I move: "That the Bill be now read a Second Time."
The purpose of this Bill is to provide for the dissolution of the Dublin and Cork District Milk Boards, for the sale of their ancillary businesses and for the establishment of a new national milk agency.
The Dublin and Cork District Milk Boards were established in 1936 and 1937 respectively by orders made under the Milk (Regulation of Supply and Price) Act, 1936. The boards' primary function was to ensure an adequate all-year-round supply of milk for liquid consumption in the country's two biggest urban areas. This was achieved through the boards' power to ensure that producers received a minimum price for their milk. Because milk production in Ireland is highly seasonal and before the boards were established, the producer price of milk sometimes fell below the cost of production, there were occasional shortages of milk for liquid consumption during the winter months.
The milk board regime provides for a "production district" from which dairy farmers supply milk and a "sales district" in which the pasteurisers and distributors must have registered premises in which to prepare milk for the consumer. In Cork, the sale and production districts are the same; an area within a radius of about seven kilometers of the city centre. In Dublin, the sales area is Dublin city and county together with the urban district of Bray, while the production district comprises most of Leinster.
Basically, only milk supplied by producers within a board's production area who registered with the board could be used for the production of milk for liquid consumption within a board's sales district. Milk could be brought in from outside the production area under licence in times of scarcity but this was the exception to the general rule. The milk board's regime worked well over the years and although it has legal backing only in the Dublin and Cork areas, it provided a model for arrangements put in place in other parts of the country. Thus, despite the highly seasonal nature of our production, winter shortages are a thing of the past and the activities of the boards were generally regarded as an important contributory factor to our high level of milk consumption.
As a result of complaints from milk processors outside the board's areas, the European Commission examined the position and formally notified the Department of Agriculture, Food and Forestry that the board's activities were not in accordance with European Union law. The restriction of access to the market for drinking milk in Dublin and Cork to parties within the board's areas who were registered with the boards, the licensing of any milk coming in from outside the board's areas and the fixing of minimum producer prices, were contrary to European Union rules of competition and contravened the rules for the common organisation of the market in milk and milk based products. On the advice of the Attorney General it was decided not to challenge the Commission's view.
There followed extensive consultations with the Commission on what measures might be put in place to ensure a steady supply of good quality drinking milk for our customers despite the highly seasonal nature of our production while keeping within the bounds of European law. There were also extensive consultations with the dairy industry. The fruits of this consultative process are set out in the provisions regarding the establishment of a new National Milk Agency.
Apart from their statutory functions of regulating the supply and price of milk for liquid consumption, the boards, over the years, were involved in supplying services to their milk producers. These services include artificial insemination of cattle, milk recording and mastitis control. As a consequence of these activities, the boards acquired considerable assets and built up a staff of more than 130 employees. However, as time went on, due to developments on other fronts there was a decline in demand for the services the boards provided. They began to lose money and it became clear that they were significantly overstaffed.
When it became apparent that the boards could no longer continue on their present statutory basis the Government decided they should be wound up and their ancilliary businesses sold as going concerns. To facilitate this sale, it was obvious that the staffing would have to be rationalised.
After protracted negotiations between the Department of Agriculture, Food and Forestry and the union representing the staff, an agreement was reached in January this year under the auspices of the Labour Relations Commission which fully protects employees' interests in the context of the boards abolition and the sale of their ancillary business.
Broadly, the terms of the agreement are as follows: some five or six staff who will be required for the new National Milk Agency will be recruited from among the boards' staff, always provided, of course, that a sufficient number of suitably qualified candidates apply for these posts; some 70 staff will transfer to the private sector on the sale of the ancillary businesses as going concerns. They will have safeguards in relation to their terms and conditions of employment including, in certain circumstances, a right to return to employment in the public sector. The agreement also provides that some 50 staff will be granted voluntary early retirement on terms similar to those which applied in the Public Service in the 1987-88 period. Finally, the Exchequer will take over the board's pension funds and the State will assume full liability for pensions for the staff concerned in respect of their employment with the boards, on the same basis as it does for civil servants. To fund the staff rationalisation programme and meet costs associated with the sale of the business, a sum of £1.5 million has been provided for in the Vote for Agriculture and Food 1994.
Having dealt with the broad considerations underlying this Bill I will now outline its provisions in greater detail.
Section 1 contains definitions of certain words and phrases used.
Section 2 provides for the establishment, by ministerial order, of a National Milk Agency. The basic role of the agency will be to ensure that a reliable supply of good quality, reasonably priced milk is available to consumers throughout the year. The agency will have a part-time chairman appointed by the Minister and representaties of milk producers, pasteurisers, distributors, retailers and consumers.
Section 3 provides for the dissolution, by ministerial order, of the Cork and Dublin District Milk Boards and the sale, which will be by competitive tender, of their ancilliary business. It also provides for the possibility of transferring that business to an interim board.
It will be noted that the order which abolishes the boards will, at the same time, replace them with the new agency. The intention is that the ancilliary business should be sold at that time also. However, as a precautionary measure in the event of a delay in the sale of the business, the Bill has provision for an interim board, comprising three persons to be nominated by the Minister, to take over the general direction of the business until such time as the sale can be finalised.
Such a transfer of assets would be technically liable to stamp duty under the 1985 Finance Act, so it is necessary to provide a statutory exemption in keeping with the realities of the situation.
Section 4 deals with superannuation for the board's staff. Essentially, it provides that, when the boards are abolished, the administration of their pension schemes will become the responsibility of the Department of Agriculture, Food and Forestry. It confers the power to amend these schemes. In practice, the schemes will be amended to make it possible to discharge the terms of my Department's agreement with the staff — to provide enhanced severance payments as well as their entitlements under the redundancy payments legislation for temporary and seasonal staff who may be granted voluntary early retirement, and to provide notional "additional years" of service for permanent staff in the same circumstances. Also, as provided for in the agreement, former and present members of these schemes or the surviving spouses of deceased members, will be afforded the opportunity of acquiring spouses and children's benefit.
In this latter regard, it is necessary to amend the Milk (Regulation of Supply and Price) Act, 1961, and this is being done by subsection (7). Since all pensions will, from then, be guaranteed by the State, subsection (8) provides for existing pension funds to be taken over by the Exchequer.
Sections 5, 6 and 7 deal with the central purpose of the Bill.
Section 5 makes it an offence to sell pasteurised milk for liquid consumption unless it has been prepared from raw milk produced on foot of a contract registered with the new agency. There are a few necessary minor exceptions to this rule. Section 6 contains the rules of the registration of a contract with the agency. Basically a contract must be for a minimum period of 12 months, the raw milk supplied must be at least of the quality prescribed by law and the purchase price must, in the opinion of the agency, be adequate to compensate the producer for continuing in production during the winter months. Section 7 requires that the agency keep a register of milk producers, processors and the contracts made between them.
Section 8 requires that a levy be paid to the agency in respect of every litre of milk acquired by a processor under a registered contract. The rate of levy will initially be set by the Minister and may subsequently be altered by the agency with the Minister's consent. By this means it is intended that agency will be completely self-financing. The section also deals with matters incidental to the payment of the levy, such as the requirement to furnish full information on the quantity of milk supplied so that the amount due can be calculated and it provides penalties for furnishing false or misleading returns or for non-payment of the levy.
Sections 9 and 10 lay down the requirements for records to be kept and information to be furnished to facilitate the agency in its work of regulating milk supplies. Section 11 distinguishes between information which may be published and that which must be kept confidential. Sections 12, 13 and 14 deal with matters such as the alteration to or cancellation of registration and the admissibility of registers as evidence in the courts.
Sections 15 to 23 are termed "miscellaneous" provisions. They contain no new substantive material, their function is to provide powers and impose obligations to ensure that the foregoing provisions can be efficiently and effectively implemented. They also cover a number of necessary legal technicalities.
The Schedule to the Bill sets out detailed rules for the establishment and functioning of the new agency: I have already alluded to the most important of these.
I trust I have given Deputies a clear outline of this Bill and I commend it to the House.