Ceisteanna—Questions. Oral Answers. - Price of Milk. – Dáil Éireann (19th Dáil) – Thursday, 23 Oct 1969

Ceisteanna—Questions. Oral Answers. - Price of Milk.

26.

Mr. O.J. Flanagan

asked the Minister for Agriculture and Fisheries if he has received representations from or on behalf of Irish dairy farmers in connection with the new milk price measures; if he is aware that representatives of 112,000 such farmers have unanimously condemned in strong terms his new price regulations as not being in the best interests of the industry; if he proposes to meet the interests involved and make alterations in the unsatisfactory price arrangement; and if he will make a general statement setting out (1) the reason for new price measures and (2) what proposals he has for improved prices to meet the wishes of the dairy farmers.

27.

Mr. Creed

asked the Minister for Agriculture and Fisheries if he is aware of the grave dissatisfaction and anxiety expressed by the various farming organisations and creamery milk suppliers generally arising out of the recent phased increase in the price of milk; if he considers this measure as an incentive to greater efficiency in the dairying industry; if he is satisfied that it will not militate against quality milk production in view of the fact that the medium and large milk producers who are supplying the greater portion of milk to creameries are being penalised; if he will consider the whole question of milk production; and if he will make a statement on the matter.

28.

Mr. T. O'Donnell

asked the Minister for Agriculture and Fisheries if he is aware that his recently announced system of payment for milk delivered to creameries has been rejected by all the farming organisations; if so, whether he now proposes to withdraw or amend the scheme; and, if not, why.

Mr. Blaney

With your permission, a Cheann Comhairle, I propose to take Questions Nos. 26, 27 and 28 together.

I commented in a public statement on 21st October on some criticisms of the creamery milk price adjustments I announced on 3rd October which obscured the main facts of the situation. The facts are that:

(1) Every creamery milk supplier in the country will, within the coming weeks, get a back payment of an additional penny per gallon on the first 1,000 gallons delivered in each of the months of May, June, July and August this year.

(2) Suppliers of not more than 7,000 gallons per annum will also get with effect from 1st September last an additional penny per gallon. Some 90,000 of the total of 112,000 creamery-milk suppliers deliver not more than 7,000 gallons each per annum and all of these will get the additional penny on their entire deliveries.

(3) A further 15,000 suppliers who deliver between 7,000 and 14,000 gallons yearly will get an increase gradually declining from 1d and phased out at the 14,000 gallon mark.

(4) Some 4,500 suppliers who deliver between 14,000 and 20,000 gallons yearly will bear no reduction.

(5) The remaining 2,500 suppliers (only 2 per cent of the total) whose yearly deliveries exceed 20,000 gallons each will bear a phased reduction in price support according to the size of their deliveries.

(6) The vast majority of creamery suppliers are accordingly getting a price increase at a time when increased production has to be sold on export markets at less than 1/- per lb for butter, which represents only 2d or 3d a gallon at the creamery.

(7) Creamery milk price support will cost the Exchequer at least £31 million this year, as compared with some £25 million last year and £19 million in 1967-68.

The large-scale suppliers of milk to creameries can, of course, produce milk at lower unit costs than those of the smaller suppliers, and the need for Exchequer support in their case is accordingly lower. However, these large-scale suppliers will continue to benefit significantly from the Exchequer support. For example, a supplier of 60,000 gallons per annum will still receive about 10d per gallon subsidy from State funds, which represents a total of £2,500 a year or an average subsidy of almost £50 per week.

I do not accept the implication in Deputy Creed's question that the smaller producers are inefficient and unable to produce quality milk. No change whatever has been made in the quality bonus of 2d per gallon, and all milk delivered to creameriees, whether by large-scale producers or small, is capable of being brought to the desired quality standard.

The support adjustments which I have announced do not in any way represent a change of Government policy for creamery milk production. They were in fact foreshadowed in the Third Programme which indicated that consideration would be given to the possibility of extending the phased system of price support for milk so as to channel a larger share of State support to the traditional supplier who is less well able to meet increasing costs than the large-scale commercial producer.

Mr. Creed

May I ask, first, if the Minister had discussions and consultations with the various farming organisations before this was introduced? The Minister must surely be aware that in the past he and his Department, the agricultural advisory service and the county committees of agriculture throughout the country were exhorting farmers to greater efficiency. Now that they have become more efficient —and this applies particularly to the production of milk—is it not true to say that because they have become efficient at some cost to themselves they have been penalised in price? Is the Minister aware that his Department went so far as to give in many ways financial incentives to farmers to become more efficient and now they are being penalised as a result?

Mr. Blaney

What the Deputy says is quite true, that we have in every way through the years in the Department made every endeavour to improve the efficiency of not only milk producers but of all other agricultural producers. But the fact that this has been and continues to be the policy is in no way contradictory of what is now being done. If we can improve efficiency—undoubtedly, it has been improved in the case of many milk producers—this brings about a situation in which their dependency on support by way of subsidy becomes less necessary in their case than in the case of the less efficient. There is no contradiction such as appears to be in the Deputy's mind between encouraging efficiency and the scaling down of subsidy support and this particularly against the background of very depressed markets, glutted markets that are overwhelmed by production in other countries, particularly EEC countries, forcing us to sell at prices little better than give-away prices. That, coming back to rest on the Exchequer which of course is the taxpayer, makes it rather difficult if not impossible, to get sufficient money from the Exchequer or the taxpayers to help other necessitous farm groups as well as milk producers.

I have already said, and perhaps I should say it again, that were it not for the phasing of support that is now being introduced it would not have been possible to give smaller producers the increased support now laid on the line for them. Far from this exercise indicating any departure in policy it is only right to put on record that the earliest programming of ten years ago would have indicated—the Second Programme did, at any rate—that by 1970 we hoped to reach 550 million gallons of milk. This is 1969 and by quite extraordinary increases in recent years we are approaching, and may reach a total quantity this year of perhaps 540 million gallons. Far from running away from or upending the policy earlier enunciated regarding milk production we seem to be peculiarly "bang on" target in 1969 in that we are only about 10 million gallons or less short of the target set quite a few years ago of 550 million gallons for milk production.

Mr. Creed

Surely the Minister can see that milk producers, particularly those who specialised in milk production in the past few years, were encouraged to spend money on improving their farms, fertilising and liming their land, improving their buildings, building milking parlours at great cost to themselves, and surely financial incentives should not have been given if the Minister could see at that stage they were encouraging farmers to produce milk that could not be sold on a glutted market? Surely the money should have been spent on diversification rather than on increasing milk production when there was no market for it? Surely the Minister is aware that there are now milk producers who have completely lost confidence in the agricultural advisory service because it was through its advice that this was done?

Mr. Blaney

Far from there being any cause for losing confidence in Government policy regarding milk production the vast majority of our milk producers should, despite the difficulties I have outlined, be reassured of the Government's concern about their wellbeing. This must be particularly true of the vast bulk who constitute the under 7,000-gallon suppliers, over 80 per cent of the total of 112,000 suppliers. Despite the difficulties, we are continuing to maintain their price level. Those who have a greater size of herd have greater efficiency as a result of larger-scale production and a great opportunity of which they are taking advantage, quite rightly, by increasing yield against the pretty low national average yield of 520 gallons per cow which one might deplore. These more efficient and better-off farmers have been able to get the benefit both ways and have been doing exceedingly well on milk, and good luck to them. But we must remember that it is not the market sales of their produce that have created this situation but an average of over one shilling per gallon paid on every gallon of milk that is produced by all of them out of the Exchequer, from the taxpayer, as a result of which probably some money is being denied to their brethren in the agricultural community because of the inability of the Exchequer and the taxpayers to meet these rising commitments and other desirable new schemes that might have been set afoot were it not for the heavy financial pressure on the Exchequer as a result of the difficulties in marketing and the very sizeable continuing increase over the years in milk production. This should be an assurance to our milk farmers rather than any question of dissuading them from continuing in the business they are at.

Mr. Clinton

Even if the Minister did not have consultations with the farming organisations on this issue, he certainly did unite them.

An Ceann Comhairle

This seems to be developing into a debate. Would Deputies appreciate that we have 359 questions to dispose of?

Mr. T. O'Donnell

I have a question down on the same topic. May I ask a supplementary? This is a very important matter.

An Ceann Comhairle

All questions are important.

Mr. T. O'Donnell

Is it not a fact that what the Minister is now proposing to do is in direct contradiction to what the Government set out to do in 1964 when the Second Programme for Economic Expansion was introduced? Is it not a fact that at that time the Government set 560,000,000 gallons as the target for 1970 for milk production? What the Minister has done is to play a shabby confidence trick on the farmers. He is jeopardising the future of this section of the economy.

Mr. Bruton

Would the Minister accept the interpretation of this decision that it involves a shift in Government policy against large-scale agricultural production? If so, what effects does he anticipate in relation to our competitive position as an agricultural nation?

Mr. Blaney

So far as the last supplementary is concerned, I should like Deputies closely concerned with this matter of milk production to ask themselves whether the profit per gallon of the man producing 40,000 or 60,000 gallons of milk, if he is efficient—and I am suggesting that he is efficient—is not, because of his efficiency and his large-scale production, a greater net profit margin per gallon than that of the under 7,000 gallons producer. I am asking Deputies to just think of this. He is getting a greater net profit per gallon on his large-scale production, on the assumption that he is efficient—and I am accepting that he is efficient—than does the man— the majority of men; 80 per cent of the milk producers—for his under 7,000 gallons production. That being so, and since half the price almost on average that goes to the milk producers comes from the taxpayer and the Exchequer, surely we must have regard to the wellbeing of the under 7,000 gallons producers, the traditional suppliers, the people who represent 80 per cent of the total numbers engaged in milk production. If we were to put it another way, if we were not to increase the milk price for the smaller producer and allow the price to remain and this continued for any considerable time, as it might well have to, then this would be the end of the small producer. They represent 80 per cent of 112,000 dairy farmers, numbering 90,000 people, who depend on this and who have been traditionally depending on it. Why then should this fuss be created that the man who is getting the bigger net percentage out of the large gallonage production should get equal support from the taxpayer as does the smaller man who does not get the same profit per gallon——

Mr. T. O'Donnell

Why did the Minister not say that in 1964? Why were they encouraged? Why did the Second Programme make this provision at all?

An Ceann Comhairle

Question No. 29.

Mr. Blaney

I will answer the questions I am asked.

(Interruptions.)

Mr. Blaney

I am asking Deputies to ask themselves that question which I have put to them.

Mr. L'Estrange

Why did the Minister do it for the past ten years? Why were they encouraged in the Second Programme?

Mr. T. O'Donnell

Thank God the farmers are united against the Minister now.

Mr. Bruton

What effect does the Minister think——

An Ceann Comhairle

Question No. 29. I will not accept further supplementaries on this question.

Mr. Blaney

These interjections by way of interruptions are going on the records of this House and are entitled to be answered. These are the tactics of those people over there who like to get their own story on the book but do not want anyone else to get anything on it at all. Those are their usual tactics.

Mr. Boland

Listen to the answer.

Mr. L'Estrange

The Minister was not here when the Taoiseach spoke. He funked it because he did not agree with it.

An Ceann Comhairle

Question No. 29.

Mr. O.J. Flanagan

I addressed a question to the Minister and I was anxious to get at least one supplementary but I accept your ruling that it is not now allowed. May I raise the matter on the Adjournment so that I may be in a position to address whatever supplementaries you allow me?

Dáil Éireann díospóireacht -
Thursday, 23 Oct 1969