Brendan Smith (Cavan-Monaghan, Fianna Fail)

At farm level we must look at increasing the scale of operations, reducing costs where possible, and encouraging a profitable future in the sector for the next generation of dairy farmers. While the mid-term reform of the CAP has ensured the extension of the quota regime until 2014-15, it is imperative now, more than ever, to assist those who wish to expand their operations within this new environment. The 2005 milk quota restructuring scheme as well as other changes to the milk quota regulations introduced are part of a two-year restructuring programme for the purchase and sale of quota. The purpose of the programme is to allow dairy farmers to plan ahead with greater certainty, thereby enabling the restructuring programme to operate more effectively having regard to the need for more competitive milk production.

At processor level too there is a need for greater rationalisation. The industry here is competing against much larger enterprises that are increasing their scale at a faster rate than we are. Dominant players have emerged in countries such as Denmark, the Netherlands and New Zealand and these are models of scale and operation that will challenge our industry as world trade liberalises even more in the next WTO agreement.

While we move forward in our internal structural reconfiguration I remain convinced that a combination of internal supports and competitive levels of export refunds are vital components of a balanced set of aids and subsidies that will maintain market share and provide the vital competitive edge to ensure that the EU can utilise its internal milk surplus. I have impressed upon the Commission, as has the Minister, Deputy Coughlan, that unless these supports are viewed in a market context rather than a budgetary one, they will be less effective in meeting their commercial objectives and will miss the current opportunities to expand EU markets.

The Minister, Deputy Coughlan, has taken a leading role in bringing other member states who share our view on the Commission market management policies together to make a collective stance on these issues. We will continue to exert every possible pressure on the Commission to achieve a satisfactory outcome for the Irish dairy industry in terms of enhanced industry competitiveness and stable farm incomes.

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