Michael Creed (Cork North West, Fine Gael)
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On a point of order, if the Minister's reply to the following question is the same as that given to Question No. 43, perhaps we could proceed by way of dealing with supplementary questions.

Brendan Howlin (Wexford, Labour)
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That is for the Minister to decide.

Michael Creed (Cork North West, Fine Gael)
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Question 46: To ask the Minister for Agriculture, Fisheries and Food the detailed analysis conducted by his Department on the crisis in the dairy industry; the measures he proposes to ensure a price to farmers for milk above the cost of production; and if he will make a statement on the matter. [20645/09]

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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Other than the introductory paragraph, my response to this question is much the same as that given to Question No. 43.

My Department carries out analysis of the dairy sector on an ongoing basis. The causes of the current predicament are widely known at this stage. The past year has been challenging for the EU dairy sector. During 2008 international dairy markets fell from the record high levels they had reached in 2007 and there was increased volatility in the second half of the year. Global supply increased in response to high prices and demand contracted during 2008 due to the economic slump. We are operating in a changed policy framework where world market forces have a major influence on the price paid for milk. This is particularly relevant to dairy producing countries such as Ireland which export the majority of product.

Ultimately, the market is the source of income achieved through competitiveness, efficiency and innovation. In an open market it is not my role to fix or guarantee prices for farmers. However, it is my role to ensure that the available support measures are utilised by the Commission during periods of market turbulence. Most EU market support measures were suspended since 2007 as prices were at such high levels. When the situation deteriorated last year I called on the Commissioner to reintroduce market supports and to use them effectively. The Commission has taken steps in recent months to address the situation.

For the remainder of my response I refer Deputy Creed to the reply given to Question No. 43.

Michael Creed (Cork North West, Fine Gael)
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The Minister makes much of the fact that market support measures were retained in the reform of the Common Agricultural Policy as an instrument for dealing with price fluctuations. We are currently experiencing the most severe of price fluctuations. Whereas farmers received in the region of 40 cents per litre of milk in 2007, they are now receiving 20 cents per litre. Teagasc estimates that the cost of producing milk is approximately 26 cents per litre. It is clear that the political objective behind retaining market support measures to deal with these fluctuations is not being met in the sense that farmers are still being asked to supply milk for less than the cost of production.

What has been the quantifiable return to dairy farmers in cent per litre of all the initiatives to which the Minister refers, including export refunds, aid to private storage and intervention? It is probably negligible in the sense that the price of milk has not increased above what is perceived as the current global market price. A large number of farmers will be forced out of the sector if a price of 20 cent per litre is maintained. Of necessity, this group will not comprise only small dairy farmers. It is noticeable that those who are hurting most currently have labour units on their farms and they are feeling the pinch more. What is the possibility of a more substantial level of support being provided by Europe, given Fianna Fáil's alliance with the liberals, who traditionally have been hostile to the CAP and who count Commissioner Fischer Boel as a member? What is the potential of adding 5 cent or 6 cent a litre in order that farmers can at least break even?

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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I fully appreciate the concerns expressed by Deputies Creed and Sherlock and other colleagues on both sides of the House regarding the serious difficulties facing the dairy sector. I am aware of these difficulties having spoken to farmers and processors in the various sectors. We have argued with the Commissioner at Union level that we need to use the market mechanism measures effectively regarding the quantities produced and the price paid. If we do not remove product from the market, normal supply and demand will maintain the downward pressure on prices.

I only became aware of the outcome of this morning's meeting as I entered the House and I did not have time to include it in the reply to Deputy Sherlock. A total of 7,686 tonnes of butter were accepted for intervention, including 2,103 tonnes of Irish butter or approximately 28%. A total of 22,789 tonnes of skimmed milk powder were taken into intervention, including 5,674 tonnes from Ireland or approximately 25%. The Commission maintained the refund level in regard to export refunds for both. It is important that quantities taken into intervention were purchased.

The Council of Ministers is due to meet next Monday and I will put forward the case strongly again to the Commissioner and the Commission about the need to continue to use the market mechanism measures as the most effective way to deal with price and the quantities taken in under all management measures.

Michael Creed (Cork North West, Fine Gael)
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This is the fourth month in a row I have heard this line during Question Time. The reality is farmers are turning in cows morning and evening at a loss. Does the Department have the will and the Minister the political commitment? Is Europe sympathetic to the case he makes to seek a meaningful response to this crisis, which will deliver a price of at least 25 cent or 26 cent a litre? While it may not be easily quantifiable, I would like departmental officials to exercise their minds on what is the tangible benefit of what has been achieved to date? In other words, what price would farmers be paid if these support measures had not been taken?

They are meaningless to farmers. We witnessed the anger of potato farmers towards Tesco yesterday and last week we witnessed the anger towards Tipperary Co-operative Creamery Limited and in Tullamore. I have sympathy for directors of co-operatives because they must take financial decisions, as they cannot trade recklessly. However, they need support in order that they can pay a price to farmers that exceeds the price of production. Can the Minister deliver that at European level?

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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Quantifying the value of the supports in place is not straightforward. The one way to increases prices is to remove product from the market. The Deputy correctly said the processors have not had it all their own way because they are not achieving prices on the world market, according to the dairy board and individual processors. At the April Council meeting, I specifically tabled an item on support for the dairy industry and ten other members states, including significant member states, supported us regarding the need for the Commission to give the best possible support to the dairy industry. I will raise the issue again next Monday and I hope even more member states will support us because, unfortunately, the position has not improved in the meantime.