The immediate history of this Bill deserves to be put on the record. For reasons that may be well known to most people in this House, the Minister was not in a position to put some of the history of this legislation on the record, although his role in it was most commendable.
Under the old Cork Milk Board there were only two registered suppliers of milk. The issue arose because of their tendering to supply liquid milk to the Southern Health Board and, in particular, to Our Lady's Hospital. By miraculous coincidence year after year the two suppliers happened to tender exactly the same price. It was one of these wonderful coincidences the world is full of. I could not, for one second, suggest collusion. How could you? People do not do these things in the world of competitive, trusting enterprise we have in this country, but there was something very funny going on. It was funny first that they managed to arrive at the same price, and it was even funnier that those who were given the job of looking after funds in the Southern Health Board never seemed to notice that they were tendering the same price. An upstart of a milk provider from outside the area tendered at a dramatically different price — the Minister had an involvement then, I do not think he has now. It ended up with one hospital saving, I was led to believe, something like £30,000 on the price of liquid milk for one year. I do not want to get hung up on the price but thousands of pounds were saved. Instead of having a general celebration of the fact that market economics, for once, worked and that we had competition, we had urgent and immediate recourse to Europe with many people attempting to defend the indefensible which was that, effectively, a cartel had operated in a considerable part of Cork city and county and managed to keep prices at extraordinarily high levels relative to what the market could sustain.
The legislation we have before us is the outcome of the dissolution of the Dublin and Cork District Milk Boards which was brought about because they were deemed to be invalid under Community law. I am assured that there is great need for this legislation because of the extreme seasonality in milk production in this country which could result, as it did in the past, in milk shortages in the less economical seasons, that is winter.
Reading the reply the then Minister for Agriculture gave to a question in the Dáil on 5 December 1991 — columns 443-444 of the Official Report — it is admittedly difficult to imagine shortages of anything in the dairy area when one considers that in 1990, 56 per cent of total butter production in the State was sold into intervention amounting to £204 million and 48 per cent of the total skimmed milk powder produced in the State was sold into intervention. While the percentages for 1991 are not yet available, the figures suggest 185 tonnes of butter and 94,000 tonnes of skimmed milk were sold into intervention in 1991.
The question a person from an urban environment like myself would ask is: where is an industry which has that scale of dependence on a dying mechanism going? Are we, to a certain extent, legislating for something that will be so transformed within the next five years as to make this legislation meaningless? What will be the nature of the dairy industry or the dairying section of agriculture in two or five years? Will there be a liquid milk industry? Will it be economical in the light of what are called reforms of the Common Agricultural Policy for anybody to produce milk in this country?
We can only compensate people if we are talking about marginal economics. In other words, the objective of the legislation which is encapsulated in section 5 on the registration of contracts is to provide a guaranteed supply of milk, and that involves quality and a price in the contract that will be sufficient to ensure that in the periods of the year when it might be marginally uneconomical to produce milk, producers will continue to do so. If the production of milk on a large scale becomes inherently uneconomical for most of the year, then the scale of compensation will be enormous.
Having been educated here over the years by my colleagues about the woes of the agriculture industry, I am amazed at the number of people who assumed the Common Agricultural Policy would last for ever. We are on the periphery of Europe. It appears to me at least that the large scale importation of milk would have diseconomies associated with it in terms of the need to preserve quality and value ratio.
I wonder if we will need something more dramatic than a fairly light handed regulatory mechanism which does no more in terms of what is written in this Bill than a rational human being would expect, in other words, ensure quality and continuity and guarantee that a price would be offered which would ensure that continuity would be maintained. That is fine when large numbers of people want to produce milk and feel that, overall, the dairying sector of agriculture is profitable. However, if policies formulated in Brussels are unsuited to many of the qualities that make Irish agriculture unique in terms of our climatic advantage and the fact that we can produce many things more competitively than anybody else if we are left with a level playing field, I wonder what will happen? The possibility of this country being unable to produce its own milk is not as remarkable as it might seem, given that we do not seem to be able to produce so many other agricultural commodities like potatoes or vegetables to meet our own market demands.
I compliment the Minister for the legislation but also for the hand he had in creating the situation where this legislation was needed. Subject to the caveats I have offered, it will meet the objectives required and hopefully in Dublin and Cork will introduce a fair amount of very healthy competition between competing suppliers of liquid milk which might even result in some benefits to the consumer, the unfortunate suffering creature who does not get the consideration that he or she deserves in most of the debates about agriculture.
Agriculture is unique in all of the industries that I am aware of in which the obsession is eternally with the producer and his or her rights. Every other industry that I am aware of has to think of the market and the consumer and then produce a product. We have the reverse here where we have an obsession in agriculture with the right to produce and apparently a compulsion then to ensure that somebody buys the product. It would be very healthy for agriculture if we were to turn that around and create a dairy sector in the agriculture industry which actually saw itself as being primarily motivated by the needs of the consumer.