I welcome the delegation, particularly Mr. Shine who is a constituent of mine. We have often disagreed in the past and may disagree today.

There was reference to €107 million going back to the Department of Finance. We must admire that because it represents good book-keeping on the part of the Government in an age of accountability. The money was available last July and it is a pity the group did not make a submission at that stage because some of it might have gone its way.

The mid-term review has been generous to dairy farmers because the milk prices held up. The price of milk was expected to fall by 5 cent per gallon but that has not happened and the EU is concerned about it. Will an EU regulation force a drop in milk prices?

The delegation knows of the problems in Dairygold. I am to the forefront in defending the farmers who are taking 3 cent a gallon less than in previous years, and acknowledge the difficulty for the workforce, who have been loyal to the organisation for many decades. The plant has been to the fore in the socio-economic development of north Cork.

I am concerned that the delegation is seeking greater regulation. There are enough regulations in this State already. Reference was made to high somatic cell count. The Government would not be too popular if we changed the regulation from 400,000 to 200,000 because many farmers would not qualify. Somatic cell count problems arise from difficulties in nutrition, the age of the cow and the quality and standard of milking machine. At this time of year, milk cows are being dried off and there is once a day milking which accelerates the somatic cell count massively. This results in low lactose, meaning the milk is not very good for manufacturing process and not profitable. Regulation is not the way forward.

The TBC is regulated by the dairies themselves through an agreement with the ICOS and the co-ops. There are, however, difficulties arising with intramammary tubes, which will need a prescription from now on. Until now, these were administered by the co-ops and were available without prescription, a major advantage to dairy farmers. This is another shift towards further regulation for farmers that will make the business more costly, a worry for me. The delegation should not go that route. Whether there are 5,000 or 170,000 gallon allowances, it will be much dearer for farmers.

There are 25,000 farmers in the State and there should not be any major change in the way the quota is structured. The dairy co-ops would like to see only three or four producers producing all of the milk because it would cost them less. The quota has served Irish farmers well and there are many farmers who would like to see the quota sold on the free market because they would buy up every one they could.

Regulations and the ring-fencing on the western seaboard have been the icing on the cake for farmers in the western area. The ring-fencing should remain with only marginal changes in the quota system. If we change the quota, it will shift into the hands of a few farmers. We saw what happened in Britain and Northern Ireland because of the downturn in the dairy industry — milk is approximately 11 cent per gallon less than in this State. Milk from Northern Ireland is now coming for manufacture in the South.

Chairman

I do not want a Second Stage speech.

Deputy N. O’Keeffe

We have 5 million tonnes of milk in this State while New Zealand has 14 million tonnes and Argentina is very cheap and expanding quickly. We should protect what we have. Production in New Zealand will increase by 3% per annum for the next ten years, giving it four times as much as our quota. A recent OECD report stated, however, that there is a good three years ahead for milk production profitability.

The single payment has been to the disadvantage of farmers who have leased land. There are widows, orphans, people with mental disorders and illness in the State.

Chairman

This is not what we are discussing with the delegation today.

Deputy N. O’Keeffe

It is relevant.

Chairman

I do not want to be awkward but it is not relevant.

Deputy N. O’Keeffe

It is related to modulation.

Chairman

There are other speakers who want to contribute.

Deputy Wilkinson

I welcome the group to the committee and thank its members for the presentation. I listened with interest to what was said and go along with the idea of helping the small farmer. I am not sure, however, that the causes of the flight from the land have been identified. The number of farmers is falling annually for a different reason. Today young people are well educated and can make a good living spending less time at work than would be the case if they were farming. It is difficult to ask a young person to be available seven days a week. Sometimes the person must be available for seven nights. We know that from farming.

The National Milk Rights Group says it wants this scheme on a national basis. The small people should be helped. I do not know how the group will do that and leave out the large quota holders. Times are changing. I agree with the main thrust of the group's argument, that small people should be helped and modulation funds should be used for that.

I do not agree with its view that "things are bad" for the milk and farming industries. There are great milk suppliers and a great dairy industry in Ireland. Not everything is right. I do not say that disrespectfully but massive strides have been made over the years. It would have been quite difficult ten years ago to predict what Ireland would be today. It has been a period of great change. I am sentimentally attached to the land. Maybe coming from that point of view I cannot look at it in an unbiased way. Many things are difficult to apprehend. Nevertheless, I see that young people are not prepared to do what we had to do. We often kept the land when it would not keep us. Life is changing dramatically and it is very difficult to persuade young people to commit to a seven-day week.

I agree with the group's main argument but I am concerned about making this available to every farmer. Maybe there should be a two-tier system if the group were to attempt to keep young people milking cows which is the objective. I thank the group for its presentation and wish it well.

Deputy Hoctor

My colleague, Deputy Ned O'Keeffe, has touched on the question I was going to ask about the national reserve. Many of the National Milk Rights Group's colleagues come to our clinics having applied for the extension to the quota and the majority are disappointed. The criteria for the national reserve seem quite restrictive for many farmers. Has the group submitted any comments on that? I would welcome them. Will it raise this issue at its meeting with the Department next week?

Deputy Crawford

I welcome the group and as a dairy farmer I am interested in its views on the issue. We supply liquid milk from our farm and milk to the Abbott Laboratories so it has to be of a high standard. The issue the group raised is not so relevant in our area. It was rectified by extra advice from personnel through the co-op as well as the advisory service.

One of the lessons we learnt during our visit to Poland was the interest shown by the advisory service there in getting out and working with farmers. They failed 80% of their forms last year for all Polish farmers, at a nil cost. These are issues we need to examine, especially among the small farmers who cannot afford private advisers or the Teagasc advisers.

The group's last point on the scheme was that additional Exchequer funding may be required. Even this year in the Estimates, which I have only scanned, €38 million has been allocated for dairy hygiene and pollution control. If one compares that with the €95 million or €93 million paid in 1996 and 1997 and take building inflation into account one can see how useless that is, if we are to rectify the position.

I make no apology for saying I come from the Cavan-Monaghan constituency which has been isolated by Government and the independent group as an area that, together with Letrim, must provide more storage space for effluent than anywhere else in the country. One of the speakers said that people could not afford the €25,000 or €30,000. It is not that they cannot afford it but if they get a reasonable percentage back in grant aid that would rectify the situation. This is one area we must consider very seriously.

There has been a major cutback in Government direct aid to farming over the past few years. If the small dairy farmers are brought up to a proper structure, the percentage of moneys available for dairy hygiene and pollution control must be increased. The income from a dairy farm is so limited that they cannot afford this unless they get realistic grants. Otherwise, I agree in principle with many of the issues the group raised but we must consider very seriously what percentage of funding farmers can get and above all ensure they get good advice because there is no point in their spending money on their own initiative on things that may not help solve their problem.

Senator Callanan

I cannot let the opportunity pass to welcome my neighbour and friend, Martin Desmond, who is very welcome, as are Donie Shine and the rest of the delegation. I restrict my comment to the issue in hand. We may have a debate another time to discuss matters that are somewhat irrelevant to this afternoon's discussion.

I take it that modulation is a transferable resource from those who have to those who may have less. Like other speakers, I have difficulty understanding the group's point that it cannot call for this because it is a national scheme but the Minister can. If it is a national scheme the Minister cannot.

What is the group's view on the quota restructuring scheme? ICOS and the Department talk about it. I would appreciate a definite comment from the group on those points.

Mr. Shine

I mean no disrespect but we are missing the point here. This scheme is for modulated funds and rigid guidelines are set down. If one steps outside those guidelines one has no submission. We would not be here today if we had not made out that submission. We made it because the guidelines were drawn up by the EU modulated funds directive. We had to go along with that, otherwise we would have had no part in this debate today.

Deputy Ned O'Keeffe said that milk will not come down in price forever. We agree to disagree on some issues and agree on others. I heard him speak at a meeting in Mallow six months ago and he said the price of milk would come down last June or July but he was proved wrong. I have no problem with that. When we go to the co-ops we find that milk will come down ten cents a gallon, to €2.05 or €2.06.

Deputy N. O’Keeffe

I quoted from an OECD report. I might send Mr. Shine a copy of that.

Mr. Shine

The point I am trying to make is that the €8,300 that the 50,000 gallon farmer will get is not index linked. In ten years' time how much will that be worth to the 50,000 gallon dairy farmer? It would not tax or insure a 20 year old son or daughter to drive a car. The money coming out of dairying is absolute crap. In ten years'

time, we will not have 5,000 dairy farmers. Instead, we will be growing thistles and paying people to cut them. It is similar to the situation in forestry where people cannot afford to tend the trees. This will happen if we do not wake up fast.

There is an element of conquer and divide on this matter with some saying the small farmer should get it and not the big farmer. I accept there is no one better than the small farmers. Last year, we fought for the €57 million not to go through as a single payment but a special scheme set up for small farmers. We were beaten before we went home because it was not politically acceptable. Farmers cannot be divided by this scheme, otherwise it will not stand up. The €34 million will go into rural development and not one dairy farmer will get a single euro from it. I apologise for being militant in expressing myself but I am passionate about this issue. I implore the committee to come behind my argument.

Ms Phelan

The guidelines for the modulated funds are available from the structural section of the Department. They will not be accepted unless it is a national scheme. It is as simple as that. I read the guidelines several times and our submission was made on the basis of fulfilling the conditions and criteria. If it was divided into smaller farmers gaining more, the submission would not be discussed with the Department next week. It is not within our power but it is at the discretion of the Minister for Agriculture and Food to cap it. It is an EU modulation fund with a 3% cut across the board.

Vast improvements have been made on the issue of the somatic cell count. As this is a five year scheme, a gradual improvement in somatic cell counts could achieve a reduction from 400,000 per millilitre to 350,000 per millilitre to 300,000 per millilitre. It is wonderful what the Danes have achieved in this area. We are not demanding that farmers reduce overnight to 200,000 per millilitre. As one Deputy said, if the advice is there to do so, it can be done. We cannot continue with the same pattern where it is disimproving by 3% every year. A fault in the system is causing this. People must be brought in to address this issue.

Next week, unfortunately, our submission is the only issue we can discuss with the Department. The milk policy section will be present too but we have been informed it is the only matter we can touch on.

Mr. Shine

Let us not become frantic. The bottom line regarding somatic cell counts is that 400,000 per millilitre is a safe figure for food coming from the farm. However, the scheme has to be slightly above the ordinary and we want the bar brought down for qualification.

Ms Phelan

We do not want a situation where farmers are forced off the land by reducing the value of the quota. However, we have been told this may happen. If milk is reduced in value from 70 cent to 40 cent to 25 cent, what will the farmer with a 30,000-gallon quota do? He will have no choice and simply be forced out of business.

I know several young farmers at Kildalton College, County Waterford, who are happy to be part-time farmers. In the case of one, he is happy to take over the family farm since his mother died. This scheme suited him and allowed him to continue in part-time farming. I am asking for the door to dairy farming be kept open. It is vital to our rural landscape, communities and environment. We need a mix of various farming practices.

Many big farmers also have financial problems. They may have financially gone in at the deep end when building, say, mass stock units. However, at the lower end of the scale is the smaller farmer who also needs help. We must not lose all farmers if we do not have a national scheme.

Deputy Naughten

Could the delegation communicate with the clerk of the committee as to how the meeting goes with the Department next week?

Ms Phelan

We will.

Senator Callanan

I would be grateful for further information from the delegation on the milk quota restructuring scheme.

Ms Phelan

Yes.

Chairman

I thank Mr. Shine and his colleagues for attending and responding to the questions raised by members. I suggest a copy of the presentation be forwarded to the Minister for Agriculture and Food for comment. Is that agreed? Agreed?

The joint committee adjourned at 4.05 p.m. until 12 noon on, Wednesday, 1 December 2004.