Joint Oireachtas Committee on Agriculture, Food and the Marine

Joint Oireachtas Committee on Agriculture, Food and the Marine

Leinster House, February 3, 2015

Presentation by Mike Murphy & Con Hurley

The Positive Farmers

Content

1. Introduction by Andrew Doyle

2. Thanks for the invitation.

3. Topic for discussion – ‘the potential difficulties and price volatility facing the dairy industry in 2015’

4. Put that in context:

· Price volatility up to 2007 – almost non-existent

· Price volatility from 2007 – wide fluctuations

· Price volatility for the future – 25 to 40 cents per litre

5. Specific difficulties for Dairy Farmers in 2015

· Superlevy - €100 million

· Milk price drop – 23 to 27 cents – a 35% drop

· Growing debt to fuel expansion

· Tax bills next November from 2014

Many farm families will have serious cash flow difficulties in 2015 and 2016

6. Actions that the Irish State, Government and State Bodies can take to alleviate these cash flow problems

· Lobbying in Europe

· Banks – need to be more flexible

· Teagasc funding needs to be maintained and possibly increased

· US Farm Bill – scope for Ireland?

7. Looking back

- Des O’Malley disappointed with Irish response to EU membership.

The facts don’t support his statement

- 1964 to 1974: Irish milk production + 59%

- 1974 to 1984 + 76%

- Over 20 years Irish milk production almost trebled: +180%

8. Looking forward

- 2020 +50% - no problem

- Real challenge:

a. 2025 - doubling

b. 2035 – trebling

9. What’s the Big Prize?

Following the removal of the Milk Quota System on April 1 2015, Ireland possesses the potential to develop a dairy industry that, by 2035, can:

a) triple dairy export earnings to €9.15 billion per annum – up from €3.045 billion in 2013

b) double the number of jobs in the dairy/service sector

c) increase family dairyfarm incomes by €560 million per annum – every year!

d) inject €4.25 billion per annum into the rural economy – every year!

e) provide high income dairy farming opportunities for young people and owners of drystock and tillage farms

f) continue to grow despite inevitable price volatility, weather variations and other challenges to farm profitability

10. Rebuilding a prosperous Irish the rural economy

· Dublin – flying ahead

· Rural Ireland – recession in many areas

· Two big Building Blocks with Comparative Advantage that can transform the rural economy

· Tourism – Wild Atlantic Way – wonderful!

· Flourishing, expanding dairy industry

11. Actions that the Irish State, Government and State Bodies can take to support, promote and realise this fantastic potential, by building on Ireland’s unique Comparative Advantage – The GrassRich Route

· Tax incentives that stimulate expansion

- increased grass production from land & soil improvement (e.g. drainage, fertility)

- herd expansion (stock relief)

· Teagasc – well funded and focused on the GrassRich Route

12.

· Banks – more flexible policies e.g. interest only periods

- BOI, only allow 1 year interest only across whole period of loan (15 years)

· Support introduction of risk management schemes as in last US Farm Bill

- greater covering forward on milk price e.g. Glanbia

- risk insurance policy to protect profit margins – nothing like this in Ireland

13. Final Message!

We have a huge Comparative Advantage in Ireland to produce milk at low cost from the GrassRich Route.

If we follow the correct policies we can build a superb, internationally competitive dairy industry for the benefit of:

· Irish farm families,

· the rural economy and

· the national economy.

Let’s all play our part.

14. Discussion