Enda Kenny (Mayo, Fine Gael)
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Question 9: To ask the Minister for Agriculture, Fisheries and Food his views on whether milk supply levels have dropped 10% during the first two weeks of the quota year; and if he will make a statement on the matter. [16985/10]

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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Milk supplies are subject to a number of variables, including price, climatic and other factors. On the 2009 to 2010 quota year, which ended on 31 March 2010, preliminary figures from the co-ops indicate that milk deliveries were 9.82% under-quota nationally for the year as a whole.

Milk markets have been subject to extremes of volatility in recent years. From the high prices in 2007, world dairy markets returned to far lower levels in 2008, primarily due to a collapse in demand caused by the global economic downturn. That trend continued into 2009, before gradually improving later in the year. Adverse weather conditions in 2009 were also a significant factor in the supply levels in that year.

The outlook for 2010 is far more optimistic. In 2009, I continually pressed the European Commission to take all appropriate actions to deal with the dairy market situation and the implementation of a range of support measures helped to stabilise the market. The application of the full range of market support measures helped to put a floor under prices, which began to stabilise last autumn and have recovered significantly since then. They needed to recover significantly. The medium-term prospects for global dairy markets are also good. Growth in wealth and population is forecast to stimulate strong levels of demand for dairy products and returns should improve to all parts of the sector.

While the very cold first quarter of 2010 was not conducive to grass growth, temperatures have increased recently and the price outlook is far more positive than at this time last year. Returns on milk deliveries are supplied to the Department on a monthly basis by milk processors. The figures in respect of April 2010 will not be compiled until mid-May. At this point, therefore, I am not in a position to comment on milk supplies for the first two weeks of the quota year.

Michael Creed (Cork North West, Fine Gael)
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Is the Minister concerned that if the trend were to continue that not only would it call into question viability inside the farmgate, but it would also call into question the sustainability of jobs in the agrifood sector? Will he comment on that issue?

Does the Department have a method of tracking the profile of people exiting the dairy industry? I do not claim to have carried out any scientific analysis but my observation is that many of the people now exiting the dairy industry are not the small producers but are medium to large producers. That is an alarming development. The Minister and his officials would do well to track developments in that regard, analyse them and take steps to address what is happening because those producers are the engine of the dairy industry and this development is giving cause for concern. I do not in any way undermine the fact that producers of all sizes in the dairy sector are under pressure but the people I have seen exiting in the biggest numbers are at least medium-sized quota holders.

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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Regarding the drop in production, even though we do not have official figures, we have made informal contacts with the industry. It has been suggested that in the first two weeks of April deliveries were considerably down, perhaps in excess of 6% compared to the same period last year, due primarily to restricted grass growth as a result of the prolonged cold spell. However, more recent evidence received through informal checks with the industry indicates that the situation appears to have improved considerably in the past ten days. Current expectation is that supply will be within 2% or 3% of last year's total by the end of the month.

We want to maintain our production base. Reports of people leaving the industry suggest a mix of producer size. Those in various processing sectors and co-operatives indicate that there is no set pattern. We will analyse the situation further.

Last year, when additional quota became available to this country as a result of the health check of the Common Agricultural Policy, I devoted a certain percentage of it to new entrants. Based on the applications, the quality of the entrants was extremely high. Unfortunately, we had to disappoint well-qualified applicants. Another scheme is currently under way which I expect will be oversubscribed as well.

Seán Sherlock (Cork East, Labour)
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We all have to be seen to be doing something when it comes to the dairy sector but it appears that every mechanism that could be put in place has been put in place. I refer to the market management regime, the export refund scheme and intervention stocks. Will the Minister acknowledge that until such time as there is a pick-up in global demand that the system will remain as it is for some time? Perhaps I am wrong but it appears that not much more can be done in terms of intervening to facilitate a recovery until such time as global demand for milk and milk-based products picks up.

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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What Deputy Sherlock said is correct. It is often a case of supply and demand. Buoyancy will return to the market and that will ensure an adequate price will be returned right along the dairy chain. The market management measures put a floor under the price. Last year, we argued that they were extremely important but we would have liked to have had that floor at a higher level under the price. The poor price last year in conjunction with the harsh winter contributed to a lower production. We hope the weather, fodder and good grass will contribute to an increase in production this year. The recent auction and the Fonterra auction have given a strong signal to the market on an improved situation. I hope the increases that have occurred since autumn of 2009 and the spring will again lift in April.