Plan for change in the dairy quota system
Tánaiste Mary Harney and the Minister for Agriculture, Joe Walsh, saw to it that David Dilger, the Greencore boss, made his peace with the beet growers.
That meeting was held the day the Tánaiste got herself tied up in a different kind of knot, but the point is that she found time on the most important day of her life to resolve a festering issue, because it was politically sensitive.
However, when you cast a cold eye across the agribusiness sector and look at what’s happening on the beef and dairy sectors, the need for political intervention in a very basic way is greater than it ever was in the past.
Both sectors are struggling hard to meet the pressures of a modern global economy and despite several efforts, reform still seems a long way off.
Today, the Prospectus report on the dairy sector will seek to push reform of the sector higher up the political agenda.
The report will be launched by Mr Walsh. Among its key recommendations will be a massive change in the quota system to allow farmers move from the existing ceiling of 40,000 gallons to over 100,000 gallons.
Such a move would drastically reduce the number of dairy farmers to between 10,000 and 11,000.
Another key suggestion is the creation of a single milk processor capable of processing up to 70% of the milk produced in Ireland.
Combined Kerry, Glanbia and Dairygold account for that much of the capacity in the sector where, as the Prospectus report suggests, the rationalisation ought to take place among the top five processors, thereby widening the net further.
It also says butter plants have to be slashed from 11 to four. Two of those would be in Leinster, one in Munster and the other probably in the Lakelands area.
West of the Shannon, there would be no butter plant envisaged under the recommendations of this report.
That probably makes sense, because if the quota system is fully implemented, then most of the smaller farmers will probably get out of the business, which clearly shows the implications of this report are quite radical.
It has been a long time in the making, but then better late than never. The payback are cost savings of €55m per annum and a boost in sales of the order of €250m annually.
The savings bit is the easy part of the argument. ICOS made similar arguments 10 years ago when it pushed for rationalisation.
Back then, the arguments fell on deaf ears, but one senses a greater sense of urgency now.
This has been a process of attrition to some extent and farmers have been learning a slow hard lesson that it is impossible to be economically viable in a sector where costs are out of line with best practices elsewhere.
Interestingly the report calls for as review of the Irish Dairy Board within two years.
It is generally felt for some time the board and the sector it serves have been competing against each other for some time in overseas markets.
That issue should have been looked at long before now, but it looks as if the days of the Dairy Board as we know it may well be numbered if this report delivers for the sector.
At an estimated cost of €350,000, it is to be hoped that it will.
The cost is being split three ways between the Department of Agriculture, Enterprise Ireland and the dairy coops.
It is understood that 2008 has been put as the deadline to have the dairy processing side rationalised.
Basically, the finger points at Kerry, Glanbia and Dairygold in that regard, but is the political will out there to make that happen?
One of the difficulties is that the minister is a facilitator. In other words, he keeps the farmers on side and will not be seen to do anything that will get farmers’ backs up if this thing gets political.
