Wednesday, 15 December 2004
Dáil Eireann Debate
It is estimated that the average price of liquid milk to the farmer is about €1.69, which is equivalent to the 1989 price. There is a threat to implement a 10 cent cut in the price of milk, which will bring the price back to 1985 levels. It is estimated that farm cost inflation over that period was in the region of 30% to 40%. The arithmetic is fairly obvious.
It is estimated that 16% of the liquid milk market in Ireland is supplied by imports, with a rumoured 100,000 gallons coming in in tankers from Scotland on a daily basis. With the free movement of milk quota between the United Kingdom and Northern Ireland, it is estimated that 10% of the UK quota has come to Northern Ireland over the past ten years, with a consequent significant increase in the levels of milk production in the six Northern counties.
The position in the Republic is clearly unsustainable. There will be a mass exodus of producers of liquid milk in the immediate period. It is farcical that the two litres of water on the supermarket shelf is more expensive than the two litres of milk beside it. That is a sad commentary on the economics of liquid milk production in Ireland today.
The need to examine the serious market distortion is obvious. It is fine to say we should have free movement of goods but in this instance it is clearly distorting the marketplace and putting dairy farmers, who work long hours seven days a week, out of business because their enterprises will be unsustainable in a loss-making situation. I exhort the Minister to immediately examine the serious difficulties that exist with a view to bringing forward alleviating measures.
The price paid to farmers for milk is a commercial matter between milk producers and the dairies or processors who purchase the milk. The prices paid by these processors are a function of a range of factors, including the efficiency of these organisations, their product portfolio and the market in which their products are sold. We are operating in a competitive market for milk and milk products and that is a reality throughout the sector at producer, processor and market level. The Prospectus study, commissioned by the former Minister for Agriculture and Food in conjunction with Enterprise Ireland and the dairy industry, clearly spelt out the need for competitive structures throughout the dairy sector in general to withstand competition.
The regulation of the supply of milk for liquid consumption is the responsibility of the National Milk Agency. The agency maintains a register of all processors of milk for liquid consumption, all drinking milk producers and the contracts made between them. By law, only milk produced under a contract registered with the agency can be used for the preparation of drinking milk. The role of the agency is to ensure year-round continuity of supply, particularly during the trough production period of the winter months.
The role of the Minister for Agriculture and Food is to ensure that an EU policy framework is in place, and EU market management measures are implemented in a manner which allows the dairy sector to continue to develop and support farmers’ incomes. In this context, I am pleased to report that the year just ended has been very good from the point of view of the Irish dairy sector in general. Milk producer prices in Ireland during 2004 were similar to those last year. As part of the Common Agricultural Policy mid-term review, butter and skimmed milk powder intervention prices were reduced by 7% and 5% respectively on 1 July 2004 and producers have recently been paid a dairy premium amounting to approximately 1.2 cent per litre as partial compensation for the reduction in the intervention price levels. The international market for dairy products has been positive throughout 2004 with increased demand and reduced supply from some of our main competitors. This has allowed the producer price in Ireland for 2004 to remain unchanged from last year, notwithstanding the introduction of the dairy premium as part compensation for the reduced EU support prices.
The liquid milk sector has always been an important part of the overall dairy industry in Ireland, accounting for approximately 10% of total output. The fact that it requires all year round supply of fresh product makes particular demands on the sector but, like all other elements of the food industry, it too is subject to competitive pressures. I am aware there is some disagreement between producers and processors in price for milk and that can only be resolved between the parties involved. It is not for the Minister or the Department to become involved in such an area.
I nevertheless urge that those involved work together to safeguard the long-term future of this valuable part of the dairy industry. Milk production, whether for liquid consumption or manufacturing, remains at the centre of our competitive agriculture industry. I will ensure that the detail and the issues raised here by Deputy Kirk will be brought to the immediate attention of senior officials in the Department and all other interested parties.
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