Séamus Kirk (Louth, Fianna Fail)

Thank you, a Cheann Comhairle, for the opportunity to raise the matter here. I have raised it a number of times with the Minister because of its relevance to the industry at present.

Irish farmers will face a superlevy fine of approximately €20 million as the industry exceeded the milk quota by approximately 1% last year. Europe will be around 5% under quota this year. Under the current inflexible quota system, Irish milk production is stagnating while New Zealand, a major competitor, is ramping up production by between 8% and 10%. Denmark took over the European Council Presidency in January 2012. Denmark has exceeded the milk quota in the past two years. Five member states - Denmark, the Netherlands, Austria, Cyprus and Luxembourg - exceeded their dairy quotas in 2010-11, resulting in a superlevy of about €55.57 million, despite the fact the EU was 6% under quota. While places like Bulgaria only filled 50% of their quota and our neighbours in Britain under-filled their quota by 10% in the 2010-11 marketing year, Irish farmers are being placed under serious pressure to curtail production. In light of the fact that Ireland came only slightly under quota for the 2010-11 milk quota year and in view of increased production in the Irish dairy industry, we are calling for the introduction of a European wide quota system replacing the current national quota system. This would allow for an orderly expansion of the Irish dairy industry prior to the ending of milk quotas in 2015.

During Question Time on 6 October 2011, the Minister, Deputy Coveney, indicated there were prospects for some agreement on butterfat correction. He stated that Ireland would be able to increase its quota in 2011 by between 1.5% and 2% in addition to the 1% we receive under the soft landing policy. I want to know from the Minister of State if any progress has been made on this matter.

Adjusting the butterfat correction is one method to address the production problems. Another way to address the issue is allowing the industry to sell outside of the EU, thus avoiding distorting the market at home. These destination guarantees would appease opponents of changing the system due to their concerns about milk prices. This would empower the European dairy industry with an orderly expansion that could protect farm-gate prices by enabling market growth rather than through wastage of product, market stagnation and constrained productive capacities.

The Irish dairy industry is at a critical stage. It has the capacity to make a significant contribution to the regeneration of the Irish economy at this time. The opportunity exists to do it. We need to examine the quota system to allow for increased production and we need to do that urgently.

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