On behalf of the joint committee, I welcome Professor Liam Downey, former director of Teagasc; Dr. Gordon Purvis, senior lecturer in the faculty of agriculture, food and the environment; and Professor Shane Ward, head of the UCD school of agriculture, food science and veterinary medicine. All of the delegates are from UCD and will make their presentation to the committee on the development of a sustainable competitive agriculture sector. Before I call on them to make their opening statement, members of the committee are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official, either by name or in such a way as to make him or her identifiable. By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. If they are directed by it to cease giving evidence on a particular matter and continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they do not criticise or make charges against a person or persons or an entity by name or in such a way as to make him, her or it identifiable. I call upon Professor Downey to make his opening remarks.
Common Agricultural Policy: Discussion
Professor Liam Downey
I thank the Chairman and members for giving us the opportunity to make this presentation. The Chairman used the word "competitive". My presentation deals, in particular, with the need for sustainable, not temporary, competitiveness. I will explain a new model of agriculture my colleagues and I have been developing in UCD and elsewhere. I ask members to presume that what we are proposing is at least half right. It definitely is half right; I am not saying it is fully right. However, there is no point in talking about it, unless two things can be done and the committee could play a central role in bringing them about. Otherwise, we will be engaged in another talking shop.
What are they? Even if the model is half right, it is irrelevant, unless an implementation group, not a discussion group or a talking shop, is set up to bring about implementation. That implementation group must have at least two characteristics. It must be a public-private implementation group, as neither the public sector nor the private sector will do this on its own. There is no point in pretending. I talk with authority, having been director of four public organisations. Second, there is no point in doing it, unless there is money to drive it. There is a real opportunity to provide money to drive it if we get our act together. Obviously, money is going to be taken away from the Common Agricultural Policy. However, if we make proper presentations in Brussels, some of the money that otherwise will be lost to the Common Agricultural Policy can be diverted towards developing a new model of European agriculture, including Irish agriculture. No matter how right or wrong the model is, there is no point in talking about it, unless there is an implementation group and one has money. Colleagues, mainly from UCD, have been developing this model in the last couple of months. Dr. Purvis has been leading the team but many others have been involved, some from outside Ireland.
I will take a few minutes to try to answer three questions. First, what is meant by "sustainably competitive agriculture"? What is this beast about which we are talking? Second, why do we need to have such a model? Third, how will we do it? I think I have dealt with the third question.
I am sure members will tell me "sustainably competitive agriculture" is an awful title. It is deliberately awful because I want people to reflect on what we are talking about. We have a great tendency to come up with names such as "green agriculture", which mean one thing on Monday, something else on Tuesday and nothing on Wednesday. I want members to think about these deliberately complicated words. What does the term "sustainably competitive" mean? It is not the temporary competitiveness of the Celtic tiger. We must talk about durable competitiveness. It is not industrialised or organic agriculture but a middle ground between the two. It has to meet five very important criteria, or benchmarks, and it is not enough to meet one or two. There is no point in creating a new model of agriculture that will totally look after the environment or make money for farmers. Such a model would not survive. To survive, it must include the following five criteria. It is imperative it is profitable at farm level, otherwise we can forget it. This formula can be profitable at farm level if a reduction in on-farm costs is achieved. This could be done by raising feed conversion efficiency and by obtaining more bang for the bucks one spends on feed through the production of more milk from the same amount of feed. This, if done, would seriously arrest one of the biggest problems in agriculture worldwide today, namely, induced diseases related to production, which are man-made diseases in farm animals. We are all aware of the problem with infertility, which is the biggest single problem we face. In essence, production related diseases can be associated with infertility, mastitis and lameness, which diseases are increasing exponentially all over the world. I am sure if Professor Michael Doherty of UCD were here today he would put the case in this regard much better than I have done. Members of the joint committee can take it, however, that I am almost a veterinarian having run the bovine tuberculosis scheme for ten years. Production related diseases are totally different from infectious diseases in respect of which we have done a reasonable job. We have not yet done a reasonable job on production related diseases.
The costs associated with production related diseases are astronomical but it appears we are determined not to find out what these are. It is impossible to find anyone in Ireland who will quantify the costs of production related diseases. It is a mystery we do not want to solve because we do not want to know the answer. Production related disease problems arise out of a mismatch between animal feed and genetics. We all know that genetics must be improved and while our standards in this regard are not perfect, they are good and we no longer have a problem in this area. We have improved our genetics. As regards milk, we have in terms of genetics turned cows into milk making machines. As cows near calving, they eat less. Because they are now milk making machines, they convert their body tissue into milk. We all act surprised to hear farmers talk about a loss of body condition. This is inevitable. We have made cows into milk making machines which means they reduce their dietary intake and, as such, use their body tissue. The problem is simple: genetics creates the potential but it is nutrition that delivers on that potential, something which the Irish do not wish to understand.
It is interesting that in the pig industry — I know Deputy O'Keeffe will agree with me on this — feed conversion efficiency is taken as a given. The pig industry is based more or less on feed conversion efficiency — I am overstating it a little. The same applies in respect of the poultry industry. We must encourage our dairy farmers to think like our pig farmers, something which we have failed so far to do. There is another benefit to feed conversion efficiency, namely, it would reduce gaseous emissions and make a contribution to climate change, an issue to which I will return.
The second criterion is that we must produce market required products. We no longer have intervention. In terms of food safety, I believe we can give ourselves a good mark. There is no doubt, and I have done much research on this, that Irish food products are pretty good by any standards. However, we have a problem in terms of quality. We have a particular problem in regard to the consistency of our quality. Consistent quality is imperative in the food industry. People drink Guinness time after time because they know that each pint will be as good as the last one. The quality of the product is consistent. The same is not true of our dairy or meat products. They are grossly non-uniform in terms of quality. This is so because of our seasonal milk production system.
We all know that we have a seasonal milk production system which allows us to cash in on grass, which is as it should be. We all also know that the volume varies approximately eightfold throughout the year. What we have not taken on board is that not alone is the volume changing, the composition of milk is changing. This means the composition of the dairy product is changing which means we have variable quality in our dairy products. I will give one example. We export a great deal of lactic butter to the continent and to Germany in particular. When produced in the middle of the summer, this product, in terms of quality, is as good as any produced anywhere else in the world. I was involved in research in this regard. However, that butter, when made in early spring or late winter, is not of the same quality. The product made in the summer would last in storage for a year or two. The product made in the winter might last one month if one was lucky. That is true of all our dairy and meat products. The reason for this is our seasonal milk production system.
While we must continue to cash in on our grass-based advantages, why are we going for extremes? I realise and am fully aware that I am challenging the organisation which I directed for a long time. Why are we going for the extremes in seasonality? That is what we in Ireland do: we push things to the hilt. Why can we not come back a little from the extreme seasonality? This would give the cows a better chance. The primary determinant of the quality of Irish dairy and beef products is the nutrition of the cow.
The third criterion is environmental sustainability. Dr. Gordon Purvis is Ireland's leading agri-environmental researcher. He will be delighted to answer any questions on this issue. I will confine to two my comments in regard to the environment. If we are to overcome the problem of production related diseases, we must give cows more digestible fibre. This means we must have greater diversity of species in our pastures. We have a monoculture now called rye grass but this does not meet the cows' requirements for digestible fibre. There would also be other advantages if we did this. Diverse pastures are usually beneficial from a wildlife point of view. They reduce the amount of loss of nutrients leading to pollution. It is the type of system that EU regulations demand.
The fourth criterion is that we must cope with climate change. While everyone in Ireland appears to be an expert on this and some of our leading business people are serious experts in this area, as members will have heard last week if listening to the radio, before the joint committee today are the only three people in Ireland who profess not to be experts on this issue. We know a little about it but are not experts. I will confine myself in this regard to two questions. If in terms of climate change we have fluctuating temperatures, will our grass stand up to it? Everything depends on this. I do not believe our grass will stand up to such change. A monoculture is more susceptible to climate change or any other change than is diverse species. While some with diverse species will cope well, others will not. We have a monoculture and are very vulnerable. Where we are in terms of conifers is where we are with grassland. We have a monoculture.
If we had diverse species, this would stand up to climate change. In the long time I have been writing about this subject I have never been able to answer how we could cope with climate change diverse species. It would also improve feed conversion efficiency. If one could achieve 100% feed conversion efficiency there would be no pollution because there would be nothing coming out the front end. While this could not be achieved, we could improve on what we have currently. We have shown that if one improves feed conversion efficiency, one can reduce methane, the most lethal gaseous emission, by at least 20%.
The final criterion is energy efficiency. This is an area where again Ireland is weak. We do not know how energy efficient are our agricultural systems. While I do not know if a seasonal milk production system is the most energy efficient system, we need to know this. Dr. Shane Ward, who is an agricultural engineer, will try to answer members' questions on this issue. Again, however, I must state that we are not putting ourselves forward as experts in this area. If we are serious about the profitability of farming, we will need to get serious about feed conversion efficiency.
Let us assume I have sold this concept to the joint committee and that it accepts it is perfect, which I know is not the case. The question then arises of why we need it. We need it for five reasons. First, if our current milk, beef and cereal production systems were benchmarked against these criteria, they would not stand up. Second, we need to reduce production costs which could be done by reducing production disorders. We also need to put our food products in a more favourable marketing position. This is probably the main point I want to make about the concept. It is a value-adding marketing strategy which would put us in a more advantageous position. I do not need to tell members of the committee that we cannot compete with the big boys. How can we compete with someone who has 1,000 cows? We cannot do so. Only a small percentage of our farmers will and are able to do so. If we want to be serious in dairy farming, having 500 cows might not be enough. Not too many of our farmers can expand to that scale. We can compete in one way — on our quality green image.
The fourth reason for doing this is the current problem, as we would protect employment in rural areas. We would regard those with 100 dairy cows or 75 suckler cows as strong farmers. When we were in Teagasc we would talk about those with 75 or 100 cows as being big farmers, but they are not really. They are only medium-sized by international standards. In Germany those with up to 100 cows are regarded as being small farmers. Those about whom we talk as big farmers with 100 cows will be under pressure. I now come to what I see as the only negative point I have to make. How will the people concerned survive when there is free trade in agriculture? How many beef farmers will survive? Fortunately, there has been a delay; therefore, we have time to get our act together. If we do all of this, the rural economy will benefit, the fifth reason.
I now come to how it can be done. While I know the name is terrible and we need to improve it, we have no intention of doing so until it is understood. How many members of the committee understand the meaning of the word "subsidiarity"? How many of us understood when it was being talked about? How many of us understand the meaning of the word "multifunctionality"? We wrote a paper on it and still do not understand it. I will not, therefore, invent words, the meaning of which we cannot understand; rather I will invent words that will make us think about what we are talking about. What is it? It is a middle agriculture between industrialised and organic agriculture. Interestingly, in the United States middle agriculture is receiving enormous support. I will not go into detail, but members can take it that it is in favour. It is not big agriculture — former President Bush's friends — but middle agriculture. What are its characteristics? Its competitiveness needs to be durable and it has an enhanced marketing image. It produces food products of consistent quality.
That brings me to my final point on the Department's recently published report, Vision 2020, to which there are two strands, one of which, rightly, must be pursued — the expansion strategy — a large expansion in milk production, with the abolition of quotas and expansion in beef and pig production. On dairy farms there is pent up capacity. When quotas are abolished, the bigger farmers will pursue this and Teagasc will give them as much support as is necessary. However, I sound a word of caution. If we are not careful, we will increase the incidence of production-related diseases. If we go for cows capable of producing 3,000 gallons, members can take it from me that we will have higher disease costs and pollution costs.
The second part of the Department's report is the part that is important to what we are saying. It refers to green opportunities. That is a welcome development. Of course, there is a strong parallel between the Department's proposals on green opportunities which are totally correct and what we propose in terms of having a sustainable and competitive agriculture sector. All we have done is to put flesh on the bones of what is meant by green agriculture.
What will happen if we do not do this? We have 25,000 farmers with fewer than 100 dairy cows and 75 suckler cows. We will talk about beef production, in particular. I do not need to tell anyone in this room that they will not survive when there is free trade in agriculture. Will Ireland produce any beef? Surely, it would be more logical — even though unacceptable — to bring it in from Brazil which will get its act together on the regulations. As the people concerned are very vulnerable, we must not do what we did when quotas were introduced. We waited until they were introduced and got into a panic. I was running ACOT at the time. We now know what is going to happen and need to get our act together.
Dr. Purvis comes from a family with a strong enterprise in beef production in the north of England. I believe he will say the model we are proposing is probably more relevant to beef than to dairy producers in the short term. It would be more difficult to get dairy producers to respond to it. If we were to do all this, we would ensure the future. What is the way forward? I am being positive and believe we have a positive future in agriculture. The expansion is positive. The green opportunities are real and we have put flesh on the bones in terms of the concept. However, there are two prerequisites. We must get over the inherent resistance that characterises institutional inertia in the public and private sectors and we must fund the concept. As I said, I hope, if members are half convinced by what we say, they will give active consideration to establishing a high level implementation group, not a discussion group, as we do not want any more reports, which is a public-private partnership. I ask the committee to take a good look at what we are saying before there is the knee-jerk reaction that characterises everything.
There is a need for urgency. Having prepared reports and plans, we cannot sit back and decide to do nothing about them. However, we have got into that frame of mind. If I were to change the title, I would like to change it to "Kerrygold Agriculture", but, of course, the Irish Dairy Board would not want that to happen. When it was led by Tony O'Reilly and the board, I was involved in the science behind it. Deputy Edward O'Keeffe would know what was going on at the time because he was not too far away from Moorepark. We did not wait until we had all the answers. The Kerrygold brand was launched and we made it up as we went along; it was serendipity. That is what we need to do. We cannot afford to reflect.
My final point relates to money. It is possible to convince the European Commission and other member states in the European Union, with which I am deeply involved — especially the new member states — that, rather than lose money from the Common Agriculture Policy to God knows what, it could be used for this purpose. That is achievable. I am pleased to note that only this morning I have received an invitation from the Commission to talk to it about what I am discussing with the committee.
Thank you, Professor Downey. I will now take questions, starting with Deputy Doyle.
I find it difficult to disagree with much of what Professor Downey said. The basic principle concerns middle agriculture which, as he noted, the Americans are now supporting. In the past 20 years they have found that intensive ranch-style farming where multinational food companies own and operate the land does nothing for rural communities, the environment, animal welfare or the quality of food production. On the other side of the scale, organic farming has been talked up considerably beyond its potential. I do not have a dispute with the role it plays and its position, but, at best, it accounts for a figure of 5%, which means that 95% of people will be pushing trolleys through a supermarket to get food. At the primary end, it is all about being sure one will be able to make a profit. I understand a supermarket ombudsman is about to be appointed in Britain. In the food supply chain, with the rest of the European Union, we are talking about equity for everybody in the marketplace.
The Agri-Vision 2020 document is excellent. More growth can be achieved in the dairy sector. Since my appointment to my current position, I have made this issue my business. During the summer I visited Moorepark where I met a number of progressive farmers. I also met others involved in the sector because I did not have sufficient knowledge of it. To put the issue in simple terms, we have 2 million ha. of grassland, 1.5 million ha. of which are used for beef and sheep production, with the remaining 500,000 ha. for dairying. Rather than increase this figure by 50%, we should double it, although I accept there are many "ifs".
One issue not raised was the need for the processing sector to get its act together in terms of how it does business. I am aware that I am rattling cages in saying this. However, I have been asked to explain the reason three Irish distribution companies are delivering three similar products to Spain to compete in the same supermarkets. Given the many opportunities available, why do these companies not join together as been done in the case of the Kerrygold brand? This issue needs to be examined to enable expansion to take place. On foot of such action, the beef sector could thrive if it was cultivated both in its own right and as a support sector to the dairy industry.
For climatic and other reasons, establishing a reasonably large-scale dairy operation in some areas of the country, including my own, would be challenging. However, in such areas it would be possible to operate as a contract rearer of heifers or as a supplier to the feed industry. These issues must be examined in a joined-up manner. Agri-Vision 2020 goes a long way towards doing so.
An immediate action plan is required because many farmers are barely surviving. Many of them are paying off last year's debts and meeting commitments from surplus. This indicates their resilience. These are my main observations.
The Common Agricultural Policy will be critical in moving towards the model of middle ground agriculture. It will give an edge if it is targeted at middle ground agriculture, as it would help to sustain rural Ireland and create jobs in the hinterland. If agriculture is doing well in an area, the local town benefits because its businesses also do well.
Last week I heard Mr. Sean O'Driscoll, chief executive officer of Glen Dimplex, being interviewed on "News at One". In what was an excellent interview he indicated we had lost the run of ourselves as regards the smart economy. A smart economy is built on production, manufacturing and exports by native, indigenous industries. One need not look far to find such an industry. As we drive to our famous think-ins, members pass farmland with major potential. Although it is not our only major indigenous industry, agriculture is our prime native industry. That is what Agri-Vision 2020 is about. As one of the simplest ways to address the economy, it is our job to put it back on agenda.
It will be necessary to go beyond what the delegation has proposed. While I do not wish to be confrontational, the practice of introducing bureaucracy, red tape and trophy regulations to satisfy political agendas must cease. Otherwise, the process will stall before it starts. I welcome this initiative and wish the delegation well. Agri-Vision 2020 must not gather dust on a shelf. An action plan is required now.
I thank Professor Downey and his colleagues for their presentation. I agree an implementation group is required. Various meetings of the joint committee have discussed the issue of milk production. The world market price of a litre of milk is in the region of 15 cent, if one takes the figures from New Zealand presented to a meeting of the committee. While I do not know the exact price of beef on the world market, it is much lower than what is being paid in Irish meat plants. Unless Irish farmers are protected and farm families are supported under the Common Agricultural Policy, the Irish agriculture sector is doomed. There is no way farmers can compete and produce food and milk at world market prices. Anything that can be done to support farmers must be done. An implementation group needs to be established to oversee developments in agriculture because without such a group, we can forget about the sector.
I anticipated that reference would be made to genetically modified organisms. Will our guests comment on the reason they did not refer to GM crops in the context of their proposal? Irish agriculture has always been based on the family farm model. The proposal before us appears to fly in the face of this model of small holdings. My reading which may be incorrect is that the smallholding would no longer exist in the proposed model. Professor Downey has stated a small farmer in Germany has 100 cows. At previous meetings of the joint committee Deputy Ned O'Keeffe, whose constituency is not far from mine, spoke on behalf of farmers with 100 or 150 cattle on good land in County Cork, while I tried to represent poor men in south Kerry with 50 cattle on bad ground. They have so much land we have heaped it all up. I ask the delegation to respond to my points on GM crops and family farms.
I welcome the presentation. It is nice to know someone is working on behalf of farmers and trying to improve their lot. Farmers need this more than ever before. None of us needs to be told farming is in a dire position. While the joint committee has been discussing costs for some time, the issue has only recently come into play to a great extent. Moreover, production related diseases, a major issue, have not been dwelled on much before now. We cannot even put a figure on the cost.
We must get our act together on the costs of marketing and distribution, an issue to which Deputy Doyle referred. These are significant costs which could and should be minimised.
Another important issue, on which Professor Downey did not dwell, is that of the cartels operating in every aspect of the agriculture industry, including the large supermarkets. I ask the delegation to comment on the issue.
Having been born on a small farm, I understand it is impossible to survive on 20 or 30 acres unless one moves to a specialised form of farming such as organic or vegetable production. Even then, one would make only a miserly living. Over the past several years it has been claimed the future is factory farming rather than family farming. Professor Downey, however, envisages a return to middle-sized farming which is already happening in America and elsewhere. As I represent many small farmers, what future does Professor Downey envisage for the small to medium-sized farmer, those with between 50 and 100 cows?
I welcome Professor Downey and his colleagues and thank them for a fascinating presentation so far. It is suitable that it will be followed by a presentation from the National Milk Rights Group on the milk quota regime.
I was struck by Professor Downey's claim about the possibility of a future based on the middle way. I would have a slightly different view to Deputy Tom Sheahan in that regard. He is fearful that if Professor Downey's plans come to pass, it will be Armageddon for small and medium-sized farmers. I take a different view and believe the fruits of Professor Downey's labours would give a future to this sector.
Professor Downey referred to an implementation group. Is he asking for the committee to accept his presentation as policy? Who will implement it and who will comprise the implementation group?
It is a timely presentation because there is a Europe wide debate on the future of the Common Agricultural Policy and its funding. All EU agriculture Ministers will want to secure maximum resources for their respective countries. If Ireland wants to achieve this, it will have to adopt a different approach to what it is currently pursuing. I do not know whether to laugh or cry when I read official Ireland's stance in the reform negotiations is to leave things as they are when we all know that will not be the case. It is important to point out to Europe that there is an alternative framework for agricultural development.
I am slightly disappointed that we are somewhat late throwing this type of thinking into the mix as we are reaching the conclusions of Common Agricultural Policy reform negotiations. During these times of budgetary constraints, if agriculture could demonstrate its sustainability and its ability to keep farmers farming and employment on the land, it would be looked at very differently.
Professor Downey's opening remarks were concise, precise and sensible. Sometimes in this country we look for complicated solutions and are not happy with common-sense approaches. The five pillars described by Professor Downey are absolute common sense. I wish him well in his endeavours and I believe we must give it the most substantial consideration. I do not know how we will move on to implementation but I believe this approach would be good for small and medium-sized family farms, helping them carve out an existence as part of a new agriculture model.
I welcome Professor Downey who has given us much food for thought today. He began his presentation addressing the fertility of the dairy herd which, admittedly, is a crisis. Bovine diseases such as infectious bovine rhinotracheitis, IBR, bovine virus diarrhoea, BVD, affect mortality and lameness rates. These are not being properly addressed and are having a major effect on the efficiency of dairy herds. Tackling these must be made a priority.
Teagasc provides advice and research services to the agricultural sector. I believe, however, we are over-researched and under-advised. I note Mr. Joe Sheehy is in the Visitors Gallery. He writes outstanding articles in the Irish Examiner supplement Farm Exam every Tuesday which are valuable to farmers and urban dwellers. In recent weeks, however, I have noted Teagasc advisers are no longer writing advisory articles in the farming supplement in The Irish Independent. Why is this?
I want less emphasis on research. I understand Teagasc's Dutch equivalent has moved away from farm production research and is concentrating more on providing advice. I accept there is this new idea of farm discussion groups. These are fine but they are taking farmers away from their everyday jobs. There is a shortage of Teagasc advisers in County Cork when an intensive advisory service should be provided by the agency.
There is much concern across Europe about the proposed 50% increase in milk production. It will mean we will be selling milk at 15 cent a gallon, New Zealand prices.
With the high rainfall and the extremes of weather we have in Ireland, I do not see a future for the 500-herd model referred to by Professor Downey. I have experience of running a fairly large dairy herd in the driest land in County Cork. It was still a bit of a nightmare with the weather extremes we get.
The world is changing its emphasis in food production and consumption. Recently, there was a salmonella problem with eggs in North America which saw the removal and destruction of millions of contaminated eggs from the market. That would not have happened ten years ago as another use would have been found for the eggs. Some years ago Ireland had a dioxin scare with pork products. There have been calls for the use of 30% of infant formula in baby food manufacture. Irish milk is very safe because it is grass produced with low levels of thermoduric bacteria. Something could be wrong one day on one farm, and there would be a crisis. We shall add 16% in that regard. We are not getting much from this whole area because there is no added value. It is a an export commodity.
My friend, Deputy Andrew Doyle, referred to jobs and quoted what Mr. Sean O'Driscoll said. Indeed, I heard Mr. O'Driscoll in a very informative radio interview, where he referred to the smart economy and asked what we were going to do with our unskilled people. In this regard he cited the battery industry. Everybody in this committee room has a battery in his or her watch or mobile telephone and we do not make a single battery in Ireland. They are all made in the Far East. That is a job for low-skilled people, and we have to look at ourselves in a different way. Perhaps Professor Downey might agree with me on that. We have lost the run of ourselves in many ways.
Behind me in the room today are people who are very much interested in the dairy production side of farming. Dairy production is essentially the property of the small farming people on this island. The family farm is the basis of the economy, and these witnesses have a good case to make. I will not name them since they have not yet been introduced officially. Nonetheless, this issue has to be addressed in a different manner.
In Holland, I understand, farmers are concentrating more on better nutrition, giving superior feed to their animals and getting higher milk production in line with lower emission levels. They are going more in a green direction, whereas we are being told here that we have more animals using grass. We have the nitrates directive at present and we shall see more and more of this green problem. We have to change direction in that regard.
Reference has been made to the negotiations on the CAP and the cheque in the post. We must face up to the fact that there will be changes in this regard. I do not believe the traditional way of paying us will continue. However, I do not want to see all the money transferred to rural development schemes. Leader is one of the biggest employers in its own right. I do not want to be insulting to anyone, but it reminds me of the Legion of Mary. It operates in the same manner, putting a few euro here and another few there. This has to change and there must be more sustainable projects. It has something in the region of €300 million to be spent between now and 2014, but this must be disbursed more productively. This economy is in crisis, and it is not all of our own making. The Opposition might argue that it is, and we shall face that when the time comes. However, I must emphasise that we must try to spend our money in a more sustained and productive manner, as regards rural development, and determine where it is going. I have made the point and I do not want to be overcritical in this regard.
We have heard what Professor Downey had to say, the Chairman is very committed and we have a meeting shortly with the Commissioner, and so on. There are some 800 cows in the research programme in Moorepark, Fermoy, which Professor Downey is very familiar with. I do not know what they are doing with the 800 cows, apart from the employment factor. Recently, we saw the emphasis being put on a joint venture between Glanbia and Teagasc, as regards a 300-cow development in Kilkenny. The professor is familiar with all this. I do not know where all this is going. We try to promote the family farm to give people a sustainable income. One can see buoyancy in the Munster area at present because the price of milk has moved up. Last year it was depressing to be around the place, meeting people going to the mart, going to mass or wherever. If we want to be competitive we must have the type of scale that is required. I have made the point here before that we have a quality product coming from grass, and a certain level of concentrates. We should keep it at that.
I thank Professor Downey for his presentation, and I hope to hear more from him.
I want to ask Professor Downey about his relations with industry as regards feed conversion efficiency. I am speaking specifically about Keenans, who have done a good deal of work as regards trying to get the balance right so that the bovine animal is capable of producing more without being impacted upon for lameness, mastitis and other production-infected diseases.
In tandem with what Professor Downey had to say, we are trying to make agriculture sustainable, while improving the countryside and reducing nitrate levels. Again, anaerobic digestion is an industry that is up and running in other countries where some of the by-products, such as slurry and grass are being used to try and produce energy. That must have an impact on the entire industry Professor Downey is talking about, if we go in that direction. However, the problem is borders. There is the Border between Northern Ireland and the Republic and there is a different interpretation of the nitrates directive in the North, which means they have reduced housing capital costs to us. Here, somebody in some Department is obsessed with process and we have to house stock on one side of the road for longer than is being done on the other side. Such border differences create different cost bases. If one has a different cost base, there is a problem with the type of model that Professor Downey is pitching.
With regard to the co-ops, there is a belief and perception that quotas will go within a few years. Glanbia attempted to remove the yoke of the farmer ownership, as I described it, in the last few months. The big stick on display was the recapitalisation costs to improve the processing facilities. If there is going to be a massive increase in production, however, this will require an increase in the facility required for ten or 12 weeks of the year to process a multiple of what is being produced in different weeks — because production has not reached its peak, or the peak is reducing. From what I hear the question as to whether quotas go is irrelevant. The co-ops will charge producers who wish to increase their production with initial costs, as is being done in other jurisdictions. Therefore if someone who is supplying 100,000 gallons wants to increase production to 200,000 gallons, this will entail increased capital costs that will effectively be prohibitive for the farmer who wants to increase his or her production.
On feed commercial deficiency, speaking as a commercial dairy farmer, that becomes irrelevant when the milk price is 19 cent a litre, which is below the cost of production. All farmers experienced that in the 2009 season. When a farmer is producing below cost, it is cheaper not to feed, and not to produce the product. Therefore Professor Downey's assumption, while correct, is based on almost a minimum threshold price that a farmer can feed his or her animals. If he or she has to buy a field of maize or a secondary product so that the total mixed ration or the product being fed to the animal is viable, if it is below production cost nobody will produce the product.
My colleagues have dealt with the notion of the family farm unit. I am not particularly concerned whether the farm family is farming on its own individual unit or through the merger of a number of units as long as the enterprise is viable, with the profitability factor being available to the farm family to keep it in the countryside. However, we need to be more proactive, whether politically or, on our part, through industry, the co-ops, the Department or whatever, to try to facilitate the merger of units so that economies of scale are achieved if what Professor Downey is discussing is not going to cost as much as it potentially could. This would also enable farming families to participate.
Another relevant point is labour unit costs. I visited family in California over the summer and I was greatly surprised to find that the minimum wage does not apply to agricultural units. There was a big debate there at that stage about whether overtime should only kick in after eight hours of labour. The Bill went through the Californian Senate and was vetoed by the state governor on the basis that it would impact on family farms. I was surprised that the minimum wage was less than $6 an hour, and that the Bill was vetoed which would allow an individual to earn overtime after working an eight-hour day. At present one has to work a ten-hour day before one can earn overtime. People compare Irish wages to minimum wages in underdeveloped countries, but California is in the United States, which is a developed country. I saw farm labourers earning less than $6 an hour in the same field as massive caterpillar tractors costing $500,000. We will never be able to compete with differences of that scale. I am thrilled to hear everybody is on board in regard to the implementation group, whereas one person sticking the oar in the water will stop it.
I meant to ask in my earlier contribution about the relevance of the distribution of single farm payments to farming in the future. At present people who are only marginally involved in farming are getting the larger payments whereas small to medium-sized farmers who are actively involved in farming are getting the crumbs.
Professor Liam Downey
I thank the members for their interesting and insightful comments. I do not know whether I will be able to do justice to them, but with the permission of the Chair, I would like to ask my two colleagues to reply to the questions that pertain to them. First, I call Dr. Purvis.
Dr. Gordon Purvis
I am very grateful to have the opportunity to address the committee. I have been an agri-environmental scientist for quite a long while. This is a very difficult place to be because, as the questions from members have illustrated, there are ongoing tensions between the apparent interests of agriculture focused on a simple price competitive model and the interests of the environment. I am both an agriculturist and an environmentalist and it has been very apparent to me — this is my motivation in helping Professor Downey to formulate ideas — that we have to reconcile that tension. Questions were focused on family farming. Let me make it quite clear that what we are writing about is absolutely compatible with the maintenance of family farming. In fact, it is possibly one of the only ways I can think of that would guarantee viable income for small scale producers, albeit lightly linked in producer groups.
In a nutshell, the argument we are putting forward is that most countries in Europe simply will not be able to compete in the agrifood industry with really big international producers in a globalised market that is driven only by price competitiveness. There will always be larger scale operators that can out-muscle smaller producers in terms of production costs. The drive towards lower and lower value for the product is killing the producer. A member mentioned the idea of a production chain and that big conglomerates are hoovering up any money to be made in the agrifood industry and the producer is left with practically nothing, but yet the whole system depends on that producer. In effect, the model we are proposing is a system that tries to reconcile the tensions between environmental issues and viable agriculture by seeking to employ knowledge.
We have plenty of knowledge about the environment and agricultural productions systems, but what we have failed to do is put those two together. The model that can be used to do that is one that ceases to go to the high ground, to stop chasing this ever diminishing value for the product the farmer is trying to produce. That is a no win game. Ultimately, it is a no win game even for the big operators, but it is definitely a no win game for a country such as Ireland. What Irish farmers have to do is get smart. The 2020 vision talks in terms of getting smart, which means starting to play a different game, making use of what one really has, one's natural assets, which is a relatively clean environment, small scale green attractive farming. The country has to harness the science that fundamentally underpins a proper use of those resources in producing a value added product. That is the point we are making. This model is, we think, viable and useful for the maintenance of rural economies together with the social and environmental side of rural life. Not all farmers in Ireland can adopt this model. There will large operators who will try to implement the price competitive model, and good luck to them, but for the majority of producers, there will be a real problem in trying to play that game. We think this model is a solution.
We think this model will be an attractive solution to the Commission in Brussels. With CAP reform in the offing, I hear the point that it is a bit late in the game to try to change a stance, but it is essential and I think there will be a lot of support for the general principles and concepts of what we are talking about. Other countries, such as France, have a rightful interest in rural populations and the viability of their agrifood industry.
Professor Shane Ward
I thank the Chairman and members for affording us the opportunity to make a presentation to the joint committee. I was particularly interested in the responses from members. Essentially what we are advocating is that this proposal is opening up a new front for the Irish agrifood industry. That is a crucial issue. It is a front where we in Ireland potentially can have a strategic advantage internationally. That is a unique selling point. That means that it is potentially sustainable because the systems are based on lower input systems. They are not what was described earlier as "industrial agriculture" nor are they at the other end, "subsistence agriculture". It is the middle ground. Effectively, that is the fabric of society in rural Ireland.
This is about both protecting the fabric of society in rural Ireland and offering a sustainable livelihood for farm families from their farm. In essence, this is associated with farm families. In a way it is very simple but it does mean that one has to stand back from competing. This complements existing systems; we are not suggesting that one stops competing. The larger farmers will continue to compete internationally, but, as Deputy Scanlon pointed out, ultimately this is leading towards a scenario where the price per gallon of milk, per kilogramme of beef and so on is reducing to a very low level. It is continual cost cutting and it becomes very difficult to compete on the scale necessary to address a world market. In contrast, this model adds what amounts to a value added product that has a higher value and lower input costs, but one can compete based on what is described in 2020 as the "green green agriculture". It is of major importance that we address this because the ultimate outcome potentially is that middle Ireland, the family farm, the fabric of Irish society, will suffer very badly. Let us look at the situation at the moment.
During the summer, when I was on my bicycle in rural Ireland, I got lost. I stopped a man driving his jeep who gave me directions, but it flipped through my mind that here was a farmer going someplace to do work. When one considers that there is no real employment in that part of rural Ireland, farmers are farmers and while they may not be doing as well, they have something to do every day, even though the economy is going through a very bad period. In terms of our social structure, this is of significant importance. It is not just about agriculture; it is also about the economy and the future possibilities. It is important that this model is effectively market led; otherwise it will go nowhere.
Let me give an example. I think the consumer has this concept that Angus beef is something very special. I do not know where that concept of Angus beef came from, but if one goes into restaurants, it is specified as Angus beef, which is quality product. Irish beef is not strong enough as a brand. What we need is the equivalent — as Professor Downey pointed out, the concept of Kerrygold, or some similar concept, that positions Ireland's produce as unique. I am not just referring to beef but any other produce. It must be market led and position Ireland in a key role internationally. One major difficulty relates to energy and the issue of food labelling, traceability and food miles. We are potentially vulnerable as we are an island nation and people have the idea that because we have to send everything over the water, we will be less energy efficient. That is a big mistake. No matter what people say, the work has not been done on assessing the complete energy input for any of our production systems. We might have data for a farm on the input for system "X" as opposed to system "Y", but the work has not been done on the holistic approach that goes from start to finish, right through transport, processing and the consumer. We need to get that work done quickly because potentially it will give us a strategic advantage. I assume we will come out on the right side and I believe we will, but we need to know what we are talking about before we address that.
It is very important we maintain high quality research in Ireland. University College Dublin is an academic institution and one of our strong points is that we operate in an independent way. Some people might not like to hear that but I am not saying we are in an ivory tower. It is very important that research is independent. In the current economic climate, some academics from certain institutions said things that were difficult a few years ago and were not heeded, but they were in no one's pocket. They were effectively telling it as it was and people chose to ignore it. We do the science and research and if the outcome is not nice, then that is it.
I am flying the flag for the largest school in any university in Ireland, namely, the UCD school of agricultural science and veterinary medicine, which offers the complete suite from production agriculture, veterinary medicine, epidemiology, food and nutrition. That is the A to Z of the agrifood industry. We are independent and we conduct leading research that is as good as any on an international level. People do not realise that this resource exists in this country. The school accounts for about 15% of all UCD students and a quarter of the entire research budget spent in UCD. Its spend on research is approximately half that of Teagasc, bearing in mind that our brief is with both training and research. We are the highest performing research group in the whole university. We also train and educate agricultural science graduates, veterinary graduates, food science graduates and biosystems engineers. We offer the high level training that is necessary to meet the needs of the industry. We have to maintain these standards and use them as a strong point. When foot and mouth disease broke out, it was the dean of veterinary medicine in UCD who chaired the group that addressed the crisis.
I see this as a new opportunity for Ireland that has to be market led. It is about branding Ireland and it provides a great opportunity for middle Ireland as the fabric of Irish society.
Professor Liam Downey
I will do my best to reply to a remarkably good group of questions. I realise that we are intruding on the next group of people, but I would like to sit up in the Gallery and hear what they have to say. Is that possible?
Certainly.
Professor Liam Downey
There was a question about beef versus dairy, and what we are proposing is definitely relevant to dairying. It is probably easier to get this introduced in beef than in dairying. Dairy farmers are not an easy crowd to deal with.
Someone asked me about genetically modified food. I did not say anything about GM food because it would go on forever. I see an enormous parallel between where GM is and where nuclear power was some time ago. When we were involved in these foresight studies, I was involved in studies on where agriculture in Europe was going. The real concern that emerged was a food security problem in Europe and across the world. Deputy O'Keeffe touched on it when he spoke about the quality and safety of food. The studies showed that there was a serious concern about food security, both in terms of supply — especially when we were taking much land out of agriculture for biofuels — and food safety. A chicken in a supermarket might contain one leg from one country and the other leg from another country. We pretend that traceability is infallible when we all know it is not.
The world will develop two different types of agriculture. One will be a high-tech, bio-tech and GMO style of agriculture and this will supply the large volume of food that people will need, because they will starve otherwise. Now that there is an energy crisis, nuclear power has become respectable, even though we do not want to talk about how to store the products. When we start running short of food, GMOs will become respectable. We will have another type of agriculture for people with discretionary income, and this will be something bigger than organic agriculture.
Professor Ward dealt with the issue of small farmers. I understand what he is talking about. I spend much of my time in the Beara Peninsula, which is half in Kerry, and it really is shocking to see what is happening there. In the 1960s, there were 67 milk suppliers in the Beara Peninsula, but there are now only two and I do not know how long more they will last. The cartels are too big. We let them get too big. It is one of the most serious problems facing the industry.
We have a tendency in Ireland to go to Brussels with the begging bowl. I am afraid that is what we will do again, but it will not succeed this time. There is a way of succeeding, and I have exploited it myself, but I would not like to talk about it here. If one goes to Brussels and talks to officials, one finds out that they would like to hear of good ideas about agriculture. They want to hear about them because their bosses are asking them to come up with new ideas and not just respond to what members want. If we went to Brussels with a concept such as this, we would influence the Common Agricultural Policy and we could do that to our benefit.
Deputy O'Keeffe asked a question about over-research. He might be surprised that I agree with him on this. There is an obsession in Europe with knowledge creation in this country, and universities claim they will create knowledge which will then create jobs. Who believes that? No one ever believed that really. The knowledge economy is dead. The obsession now is knowledge utilisation. There is plenty of knowledge if it could be transmitted properly. We are in an advantageous position. Most countries in Europe have abolished their farm advisory service, but thanks be to God we did not.
As a former director of Teagasc, I acknowledge it needs improvement but potentially we have a very good farm advisory service. To return to what we are saying, now that the knowledge is there, how much research is required to implement that model? As Professor Ward stated, we definitely need to get a handle on the energy side and on the disease side but, by and large, most of the knowledge is there to develop that model, were we able to harness it. I agree with Deputy Edward O'Keeffe that I would not like to be looking after 500 cows and climate change at the same time. As for the final issue, I was involved in the Leader group for a long time at a higher level and have a great worry about it. I really wonder whether the money could be more productively used and think it could.
Professor Downey is not going into what the right classes——
Professor Downey should continue, as another group is due to appear before the joint committee.
Professor Liam Downey
Finally, someone mentioned Richard Keenan & Company Limited a while ago. While I was more intimately involved with the company previously, I remain involved with it. It did something that is close to the point made by Deputy Edward O'Keeffe. The company realised that it did not need to do research because the knowledge already existed. Consequently, it set up a scientific advisory board of knowledge brokers comprising ten Liam Downeys from different countries in the world who do not know everything individually but collectively do. When Richard Keenan & Company Limited wants to do something new, it consults the scientific advisory board and does not spend money on research.
Deputy Doyle spoke about Glanbia and its capitalisation costs, as well as about the dairy and processing industries in general, which I appreciate I did not cover adequately. On the capitalisation issue, one must return to the seasonality question. We produce all our milk in a seasonal way and therefore have the same problem in dairying as has the ESB, in that we must be able to meet the peak loads. Plant utilisation in Ireland is only 52%, while it is more than 95% in every other dairying country in the world. What are we going to do? We are going to abolish the quota and increase milk production. We are going to increase the peak and will increase the expenditure. I believe that a rational deployment of investment in processing facilities would save a great deal of money on the process side and would allow a better price to be paid to farmers. I could continue on that matter for a long time. The only matter on which I cannot comment is the single farm payment. The answer to the question is that I do not know. However, as the Chairman is aware, I do know the current system is not entirely defensible. However, I do not have an answer to the question posed.
In conclusion, I thank members for inviting us to appear before them. We are asking for their help and, as Professor Ward and Dr. Purvis have noted, all we can do is to try to think our way through this. We have put before the joint committee a concept that we think would put Irish agriculture in a more favourable position but the implementation group is needed. As for what it should do, it must not produce a report. Were one to put together such a group, it must be told that this is the only thing one does not want it to do. Instead, it must get at it. This is what happened with Kerrygold in the 1960s. We did not set up a group and I do not think I ever saw a report on whether we were going to adopt the Kerrygold brand. While Deputy Edward O'Keeffe may have done so, I do not remember. However, the dairy board got on with it and it was backed up with science.
As the concept we have developed is 50% to 70% okay, what is the point of setting up another group to come up with another concept as it would not differ dramatically? Implementation is what is needed, which brings one back to the very start. We therefore need to influence how money is spent in the Common Agricultural Policy because this will cost farmers somewhat more. They will not be able to do this with the current prices and will need support. I hope the Chairman and members found this to be useful and I certainly found the comments to be genuinely helpful. If possible and with members' permission, I would like to stay on because I would like to hear the next group of witnesses.
Certainly. On behalf of the joint committee, I thank Professor Downey and his colleagues for their presentation and for answering questions. This has been a highly informative meeting and the joint committee will consider the witnesses' presentation and requests at a later date.
On behalf of the joint committee, I welcome from the National Milk Rights Group Mr. Donie Shine, chairman, Mr. Noel Fitzpatrick, policy director, Mr. James Donovan, assistant secretary and Mr. Joe Sheehy, former senior dairy specialist in Teagasc, to make a presentation regarding the new CAP proposals on support for family dairy farms. Before calling on them to make their statement, I note that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of the evidence they are to give to the joint committee. If they are directed by it to cease giving evidence on a particular matter and continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a person or persons or entity by name or in such a way as to make him, her or it identifiable. I call on Mr. Shine to make his opening statement.
Mr. Donie Shine
May we divide the allocated 15 minutes between the four of us?
Yes.
Mr. Donie Shine
In that case, rather than speaking for the entire time, I would prefer to say my few words and then allow my colleagues to take up the time to keep the focus on the points we are making.
First, I thank the Chairman and members for their attendance to listen to what we have to bring to the table in respect of rural Ireland or what is left of it. We must stand up and fight for what is left of it as the wheels are falling off the tracks in a fast and furious way. When we joined the European Union in 1972, there were 138,000 dairy farmers in Ireland but by 2010 the number of dairy farmers had fallen to 19,500. What has Europe done in this respect? This is dismal and we are attending today's meeting to discuss what can be done about it. This group emerged from a group called the National Milk Rights Group, which fought for development and farmers. While I will not dwell too much on that point, some Deputies who are present may not understand where we come from. To make a long story short, I think we appeared before the joint committee in 1997 and I believe the Chairman still is in the same seat.
It was not that far back.
Mr. Donie Shine
Something must be done and we drew up a plan last year after the Government wrote to all stakeholders for submissions in respect of the Common Agricultural Policy after 2013. The National Milk Rights Group held several well-attended meetings, some of which were attended by Deputies who are present today, and came up with a policy to the effect that something must be done to front-load the family farm. I compliment the previous group to appear before the joint committee, as its submission was close to what we are trying to achieve. However, a plan must be drawn up and the talking shop must stop. Otherwise, there will be 10,000 fewer dairy farmers within four to six years. If quotas are to go, there does not appear to be a mechanism in place to protect the family farm, except that the bigger will become bigger and the smaller will fall off the tracks. Consequently, our group seeks support from the Oireachtas in respect of what we consider to be achievable.
In the case of a farmer with a quota of 50,000 gallons, that farmer will be in receipt of a single payment of €8,000. Where is €8,000 in 2020? It is an absolute disgrace if a solitary payment continues on that basis. Something must be done to protect this farmer. The last group spoke about keeping these people on the land. The only way to keep them on the land is to give them a decent price. That we are getting money from the €1.3 billion fund in Europe is due to the fact that they accept we are not getting a full price for our products. It is not being filtered back to the family farm. The witnesses on either side of me are milking between 50 and 60 cows each, and I am milking something less, and we are all in middle-of-the-road family farms. We propose that every dairy farm in the country receive a trebling of the single payment. That would mean they get a single payment of €20,000. Those with 25,000 gallons or 30,000 gallons would receive a lower amount because they do not get near 40,000 gallons. The farmer with 400,000 gallons of milk should receive an equal amount. This is the only decent way to divide up the cake. I am not against the big farmer or anyone out there. The cake is so small that something must be done to survive into the future.
One may propose going to Europe for support. Last year was one of the worst years on record for the price of milk. It was 19 or 20 cent per litre and when one adds the price of last year and this year the average is 25 cent a litre. What was Europe's best handout to dairy farmers to support the crisis, which we will hopefully never again see? It was €590 per farmer in Europe. To go to Europe for a handout in a crisis is not a runner and the only chance we have is the cake that will come to Europe after 2013. I ask the people here to put their hands on their hearts and say that something must be done. People must walk the walk at this stage. I invite Mr. James Donovan to follow up on what I said.
Mr. James Donovan
I thank the Chairman for affording us the opportunity to speak today. I am a 60 cow dairy farmer from Bantry, in west Cork, with 60,000 gallons of milk. I am the chairman of Bantry credit union and was recently elected to the board of Drinagh co-op. I have a vast knowledge of the dairy industry in my area. We are coming from a year when the average price for a litre of milk was 23 cent in one of the leading co-ops in the country, Carbery co-op. In 2008 the average was 35 cent a litre. That is a difference of €42,000 to me. I was down that amount last year. We are coming to an average milk price of 30 cent per litre in 2010. There are unpaid bills from last year and this is an ongoing problem in west Cork and in the credit union. I deal with farmers every day of the week and some are in a bad way. We are all learning about volatility and, with the abolition of the quotas in the coming years, it is a serious worry for the dairy industry as regards the future of the family farm.
I am married with four children. I have two sons and I would like at least one of them to remain on the family farm. It is sustainable? Not with the model we have at the moment. I am lending my support and have joined the National Milk Rights Group. We are looking for a farm business plan in five years time. I would like to milk 80 cows. I am landlocked and cannot buy land in my area for one reason or another. One of my farms is eight miles away and the other is two miles away. Milking big herds is not on in my area. I want at least 33 cent per litre for milk. That is the aim. Is it sustainable? Yes, it is and we will get a good living from it.
As a board member and a member of the dairy industry I welcome the dairy study on the consolidation of the industry. I await the figures in that study and hopefully they will be positive. We are better in a question and answer session and I do not want to bore members anymore. We need the maximum number of family farms in Ireland.
A few members are from west Cork and they know the demographic situation there. A previous speaker referred to two farmers in Beara, a beautiful part of the country not too far from where I am. At the end of the day it boils down to this. We have 28 million gallons in Drinagh co-op, with 625 active milk suppliers with an average of 50,000 gallons. In five years time, that number could be one third lower. For the industry and for the economic benefit of the country, agriculture in Ireland must be supported. The important thing from today's meeting is the proposal we are putting out, which will not cost the Government 1 cent. It comes directly from the CAP reform budget in Brussels.
Mr. Noel Fitzpatrick
I am from Reenascreena, west Cork. I am a dairy farmer with 50 cows and some beef. The next single farm payment negotiations will be extremely difficult, especially for Ireland, as we receive the second highest per capita payment in the EU. Based on 2008 figures, 73% of single farm payment moneys go to the top 10% of recipients. Clearly, this is wrong. Ireland will lose out if the present historic model of payments is retained. However, this is the position taken by our Government and the main Opposition parties. This is out of line with the present debate in Europe, as many countries are prepared to change to meet the new realities facing the EU. Payments in future must be capped, frontloaded and used to deliver results with regard to the delivery of public goods, dealing with peak oil and maintaining family farms. The EU Commissioner Dacian Ciolo will debate with this committee at the beginning of October and I hope the committee will discuss the issues we raised with the Commissioner. The single farm payment moneys must be used to provide basic income support and not to be tied up in land sale or rental prices. They should not finance the bad investment decisions taken during the Celtic tiger era in equities and property development, which many of the large recipients have taken. Neither should it be used to pay inactive farmers. The moneys must be used to support active farmers, new entrants and must be spread over the whole country. The majority of policy decisions taken in the past 20 years have led us to the perilous state we find ourselves in and it is a sad reflection on this House that the majority of people feel we are unable to govern ourselves. The members were warned of the current economic crisis by people like Mr. Morgan Kelly and others. He warned of the idea of banks being too big to fail but he was not listened to. I ask members to listen to our warnings to prevent the same thing happening in farming. Protect the family farm and members will have a strong food sector with little debt. Debt is poison in any system and will bring us down. We need to assess whether the model of food production is based on a low level of debt. With agriculture, we will come out of the recession only if the single farm payment system is changed.
Mr. Joe Sheehy
I was going to say that, thank God, I am not a farmer. I was a dairy specialist and an adviser to farmers for many years. I originated in west Cork and for some reason I fell in love with the family farm as distinct from the industrial farm. The usual family farm has between 40 and 70 cows but I know family farms with more than 100 cows and they are excellent farms which I would support in every way. People must remember that if one has the land to increase from having 60 to 70 cows, depending on how efficient one is it will take the profit of between 50 to 70 cows to pay an extra labour unit.
No one mentioned debt. In recent years, I have become aware of five or six farmers who ran into terrible debt as a result of fast expansion. Do not ask me where they got the quota but quota was given out fairly freely to large partnerships and there was much encouragement to get bigger and bigger. I support the National Milk Rights Group because it has been fighting from the very start for family farms and the public good and to keep the countryside alive. I worked in New Zealand for a year and rural New Zealand is not a nice place to live as there are no social activities.
I am totally against the new CAP proposals, which have been gaining ground. Why, in 2020 and beyond, pay young farmers based on what their fathers or grandfathers did from 2000 to 2002? I am not sure whether Professor Downey made clear that while big is efficient when it comes to tillage, pigs or poultry when it comes to dairying there is no more efficient farming — I have looked at a lot of results — than on a good-sized family farm. However, it has to be a certain size and that is why there are proposals to front-load support for every dairy farmer, which will enable medium-sized family dairy firms to remain in place. The status quo for CAP should be thrown out immediately. I was very encouraged to hear Mr. Lyon of the EU agriculture committee state at the Agricultural Science Association meeting last Friday that “fighting for historical payments is a recipe for failure”. Could anything be more clear? That was reported in yesterday’s Irish Independent and I am sure the Irish Examiner also had it because it always reports the good news.
I cannot understand why the status quo receives so much support. I am not here to criticise farm organisations; they have done the world of good for farmers. However, I cannot understand why they support this. They maintain that it is the only way our single farm payment total budget will be maintained. Mr. Ciolos and Mr. Lyon state the opposite so there is no basis for stating that if we want to maintain our maximum CAP payment we must maintain the status quo. That is all I have to say at present and I am very glad to support the policy and programme of these people. I was delighted to hear Professor Downey and his colleagues speak. It would be a different Ireland and EU if we worked in that way.
Mr. Noel Fitzpatrick
We met Mr. Rasmussen, head of milk policy in Brussels, who was very open to our idea. As Professor Downey stated, the EU is open to new ideas and the money will be there if we take the right approach.
I thank the gentlemen for their contributions. Today's two discussions recognise the importance of the family farm and no one in this room has had an agenda other than to protect the family farm. Let us make that clear at the start. An issue is raised with regard to size, and at the end of his contribution Mr. Sheehy stated a certain level must be achieved. The problem with our supply in the beef industry is that most of it comes from people who produce ten to 15 units per year. The same is true of family dairy farms. There is fragmentation, with some farms having only 20 cows, and let us face it, these will not be viable. Agri Vision 2020 speaks of growing the industry, which means new people will enter dairying, some people at the smaller end may end up exiting it while people in the middle may stay the same. What we must do is make sure that people at a certain level, which it has been hinted is the level of 60 to 80 cows, are viable.
With regard to CAP and the single farm payment, I do not agree that it should be an income support. Its target is to ensure that the cost of food production is counterbalanced by the injection of a single farm payment, as opposed to the US model of food coupons for the public. The argument being sold is that it allows farmers to produce food at a lower margin on cost of food production over return, and that this tops up what would otherwise have to be given to the poor people of the EU. I do not think we are promoting the historic model. We are trying to protect the single farm payment total budget. Professor Downey outlined ways and expanded thoughts on how we can secure it. Certainly, I have never stated that we should use 2000 to 2002 as reference years. I accept that while not going back to recoupling, there should be some form of minimal activity and that should be set as the platform for where we go from here. I agree with Macra na Feirme that we should have rolling reference years, and it should be redirected.
It would be far better to protect the price of the product, be it milk or beef, by getting correct the issue of labelling to define a product and to ensure that everybody supplying to our market supplies to the same standard, and let us see if they can meet us with cost. There are talks about a national reserve fund and how it would be operated and funded. No matter who is in power, no government can do more than assist this. What will have to take place is an industry initiative; the industry itself will have to look at some form of market support to cut out some of the volatility. A government may deal with other elements of volatility, but no government subvention can guarantee a minimum price.
The point made by Mr. Fitzpatrick about capping the single farm payment is certainly something that needs to be looked at. He picked a level, but there is a danger with regard to, for example, a model of two brothers farming, which would have to be worked around. There are plenty such cases and there will be more. This is from where we are coming. It is only right and proper that we defend family farms. I am a father of four on a family farm — seventh generation dry stock — with three sons. I hope one of them farms and I will do anything I can in this regard.
In future, it will be important that land ownership and land operation are separated. In recent weeks, I attended a young farmer presentation in Waterford and I saw no despondency or despair, only young well-trained people. The only thing that will limit them is the availability of land and credit. The man who won is a dry stock farmer and not a dairy farmer, which is the first time this has happened in years. Professor Downey and his colleagues have laid out a template which if we all work on implementing it and the Agri-Vision 2020 research and report we can drive on this industry, this sector, and sustainable rural economies. I will not repeat myself as I made this point when I spoke to Professor Downey about sustainable rural economies. This morning I attended a breakfast meeting with bank officials and accountants in Wicklow. Provincial towns prosper when the rural economy in their hinterlands do well.
I welcome the witnesses and thank them for their presentation. Given our own investigation into Common Agricultural Policy, CAP, reform, this is a golden opportunity to discuss these issues. I come from a family farm and, like Deputy Doyle and every party in this House, I support family farms. They are the foundation and future of agriculture in Ireland. Most of us come from similar backgrounds in family farming.
On the future of CAP, Ireland has opportunities in terms of global population growth. When this recession is over we will be able to tap markets worldwide as a country which exports 80% of what we produce in the beef and dairy sectors. However, we will have to be more efficient in producing at the right price if we are to compete. We must maintain through CAP the money we need to sustain the system. The growth in EU member states has increased the demand on Brussels for the same amount of money. The reality is that we will not be able to access the same sums of money as heretofore.
I agree with the witnesses on capping. I come from a small to medium-sized farm and believe that some of the sums people are getting from CAP are wrong and immoral. I am not against big farmers or companies but the schemes need to be capped and front-loaded if they are to support the people who are most in need of the money. Some individuals are able to draw down €400,000 from CAP whereas others can only get €6,000. This is unfair and uncompetitive and we need to change it.
Ireland has a bright future but the primary producers are only getting 18% to 20% of the final price of products. It is wrong that big cartels in the middle are getting 60% to 70%. Money should be directed towards the farmers as primary producers whose average take from a gallon of milk or a steer should be 30% to 40%. This was the proportion they received in the past and we need to return to that situation.
As a family farmer, I have a son who I hope will be able to stay on the land. I am longer dairying because a certain road which came through my land had a big effect on me. My farm was fragmented into three or four parcels of land and I was only able to produce milk on the local parcel which was not sustainable. Farmers will not be able to survive with fewer than 60 or 70 cows. We need to support the family farm and direct whatever money we get from Brussels to the right people.
I welcome my friends from west Cork. The importance of the small family farm is reflected in the number of people from west Cork who are interested in this issue. We are also joined by my friend, Joe Sheehy, who comes from the Skibbereen-Baltimore area. I am familiar with his family which was involved in farming for many generations.
The two presentations were very similar because the witnesses are singing from the same hymn sheet. We need to develop a plan for the future. Mr. Donovan referred to the Carbery group. Only for Carbery's creameries, there would be far fewer farmers in west Cork today. They pay the best prices possible at a time when other co-operatives are paying a few cent less. How long this can be sustained is another question. Our margins are so tight that every aspect of the industry will have to be examined.
In regard to CAP and the payments, it is crazy that farmers are dependent on this money when they could be doing the best to help themselves to produce at low cost. This payment is being targeted at the wrong people. It is ludicrous that a small percentage of farmers are able to cream off the payments whereas people like Mr. Fitzpatrick and Mr. Donovan are struggling. I am sure this can be changed if we go to Europe with the right attitude. We need to make the point that we cannot sustain our type of farming with that kind of discrepancy. People who are only marginally involved in farming are getting large payments while families who depend on agriculture are left with the crumbs.
I will do all I can to progress the issue. We will have to discuss it with the Minister because it is crucial that the witnesses' case be heard.
I thank the witnesses for their presentations. There is no doubt that Mr. Shine is committed to the cause of the dairy farmer. We must ensure we hold on to the funds we have historically been paid as well as try to distribute them more fairly. Many people believe the last round of funding was not fairly distributed. Certain individuals received hundreds of thousands of euro while smaller farmers were left struggling. I support the witnesses' proposals and this committee will do everything it can to bring fairness to the way payments are made to secure the survival of small farms and farming families. Farming will not survive unless we help small farmers.
I welcome the witnesses and apologise for having to leave to meet a Minister. I support their proposals and commend them on their presentation. It is also welcome to receive a one-page document which sets out all the arguments. I support my colleagues' comments on finding a more equitable way of distributing funds in the hope that we retain the sums we have received previously. Even if we receive less, we must distribute it more equitably towards family and medium-sized farms. Without mentioning names, we all know the people drawing significant amounts of money, and one could question if they are farming at all.
We will support the dairy industry in every possible way. I note the delegates have argued that the dairy premium should be tripled for the first 40,000 gallons supplied by every dairy farmer. That should be considered. I come from Mayo and Deputy Scanlon would know the same type of dairy farmer. They need support. While others might argue that with our climate and so on we should not be in milk production at all, the industry has been very well supported down through the years by the farming community. It has produced quality milk. Unfortunately, numbers are dwindling but those that remain should get every possible support.
I welcome the group before us this morning. I know of its work and I have attended several of its meetings across Munster. The large crowds that turned up at those meetings of small and family farmers showed the scale of the concern in rural Ireland on whether agriculture can continue as a way of life for many people. It also demonstrated that a large number of farmers are trying to chart a new way forward from a policy perspective. This is an ideal combination of discussions today, as the combination of this group and the last are considering — to use a Blairism — a middle way.
I appreciate what my Fianna Fáil colleagues and friends have said about how they will support the group — that is in addition to my colleagues' support — but the proof of the pudding will be in the eating. If our official policy at this committee and at Government level is that we want the current European Union support mechanism for farming to remain as it is, it will mean that we do not support the group. We cannot have a pound each way. We either support the groups through some mechanism or we support the current system; we cannot do both.
We will discuss our Oireachtas committee overview of the Common Agricultural Policy in a few weeks. We will decide our stance at that meeting, as well as the future we see for the group before us and its colleagues. With regard to the European Union, all of us agree that we should maximise the available funding in Brussels for European agriculture and in Ireland for its own agriculture. Unless we are blind and deaf — these are not politically acceptable phrases any longer — and entirely removed from reality, we should recognise that the current system is not being maintained. It is sadly amusing that we want the current system maintained when we absolutely know that the decision has already been taken that it will not be maintained. It would be tragic for Ireland if we were to sleepwalk into the policy of kicking over the traces in 12 months after the horse has bolted.
We must be part of the discussion about securing a maximum amount of funding for Ireland from the CAP negotiations. If we put forward new ideas and approaches, we will significantly enhance the possibility of not just maintaining current funding but building upon it. It is in the interest of Europe to keep farming families at their work and have a viable agriculture industry. The current system has been seen by a European policy-maker as not being the best method of doing so. We must show flexibility in our approach to CAP funding, notwithstanding the fact that we must be demand that Ireland's full national envelope be maintained.
There was some degree of public comment on this from Mr. Joe Sheehy. He expressed surprise that one of the arguments was that if there was any change to the current system of historic payment, it would reduce the possibility of retaining the national envelope. I agree that at best this was a futile argument and at worse it was pathetic. If that was the best argument that could be formulated, it is rather sad.
We should be realistic, although I am not sure about the mechanism proposed. I am sure that "business as usual" is no longer an option. We have choices to make. Do we want to keep the 40,000 gallon and 50,000 gallon dairy farmer working or do we tell him that his time has come and gone? Sometimes politics, business and economics can be quite simple. This is a simple question of whether we want to see in ten years' time, the type of farmers represented by this organisation remain in farming, or do we provide a redundancy package and thank them for their efforts and wish them luck in the future.
I welcome the group before us. I listened with interest to the presentation and to the comments at various public meetings across the country. I feel empathy and sympathy for them but the proof of our efforts in this committee will be the type of report we present as an overview of the CAP reform measures, the sort of dialogue we enter into with the Commissioner when he comes here in a few weeks and the message to be sent from the committee.
As with all the great political questions, it is a matter of choice. The group is here on an appropriate day and the combination of discussions we have heard this morning shows that at a time of some despair in agriculture, with people wondering what the future will bring, there can be a future with a little flexibility, generosity and a good deal of imagination. The delegates have a role to play and I thank them for coming before us.
We will decide the official view of the committee on the future of the funding of the Common Agricultural Policy. I hope we will be brave enough to accept that changes are required, that we will be strong in our demand that Ireland gets the maximum degree of funding and that in order to secure that funding, we put forward flexible alternative views to show Brussels that the day Ireland could only say "more, more, more" is gone. We should accept that there will be changes and that we will have, radical, innovative and interesting proposals that could keep Ireland producing food and keep farming families alive. I am sure we will not accept this group's proposals totally but we can certainly work some of it into our official position.
My colleagues know I do not play political football at this committee and I appreciate their comments. We must try to prove the value of our sentiments when we make our official CAP reform proposals.
We are proactive as a committee and we have prepared a report. We will meet all the stakeholders and we will publish our report. We went to Brussels at every opportunity and the Chairman has already been there. We will also meet Ministers. As we are being proactive, the next 12 months will be important.
I welcome the delegation. I have known Mr. Shine for a long time, as he has campaigned on behalf of farmers, particularly the dairy milk rights group. Mr. Downey gave a good report on west Cork farming and I was rather surprised at the number of suppliers in Drinagh, as they supply a third of the total supply. We all envy Carbery and the four west Cork co-ops which are models and the most successful in the country. We envy the price and product mix. They are doing well. Co-ops are not doing as well in my part of the country, which would be classed as dry land.
There will be changes in the CAP but I am a bit nervous that it will go towards rural development or we will be told to pay it from the Irish Exchequer. There is big opposition within the big countries in Europe to paying into the CAP fund, as the delegates are probably aware. I was in Brazil recently and met a very important German industrialist. He said that he paid 48% in personal tax whereas the Irish pay 42% and he argued that the 6% difference was funding the CAP. That was the view of a person responsible for approximately 80,000 jobs throughout the world. He is a very bright guy. My friend Professor Downey told me that the biggest nuclear station in the world was built in Brazil, near Rio de Janeiro, and there was no problem there. If we built only a small one in Ireland people would be out on the streets.
The CAP model has been good for Ireland. What the delegates must do is convince their farming brethren to take a new direction. The ICMSA, the IFA and other organisations are committed to what Senator Bradford said. There is much work to be done other than politically. Politicians will go with the crowd. Our bread and butter is where the votes are, but farmers are different. There is much work and much convincing to be done. Everybody accepts that farming is the driver of rural Ireland. The importance of agriculture has become increasingly apparent in the past 12 months, since we got rid of the construction industry — or it got rid of us, I do not know which — and the banks went into freefall.
The major issue in the dairy industry is the loss of added value, as has happened in my area. There are no jobs for farmers' sons and daughters in the towns. We now have a commodity-based industry which is of little value. Commodities are no good. There are lots of commodities in Africa down the mines but there are no jobs. Downstream processing and packaging are where the jobs are. There must be a change in this.
One of the guests is the most influential man in Irish agriculture, Joe Sheehy. He writes in the Irish Examiner and I follow his articles every week, even if I am abroad. Mr. Sheehy can sell a package very well, and people have great confidence in him and in what he presents. He is an honest, true agriculture writer who gives the real story. That is what we want to see.
I made a point about production research, which costs a great deal of money in Teagasc. There are also other types of research, and many research stations. Professor Downey will be well aware of what I am trying to say. I do not see much need for the continuation of production research here, but I see need for a strong advisory service in specialist areas. There should be an adviser for every hundred farmers, or a similar number, in an area. We are seeing contraction in this regard. Farmers pay for agricultural advice; they make a contribution towards it. I do not want to see this turn into a private advisory service because private providers have different interests from those of Teagasc. Teagasc has an independent advisory service giving excellent advice to farmers. It will not advise them to buy a Ford or Case tractor or a Keenan feeder; it will tell them the truth. Those offering a private advisory service have other interests. They get discounts along the line for recommending certain brands. That is why I want an independent service. Ireland can afford that. I am aware that such services have been run down in other countries, but we do not have to do what other countries do. The UK made a mistake by getting rid of its service.
The CAP model has worked well in the past, but the world moves on and changes. The only thing we have going for us is our knowledge of the experience of Brittany, Normandy and other areas with small farms. Germany has the smallest farms in the world, in Bavaria, and it has a keen interest in this. People are saying they are paying 48% tax and 6% of this is going towards CAP, but that may be a joke. Brittany and Bavaria are the Connemaras of Europe. Deputy Scanlon may not agree with me, but they are much more disadvantaged in many ways than the western seaboard. I have been to those places. Here, we are discussing the nitrates directive and having difficulties with it, but let us consider the pig sector in France. In the département of Finistère, which is in Brittany and has 23 million people, there is massive trouble with pollution of the sea. The regulations state that there should be a maximum concentration of 50 mg of nitrate per litre of water, but the actual levels are well above this. I do not want to have that argument here because we are fairly in line with regulations and pollution is well under control. Much research has been done in this area. This is an impediment that will affect the dairy industry the next time. When the nitrates directive comes up for discussion in three or four years’ time, it is the dairy farmers who will be under pressure.
I welcome the delegates and am happy to hear what they have to say; other Deputies around the table are also interested. Although the milk industry is buoyant at present, we cannot say how long that will last. There are rumours that next year might not be as good as this year; this is true enough. Mr. Donovan would know this from his co-op because the Carbery Group has an excellent and proactive executive. He will have watched the farmers operating the auction system and so on.
Deputy Doyle and I will travel to New Zealand to see what is happening there. We hear a great deal of bull about New Zealand. New Zealand has 15 million tons of milk and we have only 5 million tonnes; it is very commodity-based. I can never understand this. The European market is our market. Is it the only one that is there? It is a high-priced market. New Zealand has a market consisting of Malaysia, Vietnam and all the other countries in that part of the world, so why is it interested in our space? We will come back with an honest and independent report which will not necessarily be what people want to hear.
Mr. Joe Sheehy
Has our Government made a submission to Brussels on CAP policy in line with the thinking of the farm organisations? I believe this is so. If, as Senator Bradford said, our ideal is rejected, what will be the attitude of the committee? When the Commissioner comes here to meet the committee, will the members speak in line with the Government or will they say what they all seem to agree on?
Is Mr. Sheehy referring to the Commissioner or the Minister?
Mr. Joe Sheehy
The Chairman said that somebody from Europe would come to speak to the committee — Commissioner Ciolos.
Yes. He will speak on behalf of Europe, not on behalf of any individual country.
Mr. Joe Sheehy
Yes, but he will seek the committee's views.
Yes, our views.
We have commissioned an independent report, although this is quite private at the moment. We will assess that and present our views to the Commissioner. We will have our say.
We will not get back into a debate on this.
My understanding is that the whole thing is open for discussion at the moment and that no submissions have been made. That is why we commissioned the draft report. The Minister must come in and listen to us before any submissions or policy decisions are made. I understand it is all open.
I now ask the group to respond to the queries raised.
Mr. James Donovan
I have three points to make, and I will be quick. The first is that we must aim for the entire CAP budget. That must be the goal. The second is that it must go to active farmers. The third is that the worst thing possible for Ireland in these negotiations would be for different people to come to the table for different things. What we seek is a unified front for Ireland. We will cheese off people in Brussels if we go in looking for different things. Mr. Arthur Stephenson was a top racehorse trainer in the UK, whose horse, The Thinker, won the 1987 Cheltenham Gold Cup. On the day of the race he was at a small track called Perth, and when the commentator asked him why he was not at Cheltenham, he replied "Little fish are sweet."
It is a lovely course; I have been there.
Mr. James Donovan
It is lovely. The point I am making is something we recently said to a leading player in the industry during a discussion group meeting. We asked him whether he would prefer one herd of 500 cows or ten herds of 50, and of course he said ten herds of 50, because if his one herd went wallop, he would be gone as well.
We are at one regarding CAP post-2013. No matter what political side we are on or whether we represent farming organisations or the Government, we are all at one in wanting the best deal and looking after the most important people.
Mr. Noel Fitzpatrick
I lived in France for three and a half years so I have a good knowledge of what is happening there. The French will support their family farms, although the cost of milk production is much higher than it is in Ireland. However, getting access to that market will be virtually impossible in the long run, because they will not accept it on the ground. French farmers are militant and they are worried about the ending of the milk quota. There will be problems in the years ahead.
The single farm payment, ultimately, is a question of money. It is a wonder these fellows survived without the very small single farm payment. They must have been very efficient to have come this far. We are simply calling for support for a fair distribution of payments to strengthen Ireland's agricultural base. If this is not done we will end up with a small number of large farms.
I refer to the pig sector. When the dioxin crisis hit, irrespective of everything, the Government had to go to Brussels to get acceptance to give funds to the pig sector. The pig sector was not strong enough to handle that crisis on its own. Next time, we will not be able to bail out the pig sector even if it is not our fault and it will be the same for every other agricultural sector. If we make a mistake, we will sink. The sector must be based on low levels of debt and it must be able to deal with crises as they appear, without very much funding. I cannot state that €20,000 per head is a large amount of funding to keep a family farm going.
Mr. Donie Shine
Before we conclude I wish to state that our total contribution to gross agricultural output is 31%. However, we receive only 14% in payments. This means in real terms we receive only €185 million out of €1.3 billion. That is where we are today. We are grossly underpaid for the work we do on farms 24 hours a day, seven days a week. I appeal to the people here today to get behind us and to see the logic of what we are trying to achieve.
Mr. Noel Fitzpatrick
The intervention system was in place during the reference years. The intervention price was set at a higher level, 28 cent. In a no-quota milk situation there cannot be a European-based intervention system for milk production. It simply cannot exist. The reason quotas came into being in 1983 was to prevent the escalation of production that had led to vast amounts of product being put into intervention in the first place. Some way must be found, whether they find new moneys or a new system, to deal with the volatility involved in agriculture. It is as simple as that.
Mr. Donie Shine
I thank the Chairman and his fellow Deputies for taking the time and listening to what we have to say. I hope we can meet again before this whole thing comes to fruition. I wish the committee the best of luck and I hope we will see the members again.
On behalf of the committee, I thank Mr. Shine and his colleagues for the presentation and for answering the questions put today. Certainly, we will take on board what they have stated. Deputy Scanlon wishes to raise something briefly.