Seán Ó Fearghaíl (Kildare South, Fianna Fail)
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Question 32: To ask the Minister for Agriculture; Fisheries and Food the progress made to date in bringing about an EU wide milk quota system instead of a national quota. [17625/11]

Simon Coveney (Cork South Central, Fine Gael)
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We return to the issue of the EU-wide milk quota system replacing the national quota. I have answered this question, to a certain extent, but I must reinforce the message.

We are seeking a resolution that will allow flexibility for countries like Ireland exceeding their milk quota without having to pay superlevies. However, we are a long way from resolving the matter and we are unlikely to get a resolution for this milk quota year. I caution dairy farmers not to press ahead and produce milk above their allocated quota on the assumption that a Minister or politician somewhere will achieve a resolution to this problem by next March. The last thing we want to see are heavy superlevy fines being imposed on dairy farmers who are trying to expand their dairies in preparation for 2015.

With other EU countries that have a similar agenda, we will continue to seek a soft landing. Denmark and the Netherlands are obvious examples, both of which had to pay a superlevy fine this year. There are other member states that would like to see expansion of their own dairy industries in advance of 2015 while, at the same time, Europe as a whole would still be under its overall quota. That is something we want to achieve, but we are a long way off it at present.

The case for allowing Ireland to produce more milk is strong. It is nonsense that we are not allowed to produce more infant formula for the Chinese market because of dairy quotas that are intended to control the pricing of dairy product in the EU. However, that is what we are working with. There are countries in the EU that are uncomfortable with doing away with quotas at all after 2015, and they are slow to facilitate any flexibility in the existing agreement to allow a soft landing between now and 2015. That is the problem.

David Stanton (Cork East, Fine Gael)
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Question 33: To ask the Minister for Agriculture; Fisheries and Food the amount of milk produced by dairy farmers here each year respectively from 2006; if the amount produced was over or under quota each of these years and the percentage by which it was over or under; if he will give details of any milk production estimates he has calculated for each year respectively up to 2015; and if he will make a statement on the matter. [17640/11]

Simon Coveney (Cork South Central, Fine Gael)
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This question deals with a similar issue. Deputy Stanton wants detailed figures, which is his style. I should explain that the quota year runs from March to March rather than from January to December.

For the quota years 2005-06 to 2009-10, the breakdown of the amount of milk produced by Irish dairy farmers, and the subsequent quota position, was as follows:

The figure has been increasing steadily but slightly year on year. Part of the health check agreement was that we would be allowed to increase our quota by approximately 1% each year in the build up to 2015, when quotas would be abolished. This was the supposed soft landing for quotas. We were to be allowed a slight increase in quota which would facilitate a reduction in the fiscal value of the quota as we moved towards phasing out quotas entirely.

The soft landing is not working for Ireland. The value of quota is still high here, in Denmark and in the Netherlands. In fact, it is higher in Denmark this year than it has ever been. The soft landing might be working for some member states but it is not working for us. That is why questions like this continue to be asked, correctly, by Deputies on both sides of the House who want to make sure I am pushing this issue as hard as I can on behalf of farmers. I can assure Members that I am doing so. Moving to flexibility measures outside the existing health check agreement will be difficult.

There will be an opportunity to raise this issue in the autumn. Following the collapse of milk prices in 2009, the EU Commission established a dairy group to look at ways to support prices and prevent a recurrence of the fluctuations we saw in that year. The Commission is now acting on a report produced by that group and will present proposals in the autumn in that regard. However, nothing in those proposals will suit Ireland.

David Stanton (Cork East, Fine Gael)
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I thank the Minister for his answer. This is a difficult and complicated subject. The Teagasc campus in Moorepark is holding an open day today on planning for 2015.

What can be done to increase milk processing facilities in Ireland? What is the current situation? Are we close to capacity or are there plans to increase processing facilities so that we can cope with the increase in milk production?

Simon Coveney (Cork South Central, Fine Gael)
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That is a very good question. There is no point in producing milk unless it has somewhere to go. The processing sector in Ireland is at full capacity during the high season when cows are out on grass and producing milk at their highest levels. At those times we do not have any excess capacity. The processing sector is looking at investing substantial sums of money in increased processing capacity.

Other exciting things are happening that will allow for an increased take of volume of milk. For example, outside Macroom a big plant is being built by Danone to produce infant formula. The Macroom plant currently produces 35,000 tonnes of infant formula, predominantly for export. Ireland produces 16% of the entire globe's infant formula consumption. By the end of next year Danone will be able to produce more than 100,000 tonnes of infant formula, which uses considerable milk volume, in Macroom. Things are happening.

Given that we have had quota since 1984, the processing sector stagnated in terms of volume output. Processors did not have to invest because they knew there would be no increase in milk volumes for the foreseeable future. There has been no investment in output capacity, in terms of volume, since the mid-1980s. Processors have invested in other areas but not in terms of volume. Processors know they will have to spent tens of millions of euro, if not hundreds of millions, to prepare for 2015.

David Stanton (Cork East, Fine Gael)
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What is the current position regarding quota? The previous Minister advised us that we would be 8.67% over quota. What is the current position? Has the Minister figures for April and May of this year?

Simon Coveney (Cork South Central, Fine Gael)
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I do. For the current milk quota year, which is 2011-12, returns to the Department by milk purchasers for the period from 1 April to 31 May indicate that the country is currently an estimated 4.92% over quota, when account is taken of butter fat content and milk deliveries. We are already practically 5% over quota for this year.

That is a huge problem. I do not know how to get this message across to farmers. People need to put the reins on producing volume over and above quota levels.