Seanad Éireann debate -
Wednesday, 23 Jun 1976

Vol. 84 No. 5

Dairy Produce (Miscellaneous Provisions) (Amendment) Bill, 1976 ( Certified Money Bill ) : Second and Subsequent Stages.

Question proposed: "That the Bill be now read a Second Time."

Parliamentary Secretary to the Minister for Agriculture and Fisheries (Mr. M.P. Murphy)

An Bord Bainne Co-operative Ltd. took over from the statutory Bord Bainne as from 1st February, 1973, on a voluntary basis the central purchasing and export marketing of Irish dairy products, and has to date been purchasing the vast bulk of our output of dairy products destined for exportation.

In order to finance its purchasing operations each year the board is obliged to borrow on short term large amounts of working capital from banks and other lending institutions. As, since its establishment in 1972, the new board had very little capital of its own and was consequently not in a position to depend solely on its own resources to borrow the amounts of working capital it required. I sought and obtained in section 6 of the Dairy Produce (Miscellaneous Provisions) Act, 1973, power to guarantee borrowings by the board for the purchase of dairy products up to a maximum of £20 million at any one time. With the aid of this State guarantee the board has up to recently been in a position to borrow its full requirements each year, which at maximum have been well in excess of the £20 million guaranteed. This State guarantee has enabled the board to cope with a situation where its purchasing far exceeds income from sales during the peak production months from April to August while marketing takes place fairly evenly throughout the year.

With increasing milk production and the increases which have taken place since 1973 in the price payable for milk, and consequently for the products manufactured from the milk, a state guarantee of borrowings up to a maximum of £40 million is now needed to induce the banks and lending institutions to advance the board's peak capital needs which this year are expected to exceed £90 million. Section 2 of the Bill in effect increases from £20 million specified in section 6 of the 1973 Act to £40 million the maximum amount of the State guarantee of borrowings by the board. This increased maximum will apply until 31st December, 1977, when as laid down in the 1973 Act the period over which the guarantee is available is due to expire. Meantime the board is endeavouring to build up its own capital reserves so as to enable it to operate as soon as possible free of the State guarantee.

The board is providing an excellent marketing service on behalf of the Irish dairy industry—often in difficult market conditions—and this Bill, the terms of which I confidently recommend to the House, will help them to continue their invaluable work.

Mr. Dolan

The Minister and the Parliamentary Secretary have found this Bill necessary and I am in full agreement with it. On behalf of Fianna Fáil we accept the Bill and, indeed, we welcome it. It is true, as the Parliamentary Secretary said, that there is no comparison now with a ceiling of £20 million in 1973 and what would be expected in 1976. Consequently, it is only natural to expect that the ceiling would be raised.

That is a reasonable amount and we certainly feel it is necessary. It is only fair to say that Bord Bainne and those people in charge of this have a very difficult task to perform because they are trying to sell our dairy produce, not alone on the home market, where there is serious competition, because butter can be taken across the Border fairly freely but also because of the difficulty we have experienced over long periods of selling our goods on foreign markets.

I thought that when we entered the EEC we would more or less have a guaranteed market and the difficulty would not be what it seems to be at present. I never envisaged a situation whereby New Zealand and other countries could sell their dairy produce in the EEC. I know some agreement has been made and that it will expire in 1980. In the meantime the dairying industry will have a difficult problem in trying to dispose of their surplus products. Let us make no mistake about it: the produce has increased immensely because of the increased price of milk, the increased use of fertilisers over the past nine or ten years and the increase in herds. Dairying, a very difficult occupation to engage in, is the one most small farmers place their trust in for making a reasonable profit to sustain themselves and their families. Anything that helps to ensure that that position continues is very important, not alone from the country's economic point of view but from the social point of view. It would sustain and maintain many families in rural Ireland who would, in turn, ensure the support of local towns, schools, churches and so on. The drain of the rural population into the big cities would cease and people would not be forced out of the dairying industry.

There have been grave misgivings and annoyance among small farmers for some time that only the big farmers will survive. That is very disheartening. The co-ops in the past had a very difficult role to play. The Bill helps the board to ensure adequate and efficient storage of milk powder, cheese, butter and other dairy products, and their sale, as required on the market. An enormous proportion of our working population are tied to the dairying industry, being employed in milk powder and cheese factories, creameries and various other places. The standard of living is very good and the wages paid are, so far as I know, trade union wages. These are all very important considerations.

Our creameries in the past produced excellent quality finished foods in the line of butter and cheese. Killeshandra, in my area, have won the Reid Cup, as the Parliamentary Secretary is aware, nine or ten times as a result of the efficient manufacture of butter.

All these things are encouraging. The butter we produce is the finest in Europe. We had some experience during the war years of imported butter and I do not think very many people in this country found it very palatable or would praise the standard of it. It is, therefore, tremendously important that we realise that our product is so good that it could sell on its own. At the same time it is essential for us to have money to buy storage so that the co-ops can store butter when a lean period arrives. We must have a very efficient board. Bord Bainne have been doing excellent work over the years in selling our finished product. That is what is needed. There cannot be any lay-off even though we realise that New Zealand may be going out of this by 1980. We have learned from experience in the EEC that a difficult situation can arise from one year to another. Our Minister, being only one of nine, will not be able to control a situation such as that. Consequently, it is important in the period of peak production, April to August, that we should be able to hold our supplies in proper condition and to release them on the market as the best opportunity presents itself. Our industry depends on the prices we can command abroad.

I should like to pay tribute to the efforts these people have made down the years to advertise and sell our agricultural produce in England and on the continent. We have an excellent climate now and there is great room for expansion. I should like the Minister or the Parliamentary Secretary to restore the confidence that seems to be lacking among some of the dairy people because of reports in the media that there are mountains of skim milk in one place and powder in another and that there will be a cut back in the dairying industry. We have also heard that the EEC will have to reduce this to what they call a realistic level.

Where will the Irish farmer find himself? Dairying is not an industry which one can build up overnight. It takes years. The dairy farmer is entitled to a projection, at least three or four years ahead, as to the possibility of maintaining himself and his family and making a profit.

Mr. Butler

I welcome the Bill and realise the need for the increased borrowing from £20 million to £40 million. Before I refer directly to the Bill I should like to say that the farmers of Ireland have not lost confidence in the dairy industry. They are full of confidence as anyone can see from the reports. Last year there was an increase of 9 per cent in dairy products over the previous year and this year, according to the reports, we expect a 13 per cent increase over 1975. That is confidence. I know the producers have confidence because I deal with them daily.

I should like to compliment Bord Bainne for the work they have done in the past and since 1972 that work has enhanced the board. Bord Bainne was set up by the co-operative movement and the Chairman is a milk producer, Mr. Jim O'Keeffe, who is highly thought of in the industry. He must be congratulated on the work of the board. I congratulate him and other members of An Bord Bainne consisting of farmers' representatives and executives of the industry. They are putting together thoughts that are helping the industry and finding export outlets. It is a difficult job. As a member of the EEC we are bound by certain regulations. This makes the export of our products a little more difficult than if we had free trade. However, as far as Bord Bainne is concerned, intervention was never used for butter. Irish butter never went into intervention because it had been sold by the board outside of intervention at a greater price than they would get. The easy way out would have been to put it into intervention and accept the price but An Bord Bainne does not accept that. An Bord Bainne is an organisation that goes out and sells the product. It has sold all the butter available outside of intervention and must be congratulated for that.

We have all heard of the skim powder mountain. It was only in mid-1974 that any skim powder went into intervention. We did not help to create the mountain. Since 1974, because of the demand to pay farmers for their milk, because of EEC Regulation 2690, some skim powder had to be sold into intervention. I am sure the board are sorry that happened but it had to be done because money had to be got to pay farmers.

Milk production is really only a six-or seven-month season. It starts early in April and finishes quickly after September. The Parliamentary Secretary mentioned that peak production runs from April to August. That in itself presents difficulty because capacity has to be arranged for that type of production. Bord Bainne has advised producers of milk to extend the lactation period and the creameries have offered bonuses for the early production of milk.

Recent figures show that farmers are interested in a longer lactation in going into milk earlier and in feeding their cattle better thereby hoping for a longer lactation. There has been a substantial increase in milk production in February and March this year and that is a good sign. If the lactation period can be extended, the cost of processing milk will be substantially reduced over the year. We hope that the farmers will take note of this message and become more involved in longer lactation and early and late production of milk by continued feeding and through fertilisation of grass. That would mean we would have more feedingstuffs for cattle at the end of the season. That would be of benefit to An Bord Bainne.

We know that the £40 million is intended for the payment of farmers due to Bord Bainne's situation. They have to buy the produce over a short period of time but the farmers must be paid before it has been sold. Therefore, the money is needed to pay the creameries for the produce being sold to the board.

I congratulate the board for showing an interest in farming generally and asking producers to produce quality milk and products in large quantities. The board do not mind if they have an increased quantity of dairy products. The Minister for Agriculture and Fisheries stated here and in the other House that no matter what quantity of dairy products the farmers produce they will be sold to the benefit of the farming community. Being involved in the industry I can state that the board are correct. We want more dairy products and the only way this can be done is by the farmers producing more milk. If we have more dairy products we will be able to improve our balance of payments. We have been able to do this over the past number of years, especially last year, due to increased production at farming level.

We must congratulate the farmers who have confidence in the industry. They can be proud of the board. However, there are some things which bother me. The supply of New Zealand butter coming on the British market and into the EEC as a whole concerns me. I know that from 1973 to 1976 New Zealand have not fulfilled their quota. The average tonnage sold into the EEC by New Zealand was about 120,000. An agreement has now been reached whereby they will be allowed sell 120,000 tons of butter into the EEC until 1980. The Minister has fought that as hard as he could, but he seems to be a lone bird, so far as that is concerned, in the EEC. We know he is well able to fight the farmers' cause. However, New Zealand are now allowed to sell 120,000 tons of butter in the EEC. No one is to blame for this. During our negotiations for entry into the EEC we accepted that New Zealand would be allowed sell butter into the EEC and quotas were arranged for them. In 1973, New Zealand had a quota of 165,811 tons. The Government cannot be blamed for that, they were not in office during those negotiations. Therefore, they cannot be blamed for allowing New Zealand to export butter to the EEC. However, we know that the Minister for Agriculture and Fisheries is doing his best in that regard and he will still be fighting the farmers' cause in 1980.

My second point is in regard to the cheese industry. Bord Bainne purchases cheese from the dairies and last year increased the sale of cheese by £14.8 million. Cheese is a difficult product to sell because there is no guaranteed price; there is no intervention price for it. An allowance must be given to cheese producers for that. When an increase is granted on cheese the producers do not get the benefit for a couple of months. That is not good; it creates an anomaly. Farmers producing butter and skim powder have an advantage over cheese producers. I hope this point will be heeded by those concerned. Cheese producers are at a disadvantage. They are selling their produce at home and abroad and are receiving substantial sums of money which benefit every section of the community.

Bord Bainne asked the farmers to increase the lactation period and to breed their cattle better so that the average yield per cow, which is less than 590 gallons, could be increased. The board would like to see that figure increased to 1,000 gallons. It will take a long time but the Minister for Agriculture and Fisheries is doing his best by touring the country and advising farmers to produce more and better quality milk. From listening to farmers I know they are taking note of his words.

Skim powder will be a big problem in future. It appears that penalties will be levied later this year and consequently there will be a reduction in the production of skim powder. I hope it will not be to the detriment of the farmers. The farmers must accept the position.

It is very satisfactory that Bord Bainne are not concentrating on the British market exclusively. They have satisfactory sales of Kerrygold butter in West Germany. Kerrygold is available in other European countries. We cannot sell substantial amounts of butter on continental markets because we are at the disadvantage of having to ship our exports to the continent. Therefore, our competitors have an advantage over us. Bord Bainne are gradually surmounting that problem and we have satisfactory sales of butter on the continent. I hope we will produce and export more because that will benefit all sections of the community.

It has been said for the past year or two that the creamery industry had over capacity, but that is no longer true. This year one of the larger sections of the industry, the cooperative movement, broke down in the first or second week of June. If the capacity had not been there to convert the milk into powder and cheese, the farmers would have been at a substantial loss. I congratulate those who were involved in extending the capacity and who were slated over the last number of years, not alone by the industry, but by the milk producers. We need the capacity that we arranged for at that time. Those people who condemned that decision are now very quiet. I do not see any of them praising the effort that had taken place during those years.

Unless the lactation period is extended, we will not have sufficient capacity in the years to come. We will have to invest in more capacity unless we extend the lactation period. If milk is produced it must be processed. There was an increase of 9 per cent in milk production last year, and it looks as if there will be an increase of 13 per cent this year, and for many years production will increase. As a person involved in that industry, I hope we will have that increase. The Minister has asked the farmers to increase milk production because of the benefits that are there, not alone for farmers but for the industry and workers in the industry. The number of workers is increasing. The nation needs an increase in employment and the dairy industry is providing it. By increased milk production we can increase farmers' profits and give employment to those in need of it. An extension of the season will mean that people will be working all year round.

From October to March, a high percentage of girls employed in the industry are let go. We in the industry would like to see all our workers in constant work for the 12 months of the year. The farmers wish this too. Bord Bainne request, as well as everybody else in the industry, that the farmers produce more milk. As everybody knows, quality milk is required for a quality product.

I have to criticise the board on one personal point. I do not think there is a need for An Bord Bainne to be involved in the home trade because that is an extra expense on the dairy industry and the farming community. Creameries are scattered all over the country and each creamery has its own sales service and does the job very well. I would like somebody to prove that I am wrong but I find it difficult to believe that it is of benefit to the dairy industry and the farmers to have Bord Bainne involved in the home trade. I would like to congratulate Bord Bainne and their officials on the wonderful work they have done since 1972 when they became a cooperative. I welcome the Bill and hope the board will sell all the commodities produced here.

Parliamentary Secretary to the Minister for Agriculture and Fisheries (Mr. M.P. Murphy)

I would like to thank Senators Dolan and Butler for their constructive contributions. Selling our dairy products on the export market is a very important job so far as the welfare of this country is concerned. Those who sell them deserve our thanks. As Senators Dolan and Butler pointed out, Bord Bainne Cooperative measure up to our requirements in that respect. Under the capable guidance of the chairman and general director, they do this job very efficiently in my view and are responsible for the sale of 80 per cent of our dairy products on the export market. If the position were otherwise, and if I thought the Bord Bainne Cooperative were not doing their work efficiently, I would have no hesitation in saying so, because the dairy industry is the most important industry in this country. It is the most important within the agricultural sector. Were it not for the returns from our dairy products, our balance of payments and our economy would be far worse. By saying that, I am not implying that our economy is in bad shape now.

As Senator Dolan mentioned, reports on the dairy industry percolate from time to time. At present, the percolation is from Europe and there are difficulties. It is our job as a Government to try to overcome these difficulties and for that reason our Minister for Agriculture and Fisheries has to spend the greater part of his time in Europe to ensure that so far as our agriculture industry is concerned everything we can get from our EEC membership will be obtained for the benefit of the Irish farmer, and particularly in relation to our dairy products.

The questions raised by Senator Butler are not entirely relevant to this measure because its scope is rather confined. It is a simple Bill to which this House has signified their approval, giving State guarantee to the board for £40 million in place of £20 million, the present figure.

A few weeks ago the Minister, in the course of the Estimate for his Department in the Dáil, set out in detail all aspects of this industry, with particular reference to the agricultural industry. So far as the Minister and the Government are concerned, anything that can be done for the welfare of that industry has not been left undone. The Minister, as every Member of the Seanad knows, is day after day, and night after night, dealing with this problem which means so much to our Irish farmers. We are very pleased that prices for our dairy products are quite good, particularly the price for creamery milk on which so many of our farmers, big and small, depend for their incomes. There is nothing we can see at present to indicate other than that the price will at least hold as good as it is, or possibly increase to cover any inflation that may arise in the foreseeable future.

I agree with Senator Butler that we should try to get our farmers to increase their milk supplies, irrespective of what reports percolate from Europe. It is a must so far as our Irish farmers are concerned. It would be a great advantage if, as Senator Butler mentioned, the lactation period could be extended, and if the yield per cow could be increased. I think Senator Butler mentioned the figure of 590 gallons, an average figure which is not too creditable.

The big feature of Bord Bainne sales is that so far as butter is concerned they have not sold any of it to intervention. Their job is to find the best market available so far as price and conditions are concerned. It is readily recognisable by all that intervention is there only as a last resort. On other occasions we were exhorting farmers, particularly in the meat trade, to go out and find markets and make less use of the intervention system to dispose of their products.

Bord Bainne are doing that but, with the peculiar position obtaining in the skim milk trade in the early part of 1975 they were forced to sell skim milk to intervention. Unfortunately, the position so far as disposing of this milk is concerned, is not too bright at the present time. Let us hope that the Commission will be able to discover ways and means of reducing what some people like to call this mountain of skim milk and we will be able to sell this product on a free market rather than to intervention.

A point made in the course of the discussion was that when farmers do well, other sections do well also. That is an obvious fact. If dairy farmers are doing well and getting good money for their products, when they go to town they will spend that money. The townsman will benefit, whether he is a draper, publican or a grocer. When they come here to Dublin, Cork or large towns or cities the business people in such places will benefit also. That benefit will pass to the employees of these various businesses. It is essential in the make-up of this country that we have a prosperous agricultural community, and particularly a prosperous dairy industry.

If Senators raised any other points they will find the answers to them either in the Minister's introductory statement to or in his concluding remarks on his Esitmate.

Question put and agreed to.

Agreed to take remaining Stages today.

Bill put through Committee, received for final consideration and passed.