Waterford TD John Deasy says further urgent measures are needed to help relieve the income pressure on dairy farms.

Following the abolition of quotas just over a year ago, February CSO figures showed a 37% increase in production by the sector compared to 12 months previously.

“However, milk prices have fallen by 20% since February 2015 due to a combination of global factors, and Irish farmers, many of whom have invested significantly, are struggling to cover the cost of production,” Deasy says.

The average February milk price was 24.68c/litre — down from 30.77c/l (also incl. VAT) in March 2015. And short-term indicators look to be static.

With the imminent phased payment of superlevy fines for 2015 set to further impact farmers’ cashflow, Deputy Deasy contacted the Department of Agriculture to see if there was any scope to postpone these instalments for another 12 months in the hope that market conditions can improve.

Secretary General Aidan O’Driscoll informed him that Irish officials “pushed strongly” for a possible deferral to 2017-18 during discussions in the run-up to the March Council of Agriculture Ministers.

However, Brussels had “rejected” this prospect on legal and regulatory grounds.
“While we suggested alternative arrangements it was clear that the proposal enjoyed very little support from other Member States and therefore was not likely to succeed,” the Sec-Gen added.

That means the “optimum repayment model” agreed with farming groups and at government level — 10 equal instalments from May to September in 2016 and 2017 — will proceed as planned.

Nationally some 3,672 farmers (of the 6,109 who incurred the levy) availed of this penalty repayment option; amounting to €35.6m out of a total national levy liability of €71.2m.

The exchequer has already forwarded the money to the EU. It will be repaid by farmers on an interest-free basis by way of deductions from monthly milk cheques covering the peak months of April to August. Co-ops will in turn send these monies on to the Department.

Last week the IFA called on co-ops to desist from any more milk price cuts given the challenges faced at farm level. The industry is heavily represented on the new national dairy forum — a partnership which Fine Gael TDs Deasy and Michael Creed proposed in order to address post-quota uncertainties.
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The need for meaningful, confidence-building measures to support a sustainable milk price is sure to be on the agenda when the incoming agriculture minister chairs the forum’s next session.

Waterford TD John Deasy says the first gathering of the national dairy forum “was really an introductory meeting about the structures involved and the role government sees itself playing with industry groups into the future.
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“It actually turned out to be a very constructive debate as to what measures might be taken to deal with the volatility we’ve been seeing in dairy markets for the last six months. I think the forum will prove an essential mechanism for the Irish dairy industry to put pressure on the government to take necessary steps when an intervention is needed,” he added.

FOCUS ON MARKET DEVELOPMENTS AND PRICE VOLATILITY
 
Department of Agriculture, Food and the Marine | Minister Simon Coveney T.D. today (29/9/2015) hosted the first dairy forum for stakeholders in the sector. The forum has been established by the Minister to focus on strategic issues for the development of Ireland’s dairy sector. Today’s attendees were drawn from the farming, processing and banking sectors, with representatives from Bord Bia, Enterprise Ireland, the Environmental Protection Agency, Teagasc, Animal Health Ireland, and the Irish Cattle Breeding Federation (ICBF) also attending. 
 
Commenting on the background to the forum the Minister said “as we know, 2015 is an historic year for the Irish dairy sector as EU dairy quotas have been abolished. I’ve consistently said this decision provides a great opportunity for the Irish dairy sector but equally sets us some challenges which will have to be managed along the way. This forum is about bringing key stakeholders together to assess their preparedness for this growth opportunity and to focus on strategic issues facing the sector over the next few years”.
 
The first meeting of the forum focussed on market evolution and price volatility. The package of dairy measures agreed at the EU Council of Agriculture Ministers on September 15th, was also discussed. 
 
On market issues, the forum received a presentation from Ornua on recent developments for key dairy commodities and the likely outlook in the short to medium term. Commenting on the presentation and discussion afterwards, the Minister said “there’s no question but that 2015 has been a challenging year for exporters of dairy products as a number of factors, including increased output in dairy producing countries and slowing demand in China and Russia. However there have recently been tentative signs that markets may be starting to stabilise as global production eases off slightly while demand starts to slowly increase again.”

Participants also discussed potential measures to mitigate the impact of volatility, following a presentation by Dr. Michael Keane of UCC, on potential market and policy tools. Referring to this discussion, Minister Coveney said “recent price volatility has been a reflection of turbulent global markets. This means Irish farmers are receiving a reduced farmgate price for their milk this year and I am fully aware of the difficulties which this has caused. 

While some price volatility is inevitable it is important that Irish farmers and processors have the tools to help overcome its worst extremes. The potential tools available go beyond EU market support measures. They include futures markets, longer term fixed price contracts between farmers and processors,  more stable supply and price arrangements between processors and purchasers of raw materials and finished products, and more flexible banking arrangements for farmers, calibrated to allow for periods of temporary market downturn.  Today’s forum provided the opportunity for relevant stakeholders to engage in a collaborative way on these challenges and to consider how they might respond”.
 
Concluding, Minister Coveney emphasised that the medium to long term outlook for dairy remained extremely positive “The main message is that notwithstanding current market developments, global demand is expected to strengthen substantially in the medium to long term and it is essential that the Irish dairy sector is positioned to take full advantage of this opportunity. Today was a useful opportunity to for the industry to engage collectively on how it might go about that.  For my part, I will chairing the first meeting of the High Level Implementation Committee of the Food Wise 2025 strategy tomorrow,  and I am determined that the agencies represented there will play their part in ensuring that the State plays its part in providing the  policy and operational framework  needed to  realise the tremendous  growth opportunity for the dairy sector”.

The Department of Agriculture has told Waterford TD John Deasy that it will direct a special steering committee to review the circumstances in which a Dungarvan farmer was compelled to slaughter 4,000 pigs at a loss of almost €750,000.

Speaking at last Thursday’s meeting of the Dáil Public Accounts Committee, which discussed the Department’s handling of the 2002 mass destruction of pigs at the Ballinamuck farm of Tom Galvin, Secretary General Aidan O’Driscoll said they would not allow a similar situation to unfold again.

“There’s no doubt that that. There are many aspects of this that we wouldn’t handle the same way. If we did allow on-farm slaughter we would supervise the whole thing.”

Outlining the case history, he told how traces of Carbadox — banned in the EU in 1999 because of its carcinogenic properties but still legal in the United States — were found in a pig carcass traced to Mr Galvin’s farm, where officials later found several bags of the product.

Mr Galvin was convicted under animal remedy regulations but successfully appealed the verdict. The Department did not defend the appeal on the basis that the Supreme Court had decided that the Minister did not have the right to amend regulations.

Deputy Deasy, vice-chairman of the PAC, told the Secretary General: “When it comes to Tom Galvin, I have to say he’s someone who’s very well regarded and the feeling locally would be that the Department treated him poorly, and that’s my own subjective view having looked at the evidence.”

Deasy said he’d formed this opinion “regardless of the constraints Department officials might have been under when it comes to the rules and regulations in dealing with animals suspected of being diseased, or fed things allegedly that would affect the food chain adversely.”

Mr O’Driscoll, stressing “he’d no axe to grind” with Mr Galvin and “he could well be a fine person, as you’ve said”, explained why officials entered the farm and that the farmer admitted spreading the product on the floor of his pig pens.

“Once that admission was made, effectively the pigs had to be slaughtered,” he said. No further testing took place. Mr Deasy wondered why not, if only for clarity’s sake. Mr O’Driscoll acknowledged “there must have been a test we could have done, yes.”

The Fine Gael TD disagreed with his contention that “there would have been nothing served” by testing the pigs on the farm. If it had produced “incontrovertible evidence as to what might have gone into the food chain, I think it would have solved an awful lot of problems subsequently.”

Though accepting the Department has to act in cases involving threats to the food chain, “I think you made a mistake — and left a real grey area about the state of those pigs — by not going down that road [testing],” he said. Mr O’Driscoll agreed that this was a reasonable assessment.

The Department had told Mr Galvin to have the pigs destroyed in an approved plant as they must not enter the food chain. Instead, he asked to carrying out the slaughter on his property using a humane killer. 

The Secretary General said the disposal of the carcasses was supervised by a Department official at all times. Around 25 percent of the slaughter was overseen by a veterinary official and it was done “meticulously”.

Mr O’Driscoll — who refuted an allegation that a Department official overseeing the slaughter had handed Mr Galvin a lump hammer and told him to finish the job — said he understood that about 10 animals were killed in this way before the vet intervened and took away the hammer.

Mr Deasy said that for the Department to admit it wouldn’t allow such a scenario to unfold again “is significant”. The fact that the Veterinary Council had exonerated the vets involved was “fair enough” but “that doesn’t mean that things that happened were done properly” or that this “should have occurred the way that it did.”

Mr O’Driscoll said: “You’re quite right — if we did this again I’m quite sure we wouldn’t do it in the same way and in the same circumstances. In particular, if we did allow on-farm slaughter by the farmer I think we would supervise the entire thing. Would we allow [it] at all? I don’t know, I’d be unwilling to say definitely not.”

Deputy Deasy said, “It amazes me that when it comes to the obvious, potentially devastating financial result that did occur that only 25% of the slaughter was actually supervised” — compounded by the fact that procedures didn’t change even after the alleged use of a lump hammer; which Mr O’Driscoll regarded as “a fair point”.

Having been “constructively made [to] slaughter those pigs himself,” he deemed it “understandable” why Mr Galvin asked permission to do so on his own farm, given that he’s gone to a couple of abattoirs who refused, presumably because they didn’t want any potentially contaminated pigs going into the foods chain. Plus, “it was probably the cheaper option at the time.”

Mr O’Driscoll had “no problem with that interpretation”. The only other option would have been to bring a professional slaughterman onto the farm, “and I think if we were doing it again that option would be quite a prominent one.”

In his opinion, “The key error we made was not having 100% supervision.” However, Mr Deasy maintained this was “not the only mistake really”. First off, when that singular pig was believed to have tested positive, the Department left Mr Galvin “remain in a state of limbo for three months.”

He couldn’t understand how, “if it was so crucial that those pigs were slaughtered, why did you wait three months? It seems to me it really was a haphazard approach by the Department.”

During that time, the pigs got sick, disease spread, medicines were taken away from the farmer, and he moved animals in that interim period; “probably because he needed cash to keep going.”

The Secretary General said because Mr Galvin contested the slaughter order in the High Court, which found against him, a lot of delay before the slaughter took place “related to those legal issues.”

Deputy Deasy also said Mr Galvin “would contend that the manner in which those pigs were slaughtered was not correct”. Mr O’Driscoll said the method the farmer had used was very widely applied in the UK during the swine fever outbreak two years previously.

Another option was the Department could have taken over the pigs and got them slaughtered — but the legal advice was that it would have ended up having to pay significant compensation. “Would that have been a better outcome?” the Secretary General asked. “Not for the taxpayer.”

But, Mr Deasy said, “You could certainly make the argument, for fairness sake, it might have been the best option.” He added that, notwithstanding the disease risks associated with the movement of animals and so on, “there’s also the question of treating somebody fairly, and when I look at this I think, actually, he was treated poorly”.

On account of a product that’s still not banned in the U.S. to this day, he’d been left out of pocket to the amount of €0.75m.

With a 2005 review of the case conducted without Mr Galvin’s input, and its findings still unpublished, Mr Deasy said: “I think your new steering group within the Department should take another look at this, for the sake of fairness to the individual in question who was put out of business... and at least offer him the opportunity, outside of an adversarial setting, to make his case.”

The Secretary General had “no difficulty with that” and said the best thing he could do was to refer the 2005 internal report to the steering group for its consideration, and also hand it over to the PAC. Mr Galvin could make a submission to the steering group, “if he wants to contest anything that’s in the report, or just present his own narrative.”

With a €6 million dredging operation getting underway, the Department of Agriculture, Food and the Marine has confirmed that it is exploring the possibility of constructing a breakwater at Dunmore East.

Waterford TD John Deasy asked what infrastructural funding might be made available for the next phase of development at the State fishery port when Department officials appeared before the Dáil Public Accounts Committee last Thursday.

He said “two critical issues” had been identified to him — the first being a stepping-off point and safe access for cruise ships which “are vital from an economic tourism standpoint”.

Pointing to the very real difficulties Dunmore, as a busy port, is experiencing in providing space for passengers and crew to disembark, Deasy said “it’s becoming a potential safety issue” and asked the Department to look into it.

He added: “The second piece of essential infrastructure missing from Dunmore East is a breakwater, to allow for the leisure and sailing end of things to be built on and promoted.”

Cecil Beamish from the Department’s marine division confirmed that the “the next significant capital project that is being looked for Dunmore East down the line is a breakwater.”

This, he said, “would provide benefit also to the marine-leisure side of the harbour — which has been growing very rapidly — in terms of improved shelter and overwintering, and possibly allow the development then of small craft berthing.”

He told Deputy Deasy that “the exploratory work on what type of breakwater, the positioning, the scale, the costing, all of that, that’s getting underway over the next period as we move through the dredging.”

He added that they would also be deepening the entrance channel as part of the dredging exercise, with the overall operation to remove mud and silt from the harbour basin “going deeper than had been envisaged last year.

“At the moment we’re exploring what is the engineering and design dimensions of what would be required for a breakwater because there are different versions of where and how you’d put it [in]; and then, in parallel, considering multi-annual capital requirements and how to programme that,” he said.