I wish to share my time with Deputies Moynihan and Michael Ahern.
Adjournment Debate. - Temporary Milk Leasing Scheme.
That is satisfactory.
I thank the Minister of State for being present to respond to this matter which is of serious concern in rural areas. The temporary milk leasing scheme which has been in existence for a number of years was available to milk suppliers with up to 30,000 gallons. Many small farmers with herds of 15-20 cows availed of the scheme to top-up their small quotas. Last April the Minister issued a notice informing farmers that the guidelines would be changed and he increased the quota to 35,000 gallons for 70 per cent of the milk pool, to 35,000-55,000 gallons for 20 per cent of the milk pool and in excess of 55,000 gallons for the remaining 10 per cent of the pool.
I do not understand why the quota should be increased for farmers with more than 55,000 gallons. I know farmers with quotas of 75,000 gallons, which is the equivalent of 70-75 cows, and an increase of 1,000 gallons is of little use to them. However, small farmers with quotas of between 6,000-9,000 gallons have had their quotas reduced to 1,0001,500 gallons and they are being put out of business. Some farmers have advertised the sale of their dairy herds in The Examiner and the Southern Star. This is a serious matter and I appeal to the Minister to change these disastrous guidelines and regulations.
I support Deputy Walsh's plea to the Minister. I am surprised that the Minister of State who represents a constituency with a large number of small milk suppliers would have allowed this change to go through. He must be aware of the pressure on these suppliers to earn a living from their holdings.
In my constituency some farmers have quotas as low as 7,000-8,000 gallons. Previously these farmers were able to buy an extra one or two cows, thereby securing an additional quota of a couple of thousand gallons. However, they now find it very difficult to get additional quota as it is being given to the larger suppliers. It is obvious that the Government and Minister are no longer interested in small milk suppliers who have had to work hard to earn a living but are in favour of giving quotas to the large suppliers, thereby turning the key on rural areas in the long-term.
I thank Deputy Walsh for sharing his time with me and support his plea to the Minister. Many young small farmers in my constituency who had quotas of 10,000-12,000 gallons when they started in business could secure an additional quota of up to 10,000 gallons through the temporary leasing scheme. In recent weeks these farmers have been told they will get a quota of 2,500 gallons, which means a reduction of £8,000 in their income at a time when they are trying to build up their businesses. This is a retrograde, insensitive, treacherous and barbaric decision and is further evidence, if this was needed, that the Minister is not in control and does not know what is happening in his Department or that the Government has taken a decision to do away with small farmers. It is outrageous that such a decision could be taken by a Government which includes so-called socialists. The Minister should come back to reality and look after young farmers who are trying to build up their herds. If this decision is not changed he will drive many young farmers to penury in the coming months.
I wish to share my time with Deputy Theresa Ahearn.
That is satisfactory.
I thank the Minister of State for sharing his time and for giving me an opportunity to voice my concerns about small milk producers, many of whom live in South Tipperary, who are facing hardship. These farmers who made major investments in their dairy unit, whether in buildings or stock, now find they are already over quota as a result of this decision. As Deputy Walsh knows, this recommendation was made by the milk quota review group which consists of representatives of the farming organisations. I am alarmed that the group could have made this recommendation to the Minister. Successive Ministers have accepted the recommendations put forward by the review group. However, this bad decision has been taken at a difficult time when less milk is available. I ask the Minister to reverse the decision in the second and third stages so that small milk producers can continue in business.
I thank the Deputies who have spoken on this matter.
The operation of the milk quota system has always been biased in favour of smaller producers. Apart from various special reserve allocations which have been distributed over the years, the rules governing the ongoing schemes such as temporary leasing, restructuring and the allocation of unused reference quantities, flexi-milk, have also ensured that smaller scale producers have first priority access to all quota which becomes available for distribution. For the last two restructuring schemes, and again in respect of the 1996 restructuring scheme, a subsidy has been made available to smaller scale producers towards the cost of purchasing additional quota.
All these measures are implemented with a view to improving the situation of the smaller scale producers but, at the same time, it is vitally important to emphasise that the extent to which any individual producer can benefit from any of these schemes is totally dependent on the amount of quota which becomes available for distribution at a given time and the demand for it. Milk producers are, of course, responsible for their quota management.
The quota system has not been in operation for over a decade and for this reason the Minister specifically asked the milk quota review group to look critically at all aspects of its operation. The group, which includes representatives of the farming bodies and the dairy industry in general, made a number of recommendations for changes in the operation of the various schemes, including the temporary leasing scheme. One such recommendation was that quota available for temporary leasing should be distributed across the various categories of producers in the same way as flexi-milk is allocated — 70 per cent to category I, producers with quotas of less than 35,000 gallons; 20 per cent to category II, quotas between 35,000 to 55,000 gallons and 10 per cent to category III, quotas over 55,000 gallons. The Minister accepted the group's recommendation and indicated, when announcing the first stage of the temporary leasing scheme in April last that he would review the situation for the second and third stages based on the outcome of the first stage.
They will be out of business at that stage.
In analysing the outcome of the first stage of the temporary leasing scheme, this change in categories is at most a minor factor. Under the changed system the policy of giving priority to smaller scale producers was continued.
A number of other factors are even more relevant. The main factor has been the increased level of demand and the extent of the super levy liability which was incurred in 1995-96. Some producers are applying for the first time on the basis that the flexi-milk which had been available in previous years to meet their over-quota production is no longer available. As many producers held over milk which was produced in the latter days of March in order to minimise their super levy liability for 1995-96, the estimated milk deliveries to date in the current year are in the region of 6 per cent over quota. The favourable weather conditions last year and this year have led to increased production, and there is the further unexpected difficulty of disposing of surplus dairy animals.
All these factors have meant that, while all indications are that the level of demand has perhaps doubled, the amount of quota available under the first stage of the temporary leasing scheme fell far short of requirements. It is clear that this doubling of demand is the principal factor which determined the level of the allocations to the individual producers.
There are, however, two further stages of the temporary leasing scheme this year, the second stage in September and the third stage before the end of December. The Minister has already called a meeting of the milk quota review group on 8 July for the specific purpose of analysing the outcome of the first stage and to consider how best to operate the further stages to ensure that those producers in greatest need will benefit most. The Minister is fully aware of the situation on the ground for smaller scale producers this year and he will consider the group's recommendations in the light of this knowledge.
The Dáil adjourned at 9.10 p.m. until 10.30 a.m. on Wednesday, 19 June 1996.