Seymour Crawford (Cavan-Monaghan, Fine Gael)
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Question 31: To ask the Minister for Agriculture and Food the discussions she has had with farming organisations and her own advisory body on milk quotas regarding her recent announcement that milk quota will be available from 2007 at market value through different structures including marts; when full details of this new development will be available in order that co-ops and farmers can plan for the future; and if she will make a statement on the matter. [12363/06]

Mary Coughlan (Donegal South West, Fianna Fail)
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I recently announced my intention to move to a more open market system for transferring milk quotas, which will come into effect on 1 April 2007. I made this decision because the current restructuring model will not meet the future needs of the industry and a more effective response is required to meet future competitive pressures.

This is crucial given the growing competition faced by the sector both internally in the EU and in our international markets. These competitive pressures will increase as we move towards the conclusion of a new WTO agreement. I want to ensure that the Irish dairy sector is well prepared for these challenges while having the capacity to secure its share of global growth in demand for dairy products.

In making my announcement I made it clear that the new system would continue to operate at co-op level and that it could be organised through an exchange system, through direct sales between individuals, between brokers-agents or through the marts. Quota could be sold with or without land and leased with land, with a variety of partnership options being allowed. I specifically said that the detailed arrangements would be prepared in association with the stakeholders and my Department has already commenced that consultation process.

When the initial stage of the consultation process is completed in the next few weeks, I will consider how best to proceed with a view to having the detailed arrangements in place at the earliest possible date. In announcing my intention to reform the existing system a full year in advance of the effective date of implementation, I was anxious to provide adequate time to consider all the relevant issues and to alert farmers that new arrangements were under consideration.

Seymour Crawford (Cavan-Monaghan, Fine Gael)
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I thank the Minister for her interesting reply. It is strange that she should issue the 2006 restructuring scheme on a Friday morning and on that afternoon write this statement, on the release of which an embargo was placed until Sunday, literally killing off the restructuring scheme for 2006. Was it because she was feeling anxious going to meet her colleagues on a Sunday afternoon regarding her disastrous position on the sugar beet and nitrates issues that she wanted to cause some means of distraction? If it was, she achieved that as evidenced by the fact that the nitrates issue is no longer on the front page of the Irish Farmers' Journal, but rather this issue is. Does she accept that if there is a major differential in the value of milk from one area to another, co-op boundaries will certainly not retain it?

Does the Minister have an answer for a young farmer — from whom I am sure the Minister of State, Mr. Brendan Smith, has also had contact, and this farmer is only one of many — as to the position in which he will find himself in County Cavan or in the lakeland dairy sector, given that he understood he was working to a two-year plan that she announced last year, but now finds that there will be no milk quota available for him to purchase this year and that he will have to lease it instead? Does the Minister believe what she has done so quickly after her announcement on the restructuring scheme will allow any restructuring to happen this year?

Mary Coughlan (Donegal South West, Fianna Fail)
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I totally refute the Deputy's little petty political snipe. It would be much more overcoming and overbearing if I had not done something about the dairy industry. That industry has decreased its capacity during the past nine years by 11,000 farmers. If we are to have a sustainable dairy sector, we need to do something about it. Two years ago I made an announcement in consultation with all the stakeholders to examine restructuring. I indicated at that time that I would re-evaluate the outcome, but the outcome was disappointing. It is on this basis that I have reviewed the policy, and the policy must be the preparedness of this industry to deal with the outcome of the WTO talks, increased competition — we are only half way through the Luxembourg Agreement — and the absolute necessity to sustain dairy farming here. It is on that basis that I introduced a more open market system. I am allowing a year for time to consult and to prepare farmers. On the basis of the outcome last year of 3.4%, my view is that we will not see anything near that this year on the basis of the current restructuring scheme.

Seymour Crawford (Cavan-Monaghan, Fine Gael)
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The Minister has scuttled it.

Mary Coughlan (Donegal South West, Fianna Fail)
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I have not. I am talking about the reality and dealing with it needs action and that will be provided in consultation with the stakeholders.

We are seriously concerned about outcomes for small farmers and for young farmers. That is the reason this open market system is operated within the co-ops and that ring fencing is not being removed. It would be easy to go into an open market and allow a free-for-all, but that is not in the best interests of the sector. If we are to be prepared for the competitive nature of the dairy industry and to sustain it, most particularly when the market supports are being removed, we must have a pro-active initiative within the sector to allow for scale, to allow those who wish to retire the opportunity to do so with a proper income and, in particular, to protect the most efficient who often are the smaller to middle-sized operators.

I will consult. Consultations have taken place with the stakeholders. The Minister of State, Deputy Brendan Smith, and I will meet the co-operatives as well as the farming organisations. We will take into consideration their concerns. We will not allow a free-for-all or a situation where just because a person has money, he or she can have access to quota. All of that must be done within a proper framework. When we speak of regulation and over-regulation, it is about time we allow farmers to predetermine, not to be told how they should do their business, and allow them that freedom to farm. I will certainly take into consideration many of the concerns which need to be addressed in the context of this new policy framework.

Seymour Crawford (Cavan-Monaghan, Fine Gael)
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While I appreciate the Minister's answer, how does she suggest one will be able to retain quota in areas if the value of that quota is significantly higher in the low-cost areas of this country? History shows that one of the largest quotas in the country transferred from Donegal to Cork in the past under a technicality. Does she accept that in some cases co-operatives straddle this country which means that if the chequebook farmer has the right to buy, quota can move within that co-operative structure from one end of the country to the other?

The person to whom I refer in County Cavan is a young small farmer who wants to progress. He has detailed his situation and what it will cost him. Can the Minister guarantee she will be able to ensure that if a farmer wants to sell his quota in Monaghan or Donegal, it will be retained in the area concerned and that farmers will be able to buy it at a realistic price?

I possess a quota and therefore I have a personal interest. I want to declare that clearly. If I want to sell my quota I will try to give it to the highest bidder, no matter who that person is. How can the Minister guarantee that it will remain in the area? At EU level is the Minister seeking an increase in the quota for this area? It might be a more positive way of dealing with the situation.

Mary Coughlan (Donegal South West, Fianna Fail)
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As the Deputy is aware, in 2008 we will be reviewing the quota scene. Considering what has happened in the European Community recently, our preparation must happen now to sustain our activity in the dairy sector. Coming from Donegal, I agree that the issue of ring-fencing is a policy initiative that is close to our hearts and I will continue to ensure that will remain so.

Like Deputy Crawford, I have concerns that there would be situations whereby people would over extend themselves by perhaps getting a loan to purchase quota. Equated with that is a considerable criticism of the lack of access to quota which we in this House all hear day in, day out. That is a significant concern for people. It is a significant disincentive for them to remain on the land and I must do something about that. However, I agree there will be regulations and assurances given to allow a situation whereby there is fairness and a balance within the quota system.

In listening to as many people as I do, my view is that unless we move now we will not have a dairy industry. It is incumbent on all of us in this House to ensure we have a sustainable dairy sector. It is a fabulous industry. Ours is the most efficient in the European Community. We are under a great deal of pressure from market support reductions from WTO, considerable issues of the decreasing price of milk, consumer spend and the current world price of milk. That is why it is important we have a sustainable, commercial activity in the dairy sector. It is not just farmers who will be waiting for the outcome of this, but also so many other vital ancillary industries.

I very much respect Deputy Crawford's views. I understand from where he is coming. I have read the local newspapers. I have seen some slight agitation about this issue. The Minister of State, Deputy Brendan Smith, will meet the co-operative on my behalf. I will meet them in due course. We will come up with proposals on the basis of consultation with the stakeholders which is almost complete.