I thank Chairman and members of the committee. As a recently elected public representative, it is a privilege to speak here and a great privilege to represent the Dairy Farmers Crisis Group. To give members some background, the group was set up in September 2009. It came about when I was knocking on doors in an attempt to get elected. I came across the gentleman beside me, Mr. Joe Bracken, who is chairman of the group. One is always asked tough questions when knocking on doors asking for votes. The first question he asked was what I would do about the price of milk. Not coming from a farming background, I did not know whether he was talking about milk for the breakfast or what he wanted. However, I promised that if I got elected I would come back to him and see what could be done. I was duly elected and got back to him. He educated me on where the dairy farming industry has gone.
Like many passing on the roadside and seeing 60 or 70 cattle in a field, I thought all dairy farmers were millionaires but that is far from the truth. I asked Mr. Bracken about the seriousness of the problem and how many people were in trouble. He said that every dairy farmer he speaks to is in trouble. We called a meeting in a local area of about 66 farmers and 60 farmers turned up. That showed there was a problem. Following on from that meeting, the Dairy Farmers Crisis Group was set up.
The heading on my presentation is "Are farmers charity workers or slaves?" — a heading I will return to when I summarise it. I wish to put some statistics to the committee and I apologise if members have already got this information. In the 1970s, farmers got 26 cent per litre of milk, that is, 75% of the consumer price went to the farmer. In 2007, farmers got approximately 36 cent per litre. In 2009, the amount reduced to 19 cent per litre. The first question to be asked is where has the 17 cent gone in the past two years? I ask the committee to bear that in mind when I show the figures for what it costs to produce a litre of milk. In the 1970s, some 75% of the consumer price went to the farmer whereas today he receives only 20% of the consumer price. Instead of a step forward, that is a reduction of 55% at a time of higher output costs for farmers, arising from Department policies, machinery and cost of living. At present, we have state-of-the-art farms, which was not the case 30 years ago.
A typical dairy farmer works 80 hours per week, 52 weeks per year, that is, 4,160 hours whereas the general public works 1,872 hours per year. A dairy farmer must be on the farm all the time. If he goes on holidays, he must pay somebody to look after his stock. In 2009, farmers received approximately 19 cent per litre of milk while the cost of production was approximately 27 cent, which is a difference of 8 cent per litre. In a practical sense, it is not viable for a person to produce a product on which he loses 8 cent.
A typical dairy farmer with 70 cows who produces 350,000 litres of milk loses €28,700 per annum, based on a loss of 8 cent per litre. For every hour he works he loses €6.90. The minimum wage at €8.65 per hour amounts to €35,984 per annum, yet dairy farmers are losing €28,700 per annum. That is unreal. If we take the case a stage further, the dairy farmer needs 27 cent per litre of milk to break even. We have already established in 2009 that he receives 19 cent per litre. To earn the minimum wage, dairy farmers need to be paid 39.66 per litre, approximately 40 cent per litre. A further 20 cent per litre, in addition to today's price of 19 cent per litre, equals a 98.3% increase to earn the minimum wage. We have a long way to come. It would be fair to say that nobody present would go to work and lose money. However, dairy farmers get up early and work late into the night and lose money on milk production.
Irish dairy farmers are the worst paid in Europe for the past seven years. That is not a nice record. In 2004, there were 24,000 dairy farmers while in 2009 there were 18,000 dairy farmers. That means 6,000 dairy farmers, or 25%, have ceased production. The question is how many will suffer in the future.
Since September 2009, the Dairy Farmers Crisis Group has visited a number of counties and has produced some information. We are aware of a number of dairy farmers who have since gone out of business. Whenever I make a presentation, the first question I ask is how many will be in business this time next year if the dairy farming industry remains as it is. Some 70% to 80% of those present put their hands up to say they will be gone out of business. How many more will suffer indirectly? How many people are making money out of the dairy farming industry? There are the vets, feed merchants, fertiliser companies, machinery companies, processing workers — the list is endless. If we lose another 25% of dairy farmers, we lose another 25% of indirect jobs from the industry.
In our action plan, we ask that a regulator be appointed. A litre of milk that leaves a farmer's yard at 19 cent ends up on the table with the price having increased by 400%. We need an independent processing report and testing. The Dairy Farmers Crisis Group was established in 2009 at a time when the farmers receive only 19 cent per litre. The processing trail includes the haulier who has to haul it to the creameries and then on to the retailer. Some of the large retailers get 50 cent per litre and do not even have to open the door to allow the person in. It is put on the shelf for them.
Is it fair that the dairy farmer does all the work and yet receives only 19 cent per litre while a large supermarket can receive 50 cent per litre and does not even have to put it on the shelf? That does not appear right. We recommend that the regulator have a short term in office and produce quarterly reports. We are probably paranoid and fear that he or she may get too friendly with the creameries and others. Why should dairy farmers not have a report on where the product is going and who is getting a percentage of it?
The next issue is fair trade legislation. Farmers are price takers, not price makers. They need a base price. As I said earlier, any person who produces a product knows exactly what he or she will get for it. Dairy farmers need a fair price for milk. Liquid milk suppliers need 50% of the retail price and manufacture milk suppliers need 40%. Dairy farmers should be allowed to sell to the highest paying processor. Under the current system, three months written notice must be given before a dairy farmer can move his quota. Where is the scope to encourage competition between processors? There is no competition whatsoever. The dairy farmers here with me may think that the milk which leaves their yard goes to a creamery down the road on the right-hand side but the lorry can drive out their lane and take it to another creamery. That does not make sense. There is no competition between them and the farmer has to accept what he gets. A month later he is told what he will get for his milk. That is a very unfair process.
The next issue is independent testing. Farmers live in fear of the prospect that speaking out with regard to the current crisis in the dairy industry will lead to milk processors failing their milk test and the Department forcing them to cease milk production. We have travelled a good part of Leinster and into Munster and have met many dairy farmers. We organise a hotel and send word to the local media that we are coming to speak with dairy farmers to give them some support. Everyone behind the scenes say they agree 100% with what the group is doing. They know they are losing €20,000 plus per year. They will have gone out of business in a year but they still need to have money coming in. They are refinancing their farms and houses to stay in business. However, they are afraid to speak out because of the testing system. Milk should be independently tested. Dairy farmers need Europe to develop a policy which matches milk supply and demand.
Where do dairy farmers go from here? As a public representative, I am doing my best for the farmers in my local area. We have expanded out from that. The committee members are in a better position and have more authority to bring this further. That is the reason we have come to this meeting. Perhaps the committee members can bring our views forward so something can be achieved. I cannot stand by, as a public representative, and watch friends, neighbours and constituents going out of business. I am tied into this now, like it or lump it, and must see it through to the end. I cannot stand idly by and let them go out of business. Mr. Joe Bracken might wish to hand his farm down to his son but he will not be able to do so because it will not be viable. Where do we go from here?
I have tried to keep the presentation as short as possible. We are willing to answer questions and thank the committee for its attention.