Mary Coughlan (Donegal South West, Fianna Fail)

As the Deputy will be aware, the current milk quota arrangements were extended until the end of the 2014-15 milk quota year as part of the 2003 Luxembourg agreement on the reform of the Common Agricultural Policy. A review will take place in 2008 and any proposals submitted by the European Commission will be considered by the Council of Ministers at that time. Should the Commission come forward with further proposals in the milk sector, I will participate fully in the Council to ensure that the best interests of the Irish dairy sector are protected.

At national level, my focus is on the need to secure greater levels of efficiency at both producer and processor level in the face of considerable future challenges on international dairy markets. I recently announced the establishment of a new milk quota trading scheme to supersede the current milk quota restructuring scheme. The new system will continue to operate in each co-op area, thus maintaining the principle of regional preference or ring-fencing within current pools. It will have two elements, a priority pool and a market pool, the latter to run as an exchange.

The priority pool will be available to farmers whose leases had expired and were not renewed, successors and young farmers. The surplus available in the priority category pool will be allocated to producers with less than 350,000 litres. Some 30% of the total quota offered for sale will be allocated through the priority pool at a maximum price of 12 cent per litre, while the remaining 70% will be transacted through the exchange, delivering a market price. I have already announced 24 November as the closing date for applications by buyers and sellers to participate in the trading system and I will announce the date of the exchange when all valid transactions have been entered.

The new system, which was agreed following extensive consultation with the farm organisations and ICOS, will release larger quantities of quota to active and committed dairy farmers through the combined operation of a market exchange and a maximum price priority pool. The operation of the system will be reviewed after the first exchange and a second exchange will follow in spring of next year.

These arrangements will allow milk producers the opportunity to bid for the amount of quota required to meet the development needs of their farm enterprise at a price that will generate a commercial rate of return. Given the different levels of efficiency at farm level, such decisions are best made by individual farmers.

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