JOINT COMMITTEE ON AGRICULTURE, FISHERIES AND FOOD debate -
Wednesday, 13 Jan 2010

Current Difficulties in the Dairy Sector: Discussion.

Chairman

I welcome representatives from the Dairy Farmers Crisis Group. The delegation will make a presentation to the committee on the difficulties currently being experienced in the dairy sector. With us is Mr. Joe Bracken, chairman of the group, Ms Catherine Bracken, secretary, Mr. John Leahy, Mr. Justin Cleary, Mr. Eoin Lyons, Mr. Brian Gleeson and Mr. Timmy Manion.

Before we begin, I wish to inform the witnesses that members of the committee have absolute privilege, but that same privilege does not apply to witnesses appearing before it. Members are reminded of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside of the Houses, or an official by name or in such a way as to make him or her identifiable.

Mr. John Leahy

I thank Chairman and members of the committee. As a recently elected public representative, it is a privilege to speak here and a great privilege to represent the Dairy Farmers Crisis Group. To give members some background, the group was set up in September 2009. It came about when I was knocking on doors in an attempt to get elected. I came across the gentleman beside me, Mr. Joe Bracken, who is chairman of the group. One is always asked tough questions when knocking on doors asking for votes. The first question he asked was what I would do about the price of milk. Not coming from a farming background, I did not know whether he was talking about milk for the breakfast or what he wanted. However, I promised that if I got elected I would come back to him and see what could be done. I was duly elected and got back to him. He educated me on where the dairy farming industry has gone.

Like many passing on the roadside and seeing 60 or 70 cattle in a field, I thought all dairy farmers were millionaires but that is far from the truth. I asked Mr. Bracken about the seriousness of the problem and how many people were in trouble. He said that every dairy farmer he speaks to is in trouble. We called a meeting in a local area of about 66 farmers and 60 farmers turned up. That showed there was a problem. Following on from that meeting, the Dairy Farmers Crisis Group was set up.

The heading on my presentation is "Are farmers charity workers or slaves?" — a heading I will return to when I summarise it. I wish to put some statistics to the committee and I apologise if members have already got this information. In the 1970s, farmers got 26 cent per litre of milk, that is, 75% of the consumer price went to the farmer. In 2007, farmers got approximately 36 cent per litre. In 2009, the amount reduced to 19 cent per litre. The first question to be asked is where has the 17 cent gone in the past two years? I ask the committee to bear that in mind when I show the figures for what it costs to produce a litre of milk. In the 1970s, some 75% of the consumer price went to the farmer whereas today he receives only 20% of the consumer price. Instead of a step forward, that is a reduction of 55% at a time of higher output costs for farmers, arising from Department policies, machinery and cost of living. At present, we have state-of-the-art farms, which was not the case 30 years ago.

A typical dairy farmer works 80 hours per week, 52 weeks per year, that is, 4,160 hours whereas the general public works 1,872 hours per year. A dairy farmer must be on the farm all the time. If he goes on holidays, he must pay somebody to look after his stock. In 2009, farmers received approximately 19 cent per litre of milk while the cost of production was approximately 27 cent, which is a difference of 8 cent per litre. In a practical sense, it is not viable for a person to produce a product on which he loses 8 cent.

A typical dairy farmer with 70 cows who produces 350,000 litres of milk loses €28,700 per annum, based on a loss of 8 cent per litre. For every hour he works he loses €6.90. The minimum wage at €8.65 per hour amounts to €35,984 per annum, yet dairy farmers are losing €28,700 per annum. That is unreal. If we take the case a stage further, the dairy farmer needs 27 cent per litre of milk to break even. We have already established in 2009 that he receives 19 cent per litre. To earn the minimum wage, dairy farmers need to be paid 39.66 per litre, approximately 40 cent per litre. A further 20 cent per litre, in addition to today's price of 19 cent per litre, equals a 98.3% increase to earn the minimum wage. We have a long way to come. It would be fair to say that nobody present would go to work and lose money. However, dairy farmers get up early and work late into the night and lose money on milk production.

Irish dairy farmers are the worst paid in Europe for the past seven years. That is not a nice record. In 2004, there were 24,000 dairy farmers while in 2009 there were 18,000 dairy farmers. That means 6,000 dairy farmers, or 25%, have ceased production. The question is how many will suffer in the future.

Since September 2009, the Dairy Farmers Crisis Group has visited a number of counties and has produced some information. We are aware of a number of dairy farmers who have since gone out of business. Whenever I make a presentation, the first question I ask is how many will be in business this time next year if the dairy farming industry remains as it is. Some 70% to 80% of those present put their hands up to say they will be gone out of business. How many more will suffer indirectly? How many people are making money out of the dairy farming industry? There are the vets, feed merchants, fertiliser companies, machinery companies, processing workers — the list is endless. If we lose another 25% of dairy farmers, we lose another 25% of indirect jobs from the industry.

In our action plan, we ask that a regulator be appointed. A litre of milk that leaves a farmer's yard at 19 cent ends up on the table with the price having increased by 400%. We need an independent processing report and testing. The Dairy Farmers Crisis Group was established in 2009 at a time when the farmers receive only 19 cent per litre. The processing trail includes the haulier who has to haul it to the creameries and then on to the retailer. Some of the large retailers get 50 cent per litre and do not even have to open the door to allow the person in. It is put on the shelf for them.

Is it fair that the dairy farmer does all the work and yet receives only 19 cent per litre while a large supermarket can receive 50 cent per litre and does not even have to put it on the shelf? That does not appear right. We recommend that the regulator have a short term in office and produce quarterly reports. We are probably paranoid and fear that he or she may get too friendly with the creameries and others. Why should dairy farmers not have a report on where the product is going and who is getting a percentage of it?

The next issue is fair trade legislation. Farmers are price takers, not price makers. They need a base price. As I said earlier, any person who produces a product knows exactly what he or she will get for it. Dairy farmers need a fair price for milk. Liquid milk suppliers need 50% of the retail price and manufacture milk suppliers need 40%. Dairy farmers should be allowed to sell to the highest paying processor. Under the current system, three months written notice must be given before a dairy farmer can move his quota. Where is the scope to encourage competition between processors? There is no competition whatsoever. The dairy farmers here with me may think that the milk which leaves their yard goes to a creamery down the road on the right-hand side but the lorry can drive out their lane and take it to another creamery. That does not make sense. There is no competition between them and the farmer has to accept what he gets. A month later he is told what he will get for his milk. That is a very unfair process.

The next issue is independent testing. Farmers live in fear of the prospect that speaking out with regard to the current crisis in the dairy industry will lead to milk processors failing their milk test and the Department forcing them to cease milk production. We have travelled a good part of Leinster and into Munster and have met many dairy farmers. We organise a hotel and send word to the local media that we are coming to speak with dairy farmers to give them some support. Everyone behind the scenes say they agree 100% with what the group is doing. They know they are losing €20,000 plus per year. They will have gone out of business in a year but they still need to have money coming in. They are refinancing their farms and houses to stay in business. However, they are afraid to speak out because of the testing system. Milk should be independently tested. Dairy farmers need Europe to develop a policy which matches milk supply and demand.

Where do dairy farmers go from here? As a public representative, I am doing my best for the farmers in my local area. We have expanded out from that. The committee members are in a better position and have more authority to bring this further. That is the reason we have come to this meeting. Perhaps the committee members can bring our views forward so something can be achieved. I cannot stand by, as a public representative, and watch friends, neighbours and constituents going out of business. I am tied into this now, like it or lump it, and must see it through to the end. I cannot stand idly by and let them go out of business. Mr. Joe Bracken might wish to hand his farm down to his son but he will not be able to do so because it will not be viable. Where do we go from here?

I have tried to keep the presentation as short as possible. We are willing to answer questions and thank the committee for its attention.

Chairman

Is the group a national organisation or an area-based organisation?

Mr. John Leahy

It is an area-based organisation.

Deputy Michael Creed

The fact that it is area-based should not take from the importance of the crisis to which it relates. There are other area-based organisations that have a similar concern.

I welcome the representatives of the group. It has not been an easy journey here for many of them with the current weather. Certainly, it was not easy setting out from west Cork at 5.30 a.m. this morning. It is a testament to how seriously they take the issue that they are here despite the current circumstances. The crisis in the dairy industry is a matter that has exercised this committee. Last year was very difficult for people in the dairy sector and I do not doubt that some will leave the industry as a result. In some respects many of the people who will be forced to leave it will, surprisingly, not be the smaller scale dairy producers but those who were heavily borrowed for capital investments with large quotas and perhaps other borrowings who will find it extremely difficult to survive.

The dairy sector is subject to the vagaries of world markets for dairy produce. In 2007, dairy farmers thought they would never again see a poor day when milk hit 40 cent per litre. However, the price quickly crashed to 19 cent per litre, and less than that if one had a low test. That is not economically viable. With regard to the presentation, I would not favour a regulator. We are in an era in which there are too many quangos and officials who are not doing the jobs they are supposed to do. Between the Competition Authority — if it were prepared to do the job for which it has a mandate — and the National Consumer Agency there are sufficient publicly paid officials to deal with some of the competition issues that have been raised, rather than establish another layer of bureaucracy to be paid for by taxpayers, farmers and the industry. We need to analyse the differential between what is paid to primary producers and what the consumer pays and who is profiteering on the backs of the primary producers.

Deputy Andrew Doyle and I, on behalf of Fine Gael, published a Bill last year that would tackle the power of the supermarkets. It received much support from the farm organisations and was received with hostility from those whom one would expect to be hostile to it, particularly the major multiples. We will proceed with the Bill later in 2010. It would go some way towards addressing the imbalance that exists. The danger is, and it is not just in the dairy sector, that we will increasingly outsource the production of the food on the major supermarket shelves in Ireland. That is already happening to a large extent in the case of fruit and vegetables, and the committee has been given evidence of that. It is also happening in the dairy sector. Milk from Northern Ireland is appearing on the supermarket shelves. That could force many farmers out of business. However, there is some pick-up in global dairy markets, which must be welcomed, and it is feeding through to the prices being paid by processors.

The representatives made the point that farmers are price takers, not price makers. That begs a question about the nuclear option farmers have of withholding milk supplies. How far is the group prepared to carry its conviction on price? Does it extend to withholding supply from its processors? I met the Irish Dairy Board and many of the processors, both large and small. Their trading figures for 2009 will be poor and will reflect global market realities. Many of them were not in a position to pay a higher price due to the global returns they got for their product. There are issues about the composition of the Irish Dairy Board, where some constituent members of the board are competing against it with other product. That issue must be addressed.

Is the group prepared to use the nuclear option? Is the group of the opinion that there is plenty of fat available to their processors and that they could pay more without jeopardising their viability? I suspect that many dairy processors were teetering very close to the edge in 2009 in terms of their viability.

Deputy Seán Sherlock

I, too, welcome the group. It is important to acknowledge that there is a plurality of views on farming issues and that there are groups outside the traditional farm lobby organisations such as the IFA and ICMSA whose voices should be recognised.

I will start with some of the basic assumptions. One is that farmers are price takers, not price makers. It is a line that is often trotted out. Why have we arrived at that scenario? There was a time when farmers controlled the co-operative movement. Production and distribution networks were more localised and farmers had a greater say at local level. In recent years, as co-operatives have become more corporatised or have been moulded into corporate entities, the voice of the farmer has dissipated. That is relevant to the issue of why dairy farmers find themselves in their current position, whereby they must accept the price determined by the market and they are no longer actors or agents in that process.

Our guests are advocating that a regulator should be appointed. I take a similar view to Deputy Creed in respect of this matter, namely, that we do not want another layer of quasi-non-governmental organisations, quangos, being created. There are enough such bodies and I could not support the appointment of a regulator. However, I would advocate that fair trade legislation be introduced. I do not understand why ICOS or the mighty co-operative movement is not lobbying the multiples at a higher level to ensure that a fairer price be paid to primary producers.

I do not agree with the Government's position on a potential code of conduct. Such a code will lack teeth and, ultimately, will not yield a proper price for farmers. However, I support, without question, the idea that fair trade legislation should be introduced so that primary producers will retain a degree of autonomy in respect of or control over what they produce and the means by which they produce it.

In most cases, there is a lack of transparency regarding the profits of the larger multiples. Their practices in the context of how they treat primary producers are well documented. A legislative change will be required if matters in this regard are to be placed on a more equitable footing. In that sense, our guests should not fear; the committee is well aware of the concerns they have expressed in that regard. Those concerns have been well documented and the committee has held numerous hearings and is working on that matter.

How did our guests arrive at a figure of 6,000 with regard to the number of dairy farmers who ceased production last year? I am not questioning the veracity of that figure, but I would like our guests to identify its source. They stated that in 2004 there were 24,000 dairy farmers, whereas in 2009 this had fallen to 18,000. Will they indicate from where these figures originated?

Is today's market price for milk as low as 19 cent per litre? I think there has been an increase in that regard. Perhaps our guests produced their document a long time ago and the price has not been updated.

I take issue with our guests' approach to dairy farmers selling to the highest paying processor. I am operating on the assumption that most dairy farmers are members of co-operative movements. What, therefore, would be the permutations for a dairy farmer who is a shareholder in the Dairygold Co-Operative Society Limited? Why would he or she want to sell to another co-operative entity? I would have thought that people would have a vested interest in selling to their own co-ops because, theoretically, there would be a financial yield to them at some point in the future.

Deputy Bobby Aylward

I welcome our guests if for no other reason than for updating us on what has happened in the dairy industry during the past two years. I was raised on a dairy farm and I have milked cows all my life. Last year, dairy farming was a loss-making business and this cannot continue. I accept that there has been an increase in the price of milk in the past couple of months. However, this occurred at the end of the season and is not much good to farmers. The average price of a litre of milk is 23 or 24 cent, which is an improvement but which will not allow farmers to break even. I accept our guests' assertion that farmers would need to obtain 25 or 26 cent per litre in order to break even.

Our guests' presentation was good but there are elements of it with which I would not agree. I would be concerned with regard to regulation. Ireland's is an open economy. In the past, prices relating to groceries, etc., were fixed but this did not work. People wanted to get rid of the groceries order and we did so. Since then, prices have been consumer driven. This new system worked for many years but for some reason it has now gone astray. In my opinion, that reason relates to the multiples which are taking too much. It was stated by our guests that ten years ago farmers obtained 70% in respect of their products whereas now they obtain only 20%. This is the position with regard to carrots, potatoes, grain, etc., and it is not good enough. Consideration must be given to this matter.

Glanbia has its headquarters in Kilkenny from where I come. That company is not making money and two months before Christmas it was obliged to make 480 people redundant as a result of the low price relating to milk. The only entities creaming it off in respect of this matter are the large multiples and the bigger supermarkets. It is in respect of these entities that regulation is required. I raised this matter with the Minister for Agriculture, Fisheries and Food, Deputy Brendan Smith, and the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Mary Coughlan, in order to discover whether action can be taken. Appointing a regulator will not resolve the matter. We must do something regarding the profits being obtained by the multiples. These entities are obtaining at least 40% or 50% of profits while primary producers obtain only 20%. That is wrong and the position must be changed.

On the collection and testing of milk, farmers have contracts with their local co-ops and I do not know how it would be possible to introduce an element of independence in this regard. If one's local co-op collects milk from one's bulk tank for processing, then it is responsible for testing it. That is how the co-ops pay people regarding the quality of their milk. I do not know how it would be possible to put in place throughout the country independent auditors who would decide on the price people should be paid for their milk. It might be possible to introduce spot checks but the Department of Agriculture, Fisheries and Food could not be made responsible for testing milk or for deciding on the price of milk. I do not know how one would proceed in this regard.

There are only four or five major co-ops in Ireland. As was the case with meat processing factories, these co-ops are probably in league with each other and are probably fixing the price in certain ways. Perhaps "fixing" is the wrong word to use. However, they are in league and in contact with each other.

My main point is that the multiples are the ones who are creaming it off. They have done all the damage. Tesco and other multiples are obtaining 40% or 50% profits and they need do nothing other than open their doors in order to sell milk. Action must be taken in respect of this matter.

Deputy Christy O’Sullivan

I welcome our guests and thank them for their presentation, which is fairly detailed in nature. On examining the front page of the document with which we were presented, a person who is not involved in farming would be of the view that this is an extremely complicated operation. However, I happen to have been involved in farming for some time and I see this on a regular basis. There is an impression abroad that farmers are very well off. At present, nothing could be further from the truth. Farmers may be asset rich but they are not making money from those assets. That is the difficulty.

Why was the Dairy Farmers Crisis Group established? Do its members have a difficulty with the main farming organisations, namely, the IFA and the ICMSA? Are they of the opinion that the latter do not represent their views? Will our guests indicate the position in this regard? Quite a number of organisations are being established throughout the country and I can see problems developing in that regard. The more organisations we have the harder it is to focus on the issue. The delegates might fill me in on why it was necessary to set this up and if, perhaps, it was because they believed the two main organisations were not addressing the situation adequately.

The crux of the matter is that the processors believe there is no room to hand back any more to the producers. A few weeks ago I talked to someone in Carbery Milk Products, Ballineen, where I come from. That company produces cheese at the moment at cost price, without a margin. It is bad enough that the producer is not getting a margin, but neither is the processor. This begs the question of the multiples creaming off the profits for not alone these but other dairy products, as well as vegetables and everything else, as has been well highlighted.

The sooner we get around to regulation where we can at least have some handle on what happens when a product leaves the farm gate, the better. We know the processors are not making money at the moment, so obviously the retailers are creaming it off here. Taking a global perspective, we are very dependent now on world prices from the European viewpoint. There is only so much that can be done even at the European level since it is a global issue, and it will become more so. It should emerge from this meeting that we should tackle the multiples, get them into line and emphasise that this cannot continue, even for their own sakes. There are three main players, namely, the producer, the processor and the retailer, as well as the consumer. The only light we can throw on the problem this morning is that the sooner we tackle the multiples the better.

Chairman

Just half the members have contributed, and perhaps most of the questions will be along the same lines. Does Mr. Leahy want me to call them all first? Is that agreed? Agreed.

Deputy Eamon Scanlon

I welcome the group and it is fair to say that we have heard its concerns before. I come from the north west where there are similar problems. We have the added problem of Northern milk coming in on a pretty substantial scale because of proximity to the Border. I know the dairy farmers are struggling, no question. I also know that co-ops are struggling. One of the managers has told me they paid over the odds in the last period to try to help farmers stay in business, effectively.

I appreciate the farmers are not being paid what they need to stay in business, that the co-ops are struggling to survive and then it is a question of distribution from the shops. How do the delegates believe the problem can be dealt with? It has to be addressed in some shape or form. This does not just affect milk, since the problem is replicated for beef and lamb production and right across the entire food spectrum. I agree that something has to be done. To produce beef, lamb or milk here at the moment is not viable. I would like to hear the delegates' views and I thank them for coming here today. I am sure it was not easy, given the weather.

Deputy P. J. Sheehan

I welcome the Dairy Farmers Crisis Group this morning. The delegates have outlined in no uncertain fashion that income has dropped considerably. Milk from Northern Ireland is finding its way onto supermarket shelves throughout the Twenty-six Counties, for a much lower price than our product is selling. Take Clona in Clonakilty, which is buying and bottling milk from the farmers in south-west Cork. It is also selling Elmvale milk from Northern Ireland, which I have seen in all supermarket stores and retail shops throughout west Cork. The Northern Ireland product is outselling the locally produced milk by three to one in the supermarkets. How we can curb that practice?

Deputy O'Sullivan pointed out that there was the producer, the processor, the retailer and the consumer. The consumer will travel 20 or 30 miles to supermarket outlets from the outlying villages of south-west Cork to buy goods cheaper in the supermarkets. How can Aldi, Dunnes, Lidl and SuperValu stores take full-page advertisements in Irish Sunday newspapers, costing hundreds of thousands of euro, with 75% of the content relating to food products? They are cutting each other on food products. How can the milk, beef and bacon producers exist, given that this type of war is going on between supermarket giants? Something will have to be done. I blame the consumer as well. I have seen farmers' wives driving 30 miles from their candy stores in their local villages and stocking up with cheap food products in the supermarket stores. There were eight grocery shops in my little village, Goleen, 30 or 40 years ago.

Deputy Michael Creed

The Deputy is the only one there now.

Deputy P. J. Sheehan

I have gone out of business, but my son has the only grocery shop in that little village, and now he cannot even make a living there because all people will buy is the fresh bread and the paper. The housewife will go away and fill her basket with cheap food products from all of these other outlets and sources. The kernel of the problem is how to convince the housewife who buys the product that if she wants to maintain jobs for Billy, Johnny, Margaret and Annie, now is the time to put her money where her mouth is. We need to talk seriously with consumers and the people responsible for axing the lifeblood of the economy, the farming community. Somewhere along the line we must take steps, whether by freezing prices or introducing fair trade initiatives. We have seen fair trade issues in the production of bananas in the banana republics of South America and elsewhere. We are seeing grapes from Brazil being stocked on supermarket shelves to attract housewives. Deputy O'Sullivan is from Clonakilty and can see customers from Goleen, Durrus and Ballydehob shopping in supermarkets 40 miles from their homes.

Deputy Christy O’Sullivan

They are all very welcome in Clonakilty.

Deputy P. J. Sheehan

I know they are, but how will one keep farmers in Clonakilty happy when their milk produced by Clóna cannot be taken off the shelves? Can we stop milk being brought in from Northern Ireland?

Deputy Christy O’Sullivan

No.

Deputy P. J. Sheehan

We cannot do so owing to EU regulations. Milk will soon be flown in from Australia and New Zealand. I can guarantee this.

People must be convinced that if there is to be a future for agriculture, it must stem from common sense. If housewives are attracted by milk from the North of Ireland that costs ten cents less per litre than milk produced in the South, they will grab it off the shelves. I have seen it myself and many of them are farmers' wives. We can keep banging our heads in talking about issues but we need a Government policy from the top. How will this come about? How can farmers in Northern Ireland produce milk at that price? How can there be such a price differential between the imported and home produced product? I do not know the answer but at the kernel of the problem is the consumer. Consumers must be convinced that if there is to be a future for agriculture, they will have to play their part also. The Ministers and people concerned must realise how serious is the problem. I can envisage a time when the 18,000 dairy farmers will be reduced in number to 9,000, unless steps are taken to safeguard the industry and the agricultural economy.

Deputy Seymour Crawford

As I am not a member of this committee, I appreciate the opportunity given to me to speak. I am a member of the Joint Committee on Social and Family Affairs and aware of many of the problems encountered in that area. I have an interest in the dairy industry as I am a dairy farmer.

I congratulate the group for the tremendous efforts they have made to make their case. It has been well thought out and presented. However, I would have some problems with aspects of it such as the part which deals with the issue of the regulator. I also question the group on the transfer of milk supplies and whether it would be of benefit to transfer them instantly. I represented the livestock sector for many years and there is no legislation to stop farmers transferring beef from one factory to another. That certainly did not mean the beef farmer received a better price because of the issues raised by Deputy Aylward. Many of these industries seem to be able to come together.

Some talk about bringing all dairy units together to achieve a better processing cost. I remember the time when some of the big dairy groups were set up in the midlands and south and it was supposed to be a bonanza for everybody because they would be able to stand up to the supermarkets. However, the opposite happened. The bigger they become, the more the supermarkets seem to be able to handle them. The only way this problem can be tackled is through the group's own proposal on fair trade legislation, as well as the proposal made by Deputy Creed. The supermarkets are certainly ripping us off, which is extremely serious.

We have to be aware that we export 90% of our product. Some like to suggest that we should simply put a rope around the Border but it is not that simple. I live close to the Border and product has moved in both directions from time to time. My own co-operative, of which I was a board member for many years, produces 20% of its product in County Monaghan and 80% in Northern Ireland. I know a little about how things work along the Border. Dairy farmers there are going to go out of business also because the price they are getting certainly is not good.

The issue that worries me is the extraordinary drop in incomes in the last two years. My own dairy co-operative in County Monaghan has used its reserves to minimise the effect of the drop, especially in 2008. However, in 2009 it did not have the same reserves to do this, which is why much of the problem arose.

We can be helpful in producing fair trade legislation and what we are doing in the European Union. It really annoyed me last year as a dairy farmer that when several countries in Europe were making a great case to the Commission for the provision of support for dairy farmers, unfortunately, we did not get behind it at the beginning. The Minister only agreed to become involved in the group at a much later stage to try to persuade the Commission to do something. With the new structures being put in place for 2013, if we are not in there negotiating to secure a proper deal to make sure the European Union will have sufficient milk products to serve its own customers in the future, we will have a serious problem. The single farm premium was introduced, supposedly to support the dairy industry because the Americans were refusing to allow us to provide other supports for the dairy sector, yet when they got into trouble, they used extraordinary measures within their own structures to support their industry. We have to be much stronger in dealing with the issue at European and world talks levels.

I mentioned that I was a member of the Joint Committee on Social and Family Affairs. While the farm assist scheme was introduced eight or ten years ago to deal with the income problems of farmers, there has certainly not been an even-handed approach to the provision of support through that programme. Some inspectors have accepted there has been a serious drop in milk prices but others insist on applying the previous year's income figure. Small dairy farmers received a farm assist payment of €6.50 before the budget was introduced. The budget removed that completely despite the fact that people can show they have no income because of the high cost of our summer — not winter — last year. Many dairy herds in areas like County Monaghan were housed during the summer months and fed expensive meal but that was not taken into account. It is an issue I would like this committee to follow up. While farm families may not get their full support from the marketplace, they are entitled to social welfare support if necessary.

I again congratulate the group. It has given the committee reason for thought. I assure the delegates that most of us from an agricultural background are aware of the extremely serious problems dairy farmers have experienced in the past 12 months.

Senator John Carty

I welcome the group. It has been said many times at this committee that the dairy sector is in dire straits. I have a great deal of contact with dairy farmers in my area of Mayo.

Like other members, I would not like to go down the road suggested by the group with regard to regulation, as outlined in the first action plan. We know the farmer is getting the lesser end and we know the co-ops claim they are not making any money in the process. Are the haulier and the retailer getting the cream? Have the delegates evidence of the percentages they are getting? They have provided a figure to us of 400%.

I would like the delegates to deal with the question of independent testing as outlined in the third action plan. A very worrying aspect of this is that it is suggested that milk processors would fail the test if they spoke out against it. The farmer, as the producer is the shareholder in the co-ops and if this is happening and there is evidence of it, it is time something serious was done.

Deputy Edward O’Keeffe

I welcome the delegates and sympathise with their thoughts and the position outlined in the document. Farming is an up and down business. We are primary producers and primary producers all over the world suffer, whether they produce copper, grain in the American mid-west or other products. We have to deal with the vagaries of the market.

We came from a very high period where milk was making €1.40 a gallon and then came back to 21 cent last year in my town. I cannot agree with much of what the delegates have said. Our home market is very small. For milk, it is only about 30% whereas British farmers put almost all their milk into liquid milk. What happened in the liquid milk area was that we had a protected market here for so long, with the Cork and Dublin areas protected since the 1930s. That has broken down because of EU legislation and free competition, so I cannot see why there is a price differential between here and Northern Ireland other than the currency differential. We are seeing milk flowing in because our people are demanding too much and making it very uncompetitive. That is the problem and we must face the reality of life.

Ireland has only 6 million tonnes of milk whereas New Zealand has 15 million tonnes and is very much a commodity producer. We are in that market and I do not think we can make much progress today in the pricing area unless the market improves. I have a doubt about the market. The sun is shining on the market at present but, from reading all the statements in the newspapers, it seems it might be a flash because of the huge stocks that are in intervention in both powder and butter. By mid-year we might be in difficulty again in the pricing area.

This has not stopped people going into milk production in huge numbers, however. Many farmers want to get into milk production and have applied for grants and concessions. There is interest irrespective of what the delegates have told us today. Milk production is probably the most lucrative business in farming. Last year, as the Chairman will agree, we had many arguments at meetings with the Minister for Agriculture, Fisheries and Food on the milk price. I wanted him to go back to Brussels to seek special concessions and so on. At the end of the day, he got a limited concession but he fought the case and did well.

Some 60% of the co-ops are owned by farmers. The case for independent testing is an insult to the co-operative movement. I come from the Dairygold area and we have a very well run testing facility in Mallow, with very decent, honest people whom I know well. I cannot envisage any interference in that area. It would be a criminal act to downgrade one's milk or to do anything with it unless there is an error of judgment or an error in the testing. I do not see any case for this. While Deputy Creed said independent testing might be on the way, that will be a national system and I do not know if everyone will participate.

Another issue is that the cost of production last year was extremely high in the feed and fertiliser areas. We are all aware that the price of urea will be €100 less per tonne this year than last year — I got a price for that this morning — and feed prices are €100 less per tonne also. The situation has changed a little. Farmers own the co-ops. If there is a problem there, they should be in there fighting their corner. Although 40% of co-ops are corporately controlled, there is farm involvement in all of those also — I am referring to Kerry, Glanbia and other companies. At the end of the day, farmers have a major input into the running of co-ops because there is still a co-operative ethos in those corporate organisations. I take it they are run as they should be run. If they are not, there are still 26,000 farmers producing milk and 130,000 other farmers.

We are too big in the commodity area. The Danish industry is very much based on added value. What do we do here? We make skimmed milk powder, whole milk powder and butter, and we have a small percentage of added value. We have lost that market in added value, which is where the margin is for the processors and the farmers. We now have only one chocolate crumb factory in this country, which is probably under threat again because of the Kraft Cadbury takeover, and we have lost two or three of them in the past ten to 15 years. We have practically no processed cheese. Much of our cheese is being brought in from outside and processed here, which is part of the problem.

I agree with a few points made today. Deputy Crawford referred to mergers and amalgamations. The Irish Farmers’ Journal shows in its milk leagues that the smaller co-ops are probably paying more for milk than the majors. That is an indication of inefficiency or else that there is no added value in the major societies.

While we are in a period of austerity and money is scarce, there has been so much talk about it, I hope this committee will travel to New Zealand to see the dairy industry there. However, I do not think the Chairman will get the funding to take us. It is important we would visit New Zealand because we are modelling ourselves so much on it. New Zealand is in the South Pacific and we are in the North Atlantic. There is much rubbish talked about New Zealand. I have been there twice and would like to go again. Its costs are much less than ours but the scale is bigger — it is approximately 15 million tonnes of milk versus 5 million or 6 million here. We hear much about Fonterra. It is up to its knees in debt, as I have read in the newspapers, and paying a lesser price for milk than the smaller co-ops — there are a few left. Deputy Crawford's case about mergers and amalgamations has fair merit, whether for the South Pacific or the North Atlantic.

There has been a great deal of bad management in co-ops. I have seen much of this in my own area, where we have seen more rubble than development, and we have lost our added value. I referred to that, but it is another story — it is like Anglo Irish Bank.

The delegates are in a primary production business. It is a tough business to be in and will not change very much. We can look at the history of agriculture across the world and see what happens. This year will be a little brighter than last as the cost of production will be lower. I take major issue with the delegation in respect of independent testing and its contention that it is not getting a fair deal. The delegation should take up this issue and if it can prove the point, it will be canonised. There may be farmers who agree but I know farming, having had a partnership in a dairy industry that I owned at one time but no longer do, and I have the greatest confidence in my testing. I question anyone who queries this. I do not see any dishonesty, whether testing for somatic cell count, for TBC, for thermodurics, butterfat or proteins. I sympathise with the delegation and hold the same view as it, but the world will not give me any better treatment than the delegation. My son and I produced milk at 21 cent last year. We may get 26 cent this year but we will have a lower cost of production. The cost of production will reduce substantially. The Minister has done his best in this area in Brussels. He has made a great case at times and we must have more farming organisations coming in here, including Mr. Jackie Cahill of the ICMSA, who fought a vigorous campaign at all times.

Senator Terry Leyden

I thank the Chairman for the opportunity to speak as a visitor to the committee. I welcome Councillor John Leahy, who was inspired during his campaign and decided that someone had to shout "Stop". He probably realises now how difficult it is to change the circumstances of the milk industry. I come from County Roscommon, where we have lost many milk producers and there are very few left. There are vital jobs in the county in processing at Ballaghaderreen. The campaign is justified in respect of the lack of profit in this field and its costs. Crates of milk are coming in from northern Europe and the industry is more competitive than ever.

Senator John Carty is the secretary of the Fianna Fáil Oireachtas agriculture committee. Last December, I fought vigorously at the committee meeting about the costs involved. Sometimes the same case cannot be put at meetings with the Minister, but the Minister went to Brussels and fought the case on behalf of Ireland. It is a national issue. The recently launched campaign to buy Irish milk was worthwhile. I do not know if it was supported to the extent it deserves. I was in a supermarket recently and I noted the amount of milk available. There is great competition and people do not look at the product. One sees that Avonmore is Irish. They do not look at where the product comes from. My message is that we should look to our own and buy our products. If we could do that it would support the industry we have. Aldi and Lidl are shipping in containers of milk and bringing the price down. It is tremendous that the delegation came here in difficult weather conditions to fight the case. I congratulate Councillor Leahy on being elected.

Mr. John Leahy

I am not a dairy farmer and I will not be able to answer the technical questions. Deputy Creed referred to the Fine Gael Bill. We welcome its publication and would like to examine the Bill. Perhaps we duplicate some of its elements. Most Deputies and Senators referred to the regulator. A regulator is the term I used but there must be someone who can examine this or oversee it. Our argument is that the 17 cent referred to a two year period. In 2007, farmers received 36 cent and it was reduced in 2009 but no one could give feedback to the farmers on where the price difference had gone. Perhaps the term regulator does not sit well but reference was made to the Competition Authority or a body that already exists. Someone must monitor this.

A number of Deputies referred to processors being on their knees. We do not have proof of this but perhaps someone can feed this information back to farmers. The farmers to whom we spoke reckoned the creameries were taking the cream. We do not have the information and all we know is that multinationals are creaming it. The perception on the ground is that processors are creaming it as well. Perhaps there should be a degree of continuity of communication and then that perception would not be out there.

Deputy Creed asked about where we might go in respect of withholding milk. I see this as two big wheels, with retailers, creameries and consumers. Outside that, a chain is driving it, namely, the dairy farming industry. Without that being stopped, I do not know if we will make progress. This is a personal opinion that I forced on the group but the group agrees. We can be in negotiation and we can hold 100 meetings all over Ireland but until the wheel stops, people will not realise what is happening. Members referred to consumers in Ireland having a duty. I agree. How do we publicise that? At a man's door during a campaign, I found out about this. Some 90% of the people buying milk in Ireland do not realise the crisis farmers are in. We are all from Offaly. Within two or three weeks people told us that they did not realise the extent of the situation. They are not necessarily buying Irish milk now; they may be still buying the cheaper brand. Perhaps something can be done to publicise our situation to every household. We can save jobs or even create jobs. If we get the dairy industry up and running, jobs will be created.

I will leave the figure of €6,000 to Mr. Brian Gleeson. I presume these are IFA figures. Many members referred to multinationals and I agree with the thoughts expressed. Our comment on independent testing of the product only comes from feedback we are getting. Perhaps it is a cop-out for farmers who are not putting the shoulder to the wheel. We are saying we need the backing of the farmers and we need them to be out in force. Farmers need to contact local representatives and they are saying that there is fear. Perhaps this is a cop-out but if independent testing is coming down the line, there must be something in it.

I refer to why we established the Dairy Farmers Crisis Group. I was going to address the question of the two main dairy industry organisations at the beginning, but I kept away from this topic because they are doing a good job. Perhaps they cover ground that we cover, but this goes back to the wheel situation to which I referred earlier. The cog is still turning and the farmer is still producing the milk, irrespective of the price he is getting. It is still going into the creameries, the shops and households. Do I feel it is appropriate to stop the wheel turning in order to get attention? I do not believe it is and that is why I put the shoulder to the wheel. We must get to this stage before something else is done.

Members asked how we can get standard price across the board. This point comes back to the Competition Authority and the regulator. I do not have a problem with members' comments on the regulator. Members have more experience of this matter than I. However, someone should be in a position to deal with this area.

Everywhere we go, the first farmer to speak to us asks what we will do about milk coming from the North. We know EU legislation on free trade applies to this. I do not have the details of this. Perhaps we could publicise this more. Who buys the Irish Farmers’ Journal? Farmers buy it. It is in the Irish Independent; but who looks at that section? I never looked at it until I got involved in this group. Now I must look at it because Mr. Bracken will be on the phone asking me if I saw the farming section of the Irish Independent and asking questions about it. I am forced to educate myself on it, but we are not educating 90% of the people who are buying the product. That is my point.

Hauliers get very little out of it, from what we are hearing on the ground. It is the processors and the multinationals that are involved.

Deputy Eamon Scanlon

How much are farmers in the North being paid for their milk? Is there a price differential between the South and the North?

Mr. Joe Bracken

Since our group started we have been in contact with a few farmers in the North, who said that since we got going on the ground the price of their milk has increased because our milk was coming across the Border. That was when milk was at 19 cent a litre in 2009. The supermarkets take a major cut from the price of milk, sometimes as much as 50 cent per litre. How can they charge 50 cent per litre and make 50 cent per litre profit on milk but not compete Irish milk against Northern milk? They are making a profit of 50 cent per litre but we have to produce at a loss. Do members understand where I am coming from? Why can they not put Irish milk on the shelf for less and make a smaller profit on it?

Another point I wish to mention is that of big farmers going out of business. Irish dairy farmers had to meet the dairy hygiene regulations relating to milking parlours, and set up their businesses to produce milk for export to Europe. The nitrates directive then came into effect and they had to deal with slurry storage. However, even with all these things in place we get a ridiculous price for milk and cannot stay in business. If things stay as they are for six months of 2010, a phenomenal amount of dairy farmers will have gone out of business because it is not viable for them to keep going. One cannot go to work and lose money every week while no money is coming in. It is as simple as that. We are delighted to be here representing some of our farmers. Most farmers on the ground feel the same way as we do and they cannot get the message across.

The issue of independent testing was mentioned. The farmers we met at a meeting were complaining but said they would not speak up in case they were hammered by the creameries. If a farmer is sending milk from the same tank to two different co-ops and receiving two different sets of test results, is he not entitled to have his milk independently tested? I have no problem with testing milk, but I would like this to be explained.

Chairman

Are many farmers in a situation in which two different creameries are taking their milk?

Mr. Joe Bracken

There are a few, although not many.

Deputy Edward O’Keeffe

Different cows may provide different samples.

Mr. Joe Bracken

I am referring to tank samples.

Deputy Edward O’Keeffe

The milk will always be higher in quality, in terms of fat and protein, at the source than it will be when it reaches the creamery.

Chairman

Mr. Bracken has a point. He is referring to two samples from one tank.

Mr. Joe Bracken

Both samples are taken from the tank after agitation.

Deputy Edward O’Keeffe

I have two other points. The price in Northern Ireland this time last year was much less than in the South. There was a quote to this effect in the Irish Farmers’ Journal. Everyone knows what the hauliers are getting; that is no secret.

Chairman

Please allow Mr. Bracken to continue.

Deputy Edward O’Keeffe

I am entitled to reply to the points he is raising.

Deputy Bobby Aylward

The point he is making is that if tests are done at two different co-ops and the results are different, there is something wrong.

Mr. Joe Bracken

The co-ops are taking our milk and telling us the markets are not there, but for the lowest-priced commodity at the moment, the return is around 30 cent per litre. Why is this 30 cent per litre not being passed back to the farmer? I am just throwing that point out to the committee.

Chairman

I cannot answer that question.

Deputy Bobby Aylward

Mr. Bracken referred to farmers' obtaining different test results for the same milk at two different creameries. Are these co-ops owned by farmers?

Mr. Joe Bracken

No; they are plcs.

Deputy Bobby Aylward

Yes, but 51% of Glanbia is owned by farmers even though it is a plc. Are the co-ops referred to by Mr. Bracken similar?

Mr. Joe Bracken

Yes.

Deputy Bobby Aylward

If what Mr. Bracken said is a fact, the farmers on those boards should be able to bring this up at board meetings. The farmers' representatives on the board should be doing that.

Mr. Eoin Lyons

There was a comment earlier on our brief, although perhaps it was that of Mr. Lyons, to the effect that the price of milk last year was 19 cent per litre. This winter it has increased to 24 cent per litre, although the Irish Dairy Board is paying 28 cent per litre. Thus, it is not all being passed back to the farmer but is being held up at the source end. At the moment, if the Irish Dairy Board is paying 28 cent per litre, farmers should be getting more than 30 cent per litre due to the high protein levels in milk, but we are not getting it.

Deputy Edward O’Keeffe

Twenty eight cent is the gross price, so four cent is taken by the creamery for manufacturing and other costs. It could not survive on this; it would be in debt again and we would be in more trouble. The creamery's price from the Irish Dairy Board is 28 cent, and 24 cent is the farmer's price because the creamery must take a processing cost, as I understand it.

Mr. Eoin Lyons

In earlier times the prices were matched up evenly enough until this time of the year, but for some reason it is not all being passed back. Whatever the Irish Dairy Board is paying is——

Deputy Michael Creed

If there is more milk later in the year the creamery's processing costs may be higher at times of lower volume.

Deputy Edward O’Keeffe

Four cent is a very small processing cost. It includes the cost of electricity, haulage and everything else.

Deputy Michael Creed

That would take into account, to a certain extent, the time of peak production.

Mr. Joe Bracken

It is easy to pay 24 or 25 cent at this time of the year because the milk volume is small. It is during April, May and June, when the volume is high, that the price needs to be good for the farmer. If the farmer is receiving 19 cent per litre with a high volume he is losing money at that time of the year.

Deputy Edward O’Keeffe

The price is based on a protein content of 3.6% butterfat and around 3.38% protein. If the price being received with a protein content of 3.6% last year was 19 cent per litre, it must have been based on very low butterfat levels — less than 3%. There would be an issue in terms of insufficient solids. Farmers can only be paid based on the constituents of the milk, which is 90% water.

Mr. Eoin Lyons

The issue of the smaller dairy co-ops is puzzling. Deputy O'Keeffe said earlier that the smaller co-ops are able to pay more than the larger co-ops. There are obviously too many fat cats in the bigger co-ops who are absorbing it all.

Deputy Edward O’Keeffe

If Mr. Lyons goes to Deputy O'Sullivan's constituency he will see the prices being paid by the smaller co-ops, which are the most efficient businesses in Europe. These include Carbery Milk Products, and there are three or four more in north Cork. The prices where I and Deputy Aylward live are way down the league.

Mr. Eoin Lyons

Before we leave the room we would like to know whether anything will go ahead after our trip up here today, or whether this has simply been a talking shop.

Deputy Bobby Aylward

I hope the Minister for Enterprise, Trade and Employment will investigate this issue and take on the multiples. I believe there is a great future for dairying. Over the last two years there has been a recession all over the world. Since 80% of our dairy products go abroad — 60% to Europe and the rest elsewhere — we are hoping things will pick up in this regard and that the price will rise to perhaps 30 cent per litre over the next year, which is the level farmers need to survive and have a future.

As I said, I would like to see the Minister taking on the multiples. How can they be taking 50% of the price of a litre of milk and how can we stop it? In Europe we are an open economy based on free enterprise, which is the way we want it. We did well out of it over the past ten or 15 years. However, we all forgot to mention that 15 years ago the average worker in an organisation such as Glanbia earned €200 per week. Now such workers are earning €1,000 and more, on average, which has to be paid for. The sample was taken from ten or 15 years ago, which had figures of 70% and 20%. All that money had to come from the primary producers, in other words, the cow's tit. We are hoping that everyone takes a fair share, including the multiples who, instead of taking 50%, will revert to 20%, 25% or 30%, and the primary producer will move from taking 20% to 30%.

Deputy Mattie McGrath

I am from a rural constituency and have a farming background, and understand the situation. I agree with Deputy Aylward. The Minister for Enterprise, Trade and Employment, Deputy Coughlan, has to take action and introduce stiff regulation to deal with the multiples, otherwise we will not go anywhere.

Chairman

This issue has been raised, not only in the dairy sector but in every other sector. Deputies Creed, Aylward, Doyle, the clerk to the committee and I were in Brussels last year and met Ms Mariann Fischer Boel, Commissioner for Agriculture and Rural Development, and Mr. Joe Borg, Commissioner for Fisheries and Maritime Affairs, and raised this issue with Ms Fischer Boel. Unless the issue of the multiples is tackled across Europe, it will not help the dairy sector or any other sector. The problem has to be tackled across Europe because, as Deputy Crawford and others stated, many of our products are being exported.

When we met Ms Fischer Boel last year, she told us the issue would be examined and tackled but that it was not her brief. I do not know who the new Commissioner for Agriculture and Rural Development is, but we should discuss this matter with the Joint Committee on Enterprise, Trade and Employment and perhaps send a joint committee delegation to Europe to meet the appropriate Commissioner and Minister there as soon as possible. We have raised this at the meetings of this committee, within our own groups and so forth, and will continue to do so, but unless it is tackled in Europe what we say is not worth a damn.

Deputy Edward O’Keeffe

This is what we did here last year, because the cost of production will be substantially reduced. I gave the committee figures of some €100 a tonne for dairy feed and €100 for urea. Energy costs are coming down. The situation is changing. A reduction in energy costs will help the processor as it is a huge cost. There is a great deal of talk about multiples but the Irish market, comprising some 4 million people, is very small. Of the beef we produce, 10% goes into the multiples. Some 30% of milk goes into multiples and there are similar figures for sheep, depending on stock levels. New Zealand is a big problem, and is where things have gone astray. Irish farmers cannot stop talking about New Zealand. Mr. Michael Murphy is out there in his sandals every week.

Deputy Seymour Crawford

The situation in Northern Ireland is being discussed constantly. In recent times one of its companies has bought milk from southern farmers. The reason for that is fairly simple. Dairy farmers here decided to put a certificate from the National Dairy Council on containers of milk to show it was produced in Ireland. Others are getting around that by buying a percentage of milk from dairy farmers south of the Border. It is very easy to say one can solve these things easily but people are sitting up at night to find ways and means around every regulation. This is the real problem with the supermarkets, namely, that they are really screwing the system, not just in Ireland but across Europe.

Deputy Michael Creed

Mr. Lyons asked a question which goes straight to the heart, that is, when one leaves here today, what has one achieved? I tend to see the glass being half full rather than half empty. This is something which has to be fought on many fronts. The point on the multiples is only part of the issue. Agricultural policy is a common policy across the 27 member states of the European Union, so in many respects we cannot do anything. This committee is not in a position to say to the witnesses when they leave that they will have a guaranteed price of 25 cents or 35 cents a litre for 2010; it is not within our gift to do that. We have to make sure the cost base, including utilities, water and electricity which are beginning to move in the right direction, for processing is as efficient as possible. We have to look at market supports at a European level. One of the legitimate criticisms of 2009 is that while the European Union moved in respect of taking product off the market and putting it into intervention, it was too slow to take substantial volumes into intervention to deliver a tangible result to farmers. In terms of how we deal with a similar crisis in the future, we have to learn from that how to be able to move faster and deliver more effectively to the front line.

We also have to watch how such stocks may or may not be released back into the market so that they do not depress any recovery in global markets because this is a global market issue. There are some instruments available at a European level to deal with a crisis if the market collapses, but not to the extent that they will hand a cheque to everybody who does not receive 35 cents a litre as a top-up to get them to that level. Part of the compensation mechanism which has not been mentioned in respect of the price graph 20 or 30 years ago to which the delegation referred is that the single farm payment was introduced to partially compensate farmers as they moved from a system where Ministers came home from price negotiations in Brussels 25 years ago and said we would have a guaranteed price for a gallon of milk, a system which has now gone. In the move from a guaranteed price to a market situation, the compensation mechanism of the single farm payment was introduced.

The challenge for the Common Agricultural Policy post-2013 to is make sure we secure an adequate budget for agriculture and an adequate share of it for Irish agriculture, and that the dairy sector receives its fair share of that budget. This is multifaceted. The multiples are a part of it. The Competition Authority and the Fair Trade Bill, which we have published, are part of it. I have grave doubts about what the Minister proposes because it seems he proposes a voluntary code of conduct, something the multiples have been able to drive a coach and four through in the United Kingdom. As we speak they are tearing it up and putting in place a statutory framework to deal with the multiples. Some 90% of our food, be it dairy, beef or whatever, is exported. We are dependent on global prices and how, if they drop, we can put in place compensation mechanisms at a European level.

Deputy Bobby Aylward

I have one point.

Deputy Michael Creed

It is an ongoing issue.

Deputy Bobby Aylward

I have one point, which concerns something we were told by the Minister. I also met the board of Glanbia. Only for export refunds and interventions for Glanbia and other such companies last year, the price of a litre of milk would have been 12 cent, something which Deputy Creed spoke about.

Deputy Edward O’Keeffe

I suggest we send a report of this meeting to the Minister.

Chairman

We will send it to both Ministers.

Mr. John Leahy

I have some final points. On Deputy O'Keeffe's comments, I agree Ireland is a small market but it is a problem to which there has to be a solution. About 90% of the people buying the product could be made aware of the background. If 30% of them reacted to it, it will lead to an increase. I may be unrealistic. It was mentioned that the dairy industry is lucrative within the farming sector. Given the figures we have produced, that statement is not correct and I have to disagree with it. If it were a lucrative industry, I would not be sitting here today.

I cannot disagree with the comments on the changes in the prices of feed. A Deputy mentioned it could be 26 cent a litre next year but there is no guarantee. There needs to be a base price. Why are we guessing? These men are producing a product and they should know about it. At the end of the day they are producing a product at a loss. They incurred a loss last year and will possibly do so next year. If we are invited back next year, not all of the people concerned will be back as dairy farmers. Therefore, time is of the essence.

I appreciate what the committee will do behind the scenes but I would like to see a line of communication on the progress being made in order that we will know that this has not been a waste and that the committee is actively working for us. We could contribute to its efforts.

Deputy Bobby Aylward

Who would pay the break-even price of 23 cent if the price of milk were 24 cent? Who would make up the difference?

Mr. Eoin Lyons

Ours is a small organisation. We came here to ask the committee questions. The Chairman has said he went to see the Commissioner to tackle retailers.

Chairman

A group of us brought up the issue with the Commissioner, with other concerns we were discussing.

Mr. Eoin Lyons

This does not just affect milk products, it affects everything across the board. I ask the committee to go back and push the point home. This is now serious. I have a young family and I am lucky that my wife has a good job. She is propping up everything.

Mr. Joe Bracken

I agree with Mr. Lyons. There is no way the Irish dairy farmer can stay in business unless we know what we are going to get for our product.

Deputy Edward O’Keeffe

The Minister fought hard in Brussels and did an excellent job. We were badgering him every day of the week. I was on his heels because I am heavily involved in milk production. He secured intervention, export refunds and held several special meetings with the Commissioner who was opposed to everything we were trying to achieve because she was Danish and had another agenda. However, the Minister fought hard and achieved export refunds and intervention in the case of powder and butter. That must flow into the market and we must know how it could upset it.

I milk 170 or 180 cows with my son and know a little about the business. We had an average price of 21 cent in May and June last year and had no butter fats. This year will be different because the cost of production will be lower. Energy costs will also be lower, as will feed and other costs. We are operating in a free market and no one will pick us up off the ground.

I see the reverse of what the delegates are saying; I see expansion taking place and people coming into the business at the 20 cent rate. I could name five people who were growing sugar beet but who have changed over to producing milk. If they can do this with herds of less than 250 cows, it militates against the group's argument.

Mr. Eoin Lyons

They are ploughing while the fields are green.

Deputy Edward O’Keeffe

They are not.

Chairman

Is it agreed that we will relay the concerns of the group to both Ministers? Agreed. We will look at the matter in conjunction with the Joint Committee on Enterprise, Trade and Employment to see if we can meet the Commissioner on the issue of the multiples.

Deputy Edward O’Keeffe

Is there any way we can get a few quid to travel to New Zealand to look at the industry there? There is much talk in the Irish Farmers’ Journal——

Chairman

That concerns a different issue.

Deputy Edward O’Keeffe

The Irish industry is being measured against the New Zealand industry.

Deputy Bobby Aylward

The first thing we should do is forward the minutes of the meeting to the Minister. We should then arrange with our counterparts on the other committee to return to Brussels to see about tackling the multiples.

Deputy Edward O’Keeffe

The new Commissioner might be more favourable.

Chairman

On behalf of the committee, I thank the delegates for their presentation and answering our questions. We have had other organisations facing similar difficulties appear before us and will not be found wanting in trying to advance the issue. It will not be easy but we will work in the best interests of farmers in all sectors. I met potato farmers last week whose crops were rotting in the ground. They have also been badly affected by the multiples. Every sector of agriculture has been affected by the multiples.

I thank the delegates for appearing and they are more than welcome to come back. I am sure the group will be organised on a national basis before long.

Mr. Joe Bracken

On behalf of the group, I thank the committee for listening to us and any help it can offer us.

The joint committee adjourned at 1.35 p.m. until 11.30 a.m. on Wednesday, 20 January 2010.