Dáil Éireann díospóireacht -
Thursday, 13 Oct 1994

Vol. 445 No. 8

Milk (Regulation of Supply) Bill, 1994 [Seanad]: Second Stage (Resumed).

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

Mr. Leonard

Yesterday I outlined how the milk industry operated from 1985 to 1987, when the European Union held that the Dublin District Milk Board had a monopoly and should be disbanded. At that time the Dublin dairies used the 1936 Act to create a virtual monopoly in the distribution of liquid milk.

The Bill illustrates the difficulties Ministers encounter when winding up a board set up by statute. In this case ancillary business, such as staff redundancies and pensions, was involved and the services of the Labour Relations Commission were availed of. Nevertheless, it is difficult to understand the years of delay in this case. The dairy industry plays an important role in our agricultural economy and, since the 1960s has had remarkable success in improving milk quality, product development and marketing. Until the 1960s there were only two products involved, namely liquid milk and buttermilk. Since then long life milk and Bailey's Irish Cream have been developed, two high quality products produced in my constituency. Also, many high quality yoghurts are produced today. This has been made possible because of the improvement in the quality of milk. We had butter mountains and surpluses in the past and, while the development of new products has improved the position, there is still room for the development of more products resulting in less butter production. The co-operatives have played a significant role in the milk industry. Now that they have moved into the plc area, I hope they do not forget the support they got in their early years and ensure that the milk section of the industry continues to benefit from their international marketing powers.

It is interesting to compare the position here with that in Northern Ireland where the Milk Marketing Board operates. The fortunes of that board have declined and we have the daily movement of large quantities of milk from Northern counties to milk processing plants in the constituency of Cavan-Monaghan. As a result the co-operatives involved are providing many additional jobs. Also Southern co-operatives have successfully made acquisitions in Northern Ireland, a welcome development especially today when the second paramilitary group in the North announced a ceasefire. Despite the problems created by the paramilitaries in Border regions over the years, beef and pork industrialists continued to carry out business North and South. This was evident to members of the British-Irish Interparliamentary Body on the many occasions they visited the North.

It was evident that industrialists in the North who met representatives of that body were interested in developing both economies. There will now be a great opportunity to develop resources in agriculture, tourism and so on. This will contribute to the development of a stretch of land on both sides of the Border which has been neglected for too long.

I welcome the belated decision to abolish the Cork and Dublin District Milk Boards.

Mr. Crawford

At this time of open Government and ethics in Government I wish to make my position clear. I run a dairy farm which supplies the liquid milk market. Deputy Leonard referred to the Town of Monaghan Creamery of which he was a former member of staff. I am a board member and, therefore, I have some knowledge of the liquid milk business at both producer and processor level. I represented my area on the liquid milk committee of the Irish Farmers' Association for a number of years. Deputy Leonard said last night that he was pleased this matter was now being speedily dealt with. However, this matter was discussed nine or ten years ago when I was involved with this issue. Successive Governments failed to address this matter. At least we are now discussing the implementation of this Bill.

Many changes have occurred since the demand for this Bill was first initiated by the liquid milk group of the IFA. They occurred because of EU regulations under which the Cork and Dublin District Milk Boards were considered illegal and had to be disbanded. People in Monaghan also consider the operation of those boards to be illegal. I am sure the Minister for Agriculture, Food and Forestry, who was involved in Clona Dairies, Clonakilty, which was outside the control of the district milk boards, would also have experienced some difficulties with those boards in the past.

Deputy Leonard referred to the difficulties experienced by the Town of Monaghan Creamery in liquid milk production. In 1985-86 milk was supplied from across the Border and extraordinary measures had to be taken to make that impossible. While the people in Northern Ireland wished to supply milk to the South, they under their laws refused to accept milk from the South. I joined with others to ensure there was free and fair trade. We ensured that Northern milk suppliers did not supply milk to the South when they did not accept our milk. Much has happened since then and I do not intend to cover the ground covered by Deputy Leonard in respect of the legal problems and efforts to solve them.

In view of the changes since then one wonders how relevant is this Bill. Our party do not intend to oppose it because a large sector of the farming community requested it. However, it does not take account of milk produced north of the Border.

I take this opportunity to welcome the loyalist ceasefire announced today. It opens up huge possibilities for co-operation in farming, tourism and in other areas. However, the problems that will cause for liquid milk suppliers and sales people along the Border areas cannot be ignored. Section 5 (2) clearly states that milk produced outside the Twenty-Six Counties cannot be questioned. Milk legally imported into the State is specifically excluded. That makes this Bill irrelevant to the northern part of the country. Ireland is a small island subject to European Union rules. There is free movement of goods, including milk. My co-op in Monaghan is extremely worried about this and considers it is not equitable to subject processors of milk produced in the Republic of Ireland to the regulations of the Bill if they do not apply to milk producers in Northern Ireland.

The establishment of the milk boards reflected the high level of milk consumption here. The role played by the milk boards contributed to this country having the highest level of milk consumption in Europe. That is important not only from the point of view of farmer-producers and the milk industry, but also in respect of health. Recently medical people raised health concerns about the excessive consumption of milk and milk products. That view has now been turned on its head and greater efforts are being made to encourage a higher consumption of milk. The main reason for our high consumption of milk was the structures set up. The work of the milk boards cannot be ignored. I take this opportunity to thank the staff of the milk boards for their good work and all those involved in milk recording, AI service and so on. We all recognise that the Minister and his staff experienced difficulties in finding ways to wind up those boards and this is a traumatic time for all those involved.

The Minister said yesterday that in certain circumstances the terms and conditions of employment of staff include a right to return to employment in the public sector. I hope for the sake of the employees in the Dublin District Milk Board this is correct. Maybe the Minister knows something I do not know about the regulations governing the return of staff to employment in the Civil Service. I have sought to make representations on behalf of numerous people who will be affected by the proposed closure of the milk boards to give them an opportunity to return to work.

Yesterday I received a letter from the Minister for Finance in which he said he was satisfied that the practice of reinstatement must be terminated as he could not continue to operate a scheme which had been declared to be discriminatory, contrary to both national and European law, and that, accordingly, a line has been drawn on 23 July 1993, the date on which the Labour Court issued its determination, after which no applications for reinstatement could be considered. Perhaps the Minister would check that from the point of view of his own legal situation and that of his employees.

In regard to the disposal of the milk boards, who will be the buyer? How will the Minister deal with the sale and disposal of the assets, because this will have major implications down the line for the farming community? There is great anxiety also among farmers, particularly in the northern part of the country, about the implications for our national herd of importing breeding stock from other parts of Europe.

This Bill is supposed to guarantee farmers' incomes and the supply of milk to the main areas of population over the next few years. There is no doubt that the milk board has relevance to the supply of milk to Dublin and Cork. However, areas like Monaghan and many other parts of the country have never had a problem in producing the necessary supplies outside the regulation. It must be remembered that Monaghan and other areas have at least a six months winter and animals must be fed quite liberally through that period. We were, therefore, justified in having an all year supply and did not have the same difficulties in keeping up our quotas for lack of milk production as other counties. Although we suffer the severe disadvantage of a six months winter we are still not declared severely handicapped. Perhaps that might be rectified in another forum.

Under EU regulations inspectors visit farmers to ensure implementation of the regulations. Could matters not be streamlined to avoid introducing another layer of inspectors? People in the industry are tied up in red tape. We appreciate the need to make this work, but could there not be some degree of cross-use of inspectors to avoid the time of personnel in these industries being taken up with unnecessary form-filling and bureaucracy? The EC introduced enough red tape, let us not produce more. I beg the Minister to take that into account.

I now come to the levy of 0.25 pence. Will the Minister give an assurance that this will be the permanent level or will this levy be introduced in 1995, increased in 1996 and thus be just another means of extracting money from farmers? We often hear complaints from the PAYE workers. I know complaints are justified from the amount of tax deducted from my salary every month. However, farmers pay a lot of levies for services relating to disease eradication etc., and such levies have increased enormously. Often an animal that is put down because of brucellosis or TB is worth little more than the levies paid for services at factory level. I want an assurance that this levy is not the start of a roller-coaster which will cause enormous problems for farmers in the long term.

The question of the election of the board is also of interest. I note that boards can nominate members and that there will even be elected members at producer level. I agree with all this and congratulate the Minister on it. However, in the case of boards like CBF and An Bord Bia which have real decision-making powers, there were political appointees. It is strange then that having gone to all this trouble — and I applaud him for it — in regard to An Bord Bia, to which farmers pay enormous sums of money, the Minister had to have complete control and no producer or other member of the industry could be allowed to represent their sector on the board; they are represented on the auxiliary boards but not where it really counts. Perhaps even at this late stage the Minister will reconsider the method of electing board members in the future to take account of the payments made and services rendered by those board members. Much can be learned from the discussion on these issues.

Last night Deputy Leonard mentioned our difficulties in County Monaghan when Premier Dairies and Dundalk and District Milk Board decided to dump their surplus in Monaghan and we were not allowed to fight back legally. At that time there were major discounts to Dunnes Stores etc. It is unfortunate this board seems to have little power in that area. This could mean that all the areas I covered earlier such as roundsmen could be eliminated if these stores decide, as they did in the past, to undercut the price of milk, to use it as a leader to bring in customers to the cost of the long term structures of the industry. There is nothing in the Bill to cover that.

There are very good structures in this industry. Most milk produced, for liquid milk consumption or otherwise, is of a very high quality. Deputy Leonard mentioned the production of Bailey's. There is also Emmet's cream which is produced in the Cavan-Monaghan area. These products are leaders not only in the milk market but in the Irish export field. We are doing extremely well in the American and other markets. Tribute must be paid to the producers.

I hope this Bill, when passed, will be used in a reasonable manner. The Northern Ireland milk supply should be taken into account. The town of Monaghan uses much of that milk for manufacturing purposes and I have no doubt much of it goes further south during the winter to supply liquid milk markets. There are implications and the Minister will have to be very vigilant that the Bill is used in a proper fashion and does not act against the best interests of farmers and the processing sector.

Mr. Jacob

I am grateful to you, a Chathaoirligh, for standing in for me and allowing me to make a brief contribution. I am similarly thankful to my colleague, Deputy Michael Ferris, for his unselfish gesture in giving me his time slot — I know his time is precious.

This Bill deals with the establishment of the National Milk Agency which will regulate the supply of milk for liquid consumption. The Bill is required because the previous system under which the supply of liquid milk to the Dublin and Cork areas was regulated by the Dublin and Cork District Milk Boards was deemed invalid under Community law. It also arises because of the need to put in place arrangements to ensure a year round supply of liquid milk throughout the country. It is a relatively short Bill which gives effect to these necessary changes and I heartily welcome it.

Section 2 deals with the establishment of the agency and provides that it will be a body corporate with power to sue and be sued and to acquire, hold and dispose of land. The Schedule to the Bill provides details of the operation and staffing of the agency. While the Bill arises from an EC requirement to change the regulation procedures, the effect will be similar to that relating to other new bodies. Similar Bills, for instance, to establish the Environmental Protection Agency and the National Roads Authority, involving the creation of a new body from various existing bodies were successfully steered through the Oireachtas.

Section 5 provides for the regulation of the sale of liquid milk for consumption in the State. It requires that the milk be purchased from a producer under a registered contract or from a registered processor and that it be heat treated in accordance with the Milk and Dairies Act. These provisions, if properly applied and monitored by the agency, will be welcomed by consumers.

Section 6 which deals with the registration of contracts provides for a 12 month unbroken period in specific conditions regarding the quality and supply of milk and compensation to the producer for untreated milk supplied during the year. I welcome the provisions which ensure that account is taken particularly of winter months and the economic cost of producing milk of a suitable quality, which is vitally important.

The agency will be funded by a levy payable by processors, the rates of the levy to be specified by the Minister on the establishment of the agency. Section 17 provides that the moneys so collected will be deposited in a fund from which the expenses of the agency will be paid and any balance remaining invested. It follows, therefore, that the rate of levy will be related to the anticipated cost of the agency. It is important that all processors are fully aware of the funding arrangements of the agency. The Minister has rightly provided in section 17 that the annual report of the agency be laid before the House and that its accounts be open for inspection by all persons for a small fee.

The provisions in sections 10 and 11 on the keeping of records and publication of contents of registers will be welcomed by all those involved in that there will be open and fair management of the agency's operations, which is essential. The provisions in section 13 deal with the alteration or cancellation of registration.

As there is no specific section dealing with offences I presume the Minister is satisfied that an entry in the register procured through fraud or misrepresentation is adequately dealt with through other laws. Perhaps he will elaborate on this matter when replying. The Minister has provided very well for notice of cancellation, inquiries and appeals. These may appear to be standard provisions but they are vitally important for the successful operation of the agency and its ongoing work.

I received, as I am sure did all my colleagues, a letter from the National Liquid Milk Committee of the IFA outlining its views. It indicates it strongly supports the Bill and that is encouraging. I am sure the Minister was furnished with a copy of this correspondence. In this era of social partnership agreements and consultation processes, I have little doubt the Minister will take serious cognisance of the concerns expressed and the emphasis placed on various aspects of the Bill by this committee which represents a very important part of this sector, the producers.

I wish to refer to the staffing arrangements of the milk boards. I know the Minister has approached this whole issue in a very caring, responsible way. Regardless of how we approach the matter we must allay the concern of the employees of this organisation and assure their future. The Minister elaborated on the measures he has taken and I thank him for this. He stated: "To facilitate this sale, it was obvious that the staffing situation would have to be rationalised". The word "rationalisation" carries a certain significance and can send shivers up the spine of the most courageous people. I emphasise that a shiver has been sent up the spine of these employees.

In this regard I had a traumatic experience when I earned my livelihood in a semi-State organisation when it introduced a major rationalisation programme. Although they had set out to make it their career, former colleagues of mine had to leave and make other arrangements for themselves and their families. I had to console members of my staff in that organisation when they bit the dust under this rationalisation programme. "Trauma" is, therefore, a word I would use. It is essential that a caring approach is adopted during the entire process. People have sore memories of other rationalisation programmes which did not work and under which undertakings were allegedly given by Ministers which were not honoured. This adds to the trauma and the uncertainty. The B & I fiasco has lingered for years and we do not want a repetition.

My constituency colleague, Deputy Kavanagh, is in the House and I have no doubt that he will address this aspect of the legislation in his contribution. Many of the staff live in my constituency and I am aware that they have been very dedicated in providing ancillary services such as artificial insemination. During the years they built up relationships with farmers and have provided a personal service. They will be sadly missed. It will leave a void in the lives of some of the people to whom I am referring.

The Minister stated:

After protracted negotiations between my Department 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 the employees' interests in the context of the boards' abolition and the sale of their ancillary business.

The Minister also stated that under the terms of the agreement some staff will be retained while others will transfer to the private sector. Some members of the staff will also be granted voluntary early retirement. I thank the Minister for giving those undertakings but notwithstanding this I reiterate that there is fear and uncertainty. I received a letter on 3 October from a Mr. Fintan Clarke who is one of the people who provided the personal service to which I referred. He stated that he is concerned not only about himself but about his colleagues. What they are seeking is protection and security. I have little doubt that this was uppermost in the minds of the Minister and his excellent Minister of State who I am sure is listening attentively to what is being said about this important aspect in the debate.

This short Bill has been well drafted and is well intentioned. I congratulate the Minister and his Minister of State for this and I have no doubt they will give serious consideration to this matter which affects the livelihoods of so many people about whom I am concerned. It is vitally important that these people are given cast iron assurances. Given their efforts and dedication during the years they deserve this courtesy and commitment.

Mr. Ferris

I am glad to have this opportunity to contribute to the debate on the Milk (Regulation of Supply) Bill, 1994, and congratulate the Minister on the way in which he has processed the Bill through his Department and the Seanad where it passed all Stages on 5 July. The legislation has been improved since it was initiated there; this is a tribute to the quality of the debate in that House. This ensures that its passage through this House will not be hindered or interrupted. As other speakers said, all those involved in the milk assembly business, producers and processors, have welcomed the legislation which is required to regulate, by way of licence, the supply and processing of this valuable product.

As a rural Deputy, I am aware of the importance of milk production in my constituency of Tipperary South and to the national economy. The term "heat-treated milk" has a broader interpretation than its original meaning and includes flavoured and fortified milks. Diversification in the market has led to a need for new definitions. All types of drinking milk need to be of a consistently high quality. The Bill provides for the registration of contracts between milk processors and producers to ensure a constant supply of quality raw milk. The consumer demand for drinking milk of varying fat content levels has to be met. The Bill requires that heat-treated solid milk be prepared from "raw milk" purchased from a producer under a registered contract. The tightening up of the legal arrangements for the supply of milk is widely welcomed.

The Bill provides for the dissolution of the district milk boards in Cork and Dublin and for the establishment of the National Milk Agency which will function throughout the country as a whole. Previous speakers have referred to the existing staff who worked under the old structures and it is appropriate to put on record our appreciation of the dedication of the Minister of State to ensuring that staff were redeployed or paid adequate compensation for their services down the years. Thankfully, agreement has been reached through the Labour Relations Commission on the settlement of all staff claims. If one does not have industrial peace during a period of change, it makes the change very difficult.

I share Deputy Crawford's concern about appointments to the board of national bodies. The composition of the board of the new agency is good. Farming organisations are normally consulted and asked to advise on the suitability of appointees. The IFA and ICMSA expressed their resentment to me and to others on being bypassed when appointments were made to An Bord Bia. I have made representations directly to the Minister concerned. It is appropriate to commend the Minister when we agree with the structure put in place as well as reminding him that it should be used more widely and should certainly have applied to An Bord Bia.

The IFA has lobbied us — Deputies and Senators appreciate such organisations' assistance in identifying areas where there may be problems — but in this case the farming organisations are in full support of the Bill and commend that we expedite its passage. They specify the reasons for their welcome. In one of their submissions they state that to become a liquid milk producer a dairy farmer must commit himself to delivering a specific proportion of his milk supply at specified times of the year. This means that whereas a manufacturing milk producer relies on low cost grass-based production and spring calving — which is the normal farm enterprise in Ireland — a liquid supplier has to adapt calving and feeding patterns and procedures to achieve the required all year round supply. One has to be mindful of the additional demands we are making of liquid milk suppliers as well as the extra costs involved in the production of milk when grass is not growing. The cows have to be fed specialised quality feeds as well as vitamins and other additives to ensure that the quality of the milk produced during this time will be of the highest quality to meet the standard required by EU requirements on somatic cell counts, and so on. The IFA and the ICMSA are aware of the demands being made. No other sector has had to make as many changes as the farming community and it has adapted product supply and production to meet the requirements of EU legislation. The processing industry has also changed dramatically but at tremendous cost.

The importance of the milk assembly industry cannot be overestimated. Milk is a natural product and has wonderful potential for added value. The importance of milk to a rural constituency cannot be over-emphasised. I represent a rural constituency in South Tipperary and a small co-operative creamery, Tipperary Co-operative, through its dynamic management spearheaded by Mr. Noel Horgan and his staff has put a relatively small co-operative at the top of the league. In 1993 its total milk take was 35 million gallons and it had a turnover of £59 million. It has a subsidiary in France, Tippogral, which manufactures speciality cheeses such as Gouda, Edam and Ementhal. This co-operative gives tremendous employment as well as an assured outlet to producers. The co-operative has total sales outside Ireland of £41 million, of which £28 million is within the Community and a further £13 million sales to markets outside the Community. This gives an idea of the importance of the industry. The co-operative employs 180 people and the total wage bill is £3.8 million annually.

Factories set up by multinational companies are important but the processing of a natural indigenous product is equally important in terms of creating employment. I have given an indication of the importance of milk as a product. At times we treat it as if it were an illegal spirit. We penalise people for over producing it. We tell others that they are not to produce it. Who would ever have thought ten or 15 years ago that we would treat production of milk in that fashion?

Throughout my constituency which is within the Golden Vale and is often looked upon as being a wealthy farming area people work very hard.

Mr. Crawford

The golden triangle.

Mr. Ferris

There is another factory in my constituency, Miloko in Carrick-on-Suir, which is not directly involved in the intake of milk but is a subsidiary of the Avonmore Group. Carrick-on-Suir, like Tipperary, suffers from widespread unemployment and Miloko, under the expert management of Tom Casey and others, is also involved in products derived from milk which it buys in from places such as Ballyragget in Kilkenny.

The Minister visited Miloko with me and he is familiar with that operation. It is involved in a major research programme involving various by-products of milk. It currently specialises in the area of dairy spreads and cheese analogue. Miloko's total sales last year were approximately £13 million. The company employs 50 or 60 people and has a wage bill of over £1 million. It purchases approximately £3.7 million worth of the products that it adds value to from its sister factories in Ballyragget and elsewhere. Since the change from casein production in this factory, the employees are aware, because of the products in which they are directly involved, of the primary needs of the consumer.

This Bill addresses the consumer's needs. It deals with the area of production and the producer because without the producer there is no product to sell and there can be no employment. Consumer demand would not be met and we would have to engage in the costly practice of importing most of our products from abroad.

There are many thousands of people involved in the milk assembly industry throughout the country. We should pay tribute to those people who do not work five days per week, who do not work from nine to five but who work seven days per week at all hours of the day when the need arises. They work longer hours out of season to match the challenges laid down in this Bill. However, if those people have a reasonable recompense for their efforts, they are happier doing work than receiving hand-outs, whether from the EU or elsewhere. They are special people. They are often looked upon as being very wealthy but they have capital investment tied up in animals and in the production and delivery process. The producers have made all the changes required under EU legislation to meet the demands of a Bill such as this.

This Bill represents a step forward. It would be appropriate to commend the Minister on his efforts in this regard because this legislation has widespread support and acceptance in the community at large. Ireland can be very proud of its green image and the quality of the food it produces whether manufactured or in the liquid milk area. I commend the Bill to the House.

Mr. Kavanagh

I wish to contribute to the debate on this Bill because I want to voice some concerns which I am sure the Minister of State can allay.

I accept the Bill is brought before the House because the EU has decided that milk processors in the Dublin and Cork areas are in contravention of EU rules. The milk boards have been carrying out their responsibilities for almost 50 years and they have worked well throughout those years in guaranteeing supplies of milk to Cork and Dublin. They have also ensured that the milk supplied is of the highest quality and that the guarantee of price to the consumer and to the producer has worked well over the years. It is appropriate to acknowledge that.

As a member of the Labour Party I am a little concerned that we are introducing a Bill which privatises a State board. I realise this has been brought about because the EU has decided that we are in contravention of directives and regulations. Nevertheless, it is unfortunate that a board which has worked well over the years is now to be privatised but I must accept that the Minister has offered guarantees to the suppliers, the consumers and the staffs of the boards and that is all he can do in the present circumstances.

The area in which I am most familiar with the operation of the company is the Dublin district. I am not as familiar with the operation in the Cork area. This morning the Minister stated that the sales area in Dublin city and county, together with the urban district of Bray, was covered by the former milk board. I can assure the Minister that the area was much wider. Not only did the board supply milk, it also operated the AI and the milk board stations in Wicklow town and had responsibility for milk supplies to the whole county. Most of the liquid milk sales in the county come from the Dublin suppliers so this will have a major effect across the constituency I represent.

The introduction of this Bill causes me some concern which I hope the Minister can allay. I hope the Bill will ensure a guarantee of supply to the areas I mentioned. I am sure I speak for my colleagues in Cork as well as consumers in Dublin, Wicklow and Kildare from where the supplies come and the city based processors. I hope the pricing regime that has operated in the past will be assured to the people of those areas.

I was concerned lately about a report that the passage of this Bill will mean that liquid milk may be exported to the European mainland and to Great Britain. If that were to happen, I hope there would not be a shortage of milk for consumers here. When shortages occur, the price goes up and if milk is directed to other areas outside the country prices could increase. If there is an over supply of milk it is appropriate that we should look for markets abroad.

I hope control will continue to be exercised over the pricing and supply of milk to ensure sufficient supplies for those who have no alternative but to have it supplied from producers within the milk board areas. Liquid milk is on sale in supermarkets and we are all happy to purchase it cheaply. On occasion they have entered into milk price wars which adversely effect milk suppliers and door to door deliveries. There are no local dairies in areas such as County Wicklow and people depend on door deliveries. We may obtain a short term benefit from a milk price war in supermarket chains but prices would soon rise with competition.

The House has been concerned about the treatment of staff when changes occur in semi-State companies. We made our arguments about the staff of the Department of Posts and Telegraphs when it was divided into boards. The impetus for ensuring that staff were well looked after under the Bill came from my party. However, there is lack of consideration for the staff who will be displaced under the terms of this Bill.

The Minister stated that under the terms of the staff agreement five or six of them will be required for the new milk agency — there are 170 people involved in the operation of the board — provided that sufficient numbers of suitably qualified candidates apply for the posts. I doubt if the Minister will have a problem getting five or six suitably qualified candidates from a staff of 170. He said 70 per cent of the staff will transfer to the private sector on the sale of the ancillary businesses as going concerns.

The Bill deals mainly with the supply of milk and EU objections to the milk boards. The EU directive does not appear to refer to ancillary services such as AI stations and other technical and professional advice given to the agricultural community. Will the Minister clarify if that is at variance with EU law? The majority of staff were involved in the ancillary services. The Minister stated that the 70 per cent of the staff who will transfer to the private sector will have safeguards in their conditions and terms of employment including, in certain circumstances, a right to return to employment in the public sector. That must be made clear by amending the Bill or explaining the phrase. I do not see any reference in section 4 which reflects the commitments given by the Minister. In the past, Ministers gave strong assurances in the House but the best assurance is to reflect it in the Bill. Such assurances were written into the superannuation sections of the Bills dealing with An Post and Telecom Éireann. Section 4 is weak in that regard.

The agreement also provides that 50 staff will be guaranteed voluntary early retirement on terms similar to those which applied in the public service in 1987-88. I am informed by some of those concerned about the passage of the Bill that highly qualified people with great expertise in the ancillary services have been told they may take early retirement but if they are employed by those who will operate the ancillary services they will have to give up their pension. Normally I would agree that if a person takes early retirement they should not take up employment and so deprive someone else of a job but where a person has particular knowledge and skills it is difficult to prove the argument that they should not work again on the basis that they would lose their entitlements.

I accept that the Bill must be introduced given the EU directive but I am concerned for consumers and producers who may be caught up in a price war. The best way to reassure the staff that they need not fear the passage of the Bill is to ensure adequate guarantees are written into it such as was the case on the establishment of An Post and Telecom Éireann. This would strengthen the Bill and reflect a caring approach by the Government to those who must accept privatisation of the boards with the consequent loss of employment certainty as public sector employees. The assurances given by the Minister must be reflected in the Bill.

Dr. Moffatt

I wish to share my time with Deputy Kirk. I welcome the Bill.

The dissolution of the Dublin and Cork district milk boards, and their associated and ancillary business, enables the establishment of a national milk agency and, at the same time, provides employees of the old boards with the guarantees commensurate with their previous occupation. I am sure the Minister will take on board the concerns expressed by Deputies Jacob and Kavanagh about this point.

We now have an opportunity, perhaps with a nudge from the EU, to put the liquid milk sector on a proper footing. The new agency will ensure that liquid milk producers have a legal recognition and protection for their products. Liquid milk producers operate under different criteria from their counterparts in the manufactured milk supply arena. For example, they have greater costs, supply milk all year round and have to meet strict health regulations in regard to bacterial count, somatic count, the conditioning of milking parlours, etc. We are fortunate to have a very high quality liquid milk product. I note the definition of "heat treated milk" has been extended to include flavoured and fortified milks. This is a step in the right direction. Given the welcome news of a ceasefire by loyalist paramilitaries, perhaps one day there will be an all-Ireland milk supply agency.

We are high consumers of milk in the European and world league of consumption of milk per capita. Milk is a relatively cheap food which is suitable for the young, old and gravidas. Some people might quibble about giving milk to babies during the first year of their lives, but there is no better liquid product for older children.

The new agency will take cognisance of liquid milk supply throughout the year and will record and police the industry. I hope that this will prevent dumping on the market. The Bill deals with transfers and the duration of contracts. The agency will be self-financed through the imposition of a levy on the industry. I am sure the Minister has taken note of the concerns expressed by Deputy Crawford in this respect. The imposition of the levy will mean that neither the Minister for Agriculture, Food and Forestry nor the Minister for Finance will have to worry about financing the agency. The setting up of the agency represents a new move in terms of liquid milk supply and I am glad the main farming organisations have welcomed it. I commend the Minister on bringing forward the Bill.

Mr. Kirk

I welcome the opportunity to contribute to this debate. This Bill has been awaited with anticipation for some time. I will not repeat the points made by previous speakers, but we are all aware of the necessity for this legislation and the difficulties experienced by the Dublin and Cork district milk boards which fulfilled a vital role during the development of the dairy sector. It is vitally important to have an all year round supply of liquid milk and an agency which will ensure a regular supply of top quality liquid milk.

Those of us from a rural setting know that the dairy industry is no different from the beef industry — it experiences the same problems in terms of seasonality of supply. It is clearly much cheaper to produce milk during spring, summer and autumn when cows can graze in fields than during November, December and January, hence the necessity for an agency which will ensure that liquid milk is produced during these months. Producers must be paid an adequate price for milk during the winter months if they are to stay in business.

The dairy industry has a core of very committed liquid milk producers and has been totally transformed during the past 20 years. Milk producers do not work sociable hours but those who do a good job get a reasonable return. Due to the regular cashflow, milk producers have a higher viability threshold than many other smallholders in the agricultural sector. If producers had been given an extra five or six years to expand before the introduction of the milk quota regime — introduced in 1983 — more employment could have been created in this sector and many small and fragmented holdings could have been made viable. The various adjustments and reductions since 1983 have reduced the overall capacity of the industry to produce milk.

The Minister said that an interim board would be established. This is a wise decision as all boards have teething problems and the experience gained by the interim board will prove invaluable to the agency.

Milk is one of the most wholesome and cheapest products available to consumers. It compares very favourably with a pint of Guinness or Murphy's in terms of cost and benefit to the health and well-being of families. Those involved in health fads tend to be critical of milk as a product. It is very easy to be critical of milk but the reality is that it costs a lot in terms of time and effort to undo the damage caused by the utterances of somebody who purports to be an expert on the subject.

Deputies who have constituents employed in the ancillary services will be aware of the implications of the changes. The Minister said there had been prolonged negotiations and that a satisfactory arrangement had been arrived at. I hope that is the position and that the interests of those employees who have served both the Dublin and Cork milk boards have been protected in the negotiations.

I wish to refer to the disposal of the ancillary services. As is normal in these circumstances I assume these will be put out for public tender. Perhaps we should focus on that aspect and try to identify the problems, if any, which may arise from a new arrangement in the sector. At least one group is anxious to acquire the ancillary services for the development of the dairy industry. As in every case there will be, to a lesser or a greater extent, a vested interest involved. I do not know if the Department of Agriculture, Food and Forestry wishes to retain any control over the ancillary services. I am sure there are other mechanisms by which the Department will exercise control.

It is important that the broad general self-interest of the dairy industry is protected. It would not be advisable to have a new arrangement dominated by a particular group, whose primary aim might not necessarily be in the best interest of the dairy industry.

It is important that individual farmers have access to the widest range possible of the best breeding stock. The ordinary commercial dairy farmer accepts advice from Teagasc personnel or the cattle breeding station. In some instances it may well be that the availability of breeding stock, through processing semen, may be restricted. That is not desirable. The sooner the better top sires for breeding are available to every farmer.

The Bill is worth while. I am confident that the milk agency will fulfil its role in ensuring an adequate supply of liquid milk. It would be very serious if there were shortages. There is of necessity a need for planning in these matters and I am sure the licensing arrangement provided for in the Bill will ensure that a constant and adequate supply of liquid milk will be available for households in all areas.

Minister of State at the Department of Agriculture, Food and Forestry (Mr. O'Shea)

I have listened with great interest to Deputies' contributions to this debate. The high level of support the Bill has received is most encouraging. I should like to reply to some of the remarks and to questions raised during the course of the debate.

In relation to Deputy Avril Doyle's queries, I would point out that this Bill is not a further contribution to the corpus of milk supply regulations and price legislation which commenced in 1936 and was last amended in 1967 and under which the present milk boards' regime functions. The Bill will repeal all that legislation and clear the way for the abolition of the milk boards. It will also open the way for the establishment of the new national milk agency which will have a key role in regulating the supply of drinking milk but it will have nothing to do with the fixing of price. This point was raised by my colleague, Deputy Kavanagh, as well as by Deputy Seymour Crawford. In regard to liquid milk there is no price control regime in operation. If difficulties arise in relation to the market they will be referred to the Office of Consumer Affairs. This legislation marks the beginning of something new and is not the last chapter in some long running saga.

Some Deputies expressed concern about the future of staff transferring to the private sector. I can assure the House that the agreement reached is most satisfactory. The Minister gave an outline of the arrangements yesterday. They involve recruitment, where possible, for the agency from existing staff of the boards; an offer of voluntary early retirement to some 50 or more on terms similar to those which applied in the public service in 1987-88 and the transfer to the private sector of those remaining in the ancillary business. Those who transfer in this way will have the right to be re-employed in the public sector in the event of their being subsequently made redundant due to rationalisation or business failure. In this connection pay scales have been linked to those in the Civil Service. They will return with the same pay relativity and to work as close as possible in nature to that which they had when they left.

Deputy Kavanagh raised the issue of the rights of staff transferring to the public sector. These are set out in a written agreement negotiated under the auspices of the Labour Relations Commission. There is no need to include them in the Bill. The agreement reached is binding and fully protects the rights of employees.

Concern has also been expressed about the impact of this measure on imports of drinking milk, particularly from Northern Ireland. I wish to make it abundantly clear that the Bill does not have the slightest effect on imports of milk. Milk legally imported into the State is specifically excluded. Trade in milk and milk products, within the European Union is governed by the provisions of Council Directive 92/46/EEC and, provided milk and milk products conform to the standards of that directive, their freedom of movement on the internal market cannot be regulated by the national legislation of any member state. The definition of "heat treated milk" for the purpose of this Bill is based largely on the definition of Council Directive 92/46/EEC and includes not only pasteurised milk but also UHT and sterilised milk.

In regard to the need for an efficient and cost effective pattern of milk collection and transportation this is essentially a matter for the industry to address. The industry is well aware of the desirability, not to say the necessity, for rationalisation and considerable progress has been made on that front.

Reference was made in the debate to the promotion of milk and milk products. This is carried out in Ireland by the National Dairy Council. I am pleased that the industry has agreed to continue to finance these programmes once the EU co-responsibility levy is ended. Deputy McManus referred to the fear of a closed shop. The key function of the agency is to regulate the supply of liquid milk for consumption. If this is to be a realistic objective the people involved must have a stake in the business. It is not sensible or appropriate to provide for the election to the agency of parties who may have no knowledge or interest in the trade. As new producers will be registered they will be automatically entitled to vote so that it cannot be realistically regarded as a closed shop.

Deputies Crawford and Ferris raised the method of appointment to the new milk agency and to An Bord Bia and specifically referred to the concern of farming organisations that there was no provision to allow them direct representation on the board of An Bord Bia. I will reiterate what I said during the debate on those two Bills in the Dáil and Seanad. The new board will deal with market development and promotion of Irish produce. The reform of the Common Agricultural Policy and the fact that we can no longer rely on intervention as a market outlet means that to sell our basic produce we must move rapidly down the value added agenda. The operational programme awaiting final approval takes cognisance of that. Effectively, we were putting in place a marketing board and it would not be practicable for any group to have the right of direct representation on it. It should be stressed, however, that the subsidiary board which will be set up — which will be the existing CBF board — will have the direct nomination sought by the Deputies.

The interim board appointed by the Government has been well received across the industry. Producers have been appointed to it, albeit those involved are the chairpersons of two of the largest food co-operatives in the country. It was made clear in the debate that there would not be vocational representation on the board and that the Government would appoint the people best qualified to implement the policies and structures necessary to expand the food industry market and, more importantly, create jobs — an issue which underlines all Government policy. It was obvious that we needed to broaden and extend markets for the sale of Irish food products as rapidly and as effectively as possible. The Government has taken the correct approach on this matter and there is widespread support for the board.

The selection procedures for board membership of the new National Milk Agency were also raised. This has been the subject of much consultation with all involved and I am satisfied that those appointed will be the best qualified for the job. The Bill provides that the appropriate number of processor, producer, distributor and consumer members shall be appointed to the agency. While an understanding has been reached by administrative means as to the number of each who shall be appointed to the agency, it is not considered necessary or appropriate to set out those numbers in the Bill. It is more appropriate to leave room for discretion and flexibility.

I have already dealt with Deputy Kavanagh's point regarding the inclusion of the provisions of the agreement and I sympathise with the staff concerns and uncertainties expressed by Deputies Kavanagh and Jacob. The agreement with staff provides that a person who takes voluntary redundancy cannot take up similar work with the new private sector employer. It would be difficult to justify any other provision. Deputy Kavanagh also raised the matter of the re-employment of a person who retires. The agreement states that, having regard to Government policy in the areas of unemployment and job creation, it would be difficult to justify public sector employees who availed of the voluntary retirement scheme resuming employment with the new private sector employer. The officials will take all possible steps to ensure that such a scenario does not arise. Where a person is re-employed in a post to which an appointment could have been made by the milk boards prior to rationalisation, voluntary early retirement pensions will be suspended. I will be happy to discuss the specific points raised by the Deputy in that regard prior to Committee Stage.

Deputies Crawford and Kavanagh raised the retail price of milk. Indications of unfair trading policies would be a matter for the Director of Consumer Affairs. Deputy Jacob raised penalties. There is provision for penalties for contravening the provisions of the Bill and, obviously, the nature and extent of them would depend on the nature of the contravention. Fines of up to £1,000 will be imposed for selling heat treated milk in breach of section 5 and fines of up to £500 will be imposed for making a false return to the agency. Deputy Crawford expressed concern that imported milk would not be covered by the new agency. Under the European Union Single Market, such milk cannot be covered by the agency.

I am sure Deputies are aware that the standards set under Directive No. 92/46 include structural standards for on-farm dairy facilities. To assist farmers achieve those standards a generous scheme of grant aid was introduced on 1 September last, providing aid of up to 60 per cent for a wide range of building works and dairying equipment. Deputy Crawford raised the possible duplication of inspectors. The inspectorate employed by the milk agency will comprise a small core of staff who will travel around the country to ensure that the returns made by processors to the agency in respect of milk sales and so on are correct and that the terms set out in the contracts registered with the agency are adhered to. Their function will be essentially auditorial, they will not duplicate the work of another inspectorate.

Deputy Kirk and others raised the sale or disposal of assets. The Minister has made it clear that the disposal of the ancillary business of the milk boards will be on the basis of sale by public tender. Deputy Crawford raised the question of a levy on milk producers. Under the existing milk boards, the levy is 0.8262p per gallon. Under the new agency it will be considerably less. It will be set initially by the Minister and thereafter by the agency with the Minister's consent. Because the agency will be a small body with a defined role, the fears expressed by the Deputy that the levy will continue to increase are unfounded. Deputy Kavanagh expressed concern about the milk shortages. The main objective of the Bill is to provide for an adequate supply of liquid milk.

I thank the Deputies who contributed to the debate and for their general support for the Bill which I commend to the House.

Question put and agreed to.

Acting Chairman (Mr. T. Foxe)

When is it proposed to take Committee Stage?

Mr. O'Shea

Next Tuesday, subject to the agreement of the Whips.

Committee Stage ordered for Tuesday, 18 October 1994.