Brendan Smith (Cavan-Monaghan, Fianna Fail)

We have an unprecedented situation in the dairy sector at present and the outlook for dairy markets in the short term is poor. Market prices have been adjusting following historically high prices in 2007 and early 2008 and there is the further complication of the credit crunch. These two factors have put an enormous burden on the sector and we have seen a slump in demand as a consequence. In Ireland we are entering a period of abundant supplies and the levels at which export refunds and intervention function will be critical to the speed at which the sector emerge from the current difficulties. I have urged a short sharp utilisation of the market management measures to get the market back to equilibrium as quickly as possible.

I have maintained close contact with Commissioner Mariann Fischer Boel regarding the need for appropriate action to support the market. The Commission responded initially with the early introduction of private storage aid for butter and with the reintroduction of export refunds in January. In addition, the Commissioner gave a commitment to continue intervention for butter and skimmed milk powder under the tendering arrangements once the fixed limits were reached. These were welcome developments and well judged at the time.

I met the Commissioner in Brussels on 11 March to discuss developments and to explore the options open to us. In particular, I had two main issues to press her on. The first was the need to buy butter into intervention at prices close to the fixed price level. The second was to stress the need to export larger quantities of butter and skimmed milk powder to international markets. I am pleased to report very positive progress on both these key points. At last week's management committee meeting it was agreed to purchase a total of 6,665 tonnes of butter into intervention at levels very close to the intervention price. This is a very important development.

In addition to this, increased quantities of butter and skimmed milk powder were granted export refunds at the meeting. The volumes supported with export refunds last week were almost equivalent to the combined totals of the three previous tenders. This is a very welcome and needed improvement and should help bring stability to the market.

At yesterday's meeting of the Council of Ministers there was a debate about the unprecedented situation at present in the dairy sector and the short term outlook for dairy markets. I informed my colleagues that in Ireland we are entering a period of abundant supplies and the levels at which refunds and intervention function will be critical to the speed at which we emerge from the current slump. While I was encouraged by recent developments in community support, I further urged a short, sharp utilisation of the market management measures to get the market back to equilibrium as quickly as possible. It is clear to me that the elements which will lead this recovery are competitive refunds that allow the sale of dairy products onto world markets in considerable quantities and the continuation of intervention under the tendering mechanism, provided that these arrangements remain relatively attractive.

The Commission was left in no doubt by myself and by a number of other member states of the importance of fully using all available supports to manage the market in the upcoming period.

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