Séamus Kirk (Louth, Fianna Fail)
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I am grateful to the Ceann Comhairle for the opportunity to raise this matter. The end of the month, 31 March, is looming for many hard working, progressive dairy farmers throughout the country. Unfortunately, a hefty milk quota super levy bill is also looking for them because of the inflexible position within the industry. As Deputies representing rural constituencies will be aware, the milk quota regime is due to be phased out between now and 2015 and while a minor transitional arrangement is in place to cater for it, it is clearly inadequate. The previous Minister, Deputy Brendan Smith, introduced the Food Harvest 2020 strategy, which set ambitious targets for the dairy industry. Dairy farmers who are in the process of expanding their operations now find that they have to tailor production to meet the strict milk quota limits. At a time when the industry is reasonably buoyant, with the potential to help our export statistics, dairy farmers find themselves seriously constrained by the prospect of a penal super-levy bill. I would have thought progress could be made by the Minister for Agriculture, Food and the Marine on a bilateral arrangement with the United Kingdom. This issue has been raised in the House from time to time, certainly in the past 12 months or so. It is quite ironic that there is probably unused super-levy quota on this island - in Northern Ireland - which should be available to dairy farmers south of the Border, but it is not. I ask the Minister to initiate a concerted effort, now that we are well into the month of March and coming to the end of the market season, to prevail on the Commission to agree, even just for this year, to a bilateral arrangement under which unused quota in the North of Ireland would be made available to help our hard-pressed farmers who are on the edge as far as production is concerned. There is no logical reason we cannot have a bilateral arrangement with the United Kingdom.

At a time when the economy could benefit from a lift in primary production such as in the dairy sector, this seems an obvious area in which to introduce an initiative. It could help the economy, dairy farmers and the industry in general. I am glad the Minister is in the House to deal with this issue because I am sure he appreciates, on a personal level, the serious difficulties being faced by farmers. I await his answer.

Simon Coveney (Cork South Central, Fine Gael)
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I thank the Deputy for raising this issue which is indeed topical. During the past 12 months my Department and I have been active in raising the question of an adjustment to the milk quota regime at political, official and Commission level and have made determined efforts to secure a soft landing for all member states in the lead-up to milk quota abolition in 2015. I have discussed the matter extensively with other EU agriculture Ministers, including in bilateral meetings with my Danish, French, German, Estonian and UK counterparts. Furthermore, officials from my Department have raised the issue at every available opportunity at appropriate EU meetings in the past eight months or so and at bilateral meetings with other member states.

Among the options discussed with regard to a soft landing were the front-loading of the remaining quota increases between now and 2015, a reduction in super-levy fines, a further reduction in butterfat correction levels and a EU flexi-milk arrangement which would operate provided EU production overall was within quota. Most attention was focused on butterfat correction. In December a coalition of member states involving Ireland, Denmark, the Netherlands, Belgium and Cyprus formally put a specific proposal to the Special Committee on Agriculture for an adjustment to the butterfat correction mechanism. That would have given us flexibility of about 1.5% in our quota. Unfortunately, the Commission has consistently resisted attempts to reconsider this issue, as it has resisted attempts to revisit the outcome of the 2008 CAP health check agreement in an overall sense. This is something to which the previous Government signed up, but, unfortunately, it has not worked out.

The extent of the difficulties in terms of the potential for super-levy fines this year was confirmed today on the front of the Farming section of the Irish Independent. It was reported that Copa-Cogeca had secured agreement on a common position calling for a reduction in butterfat adjustment levels. It seems, however, that this is not the case; unfortunately, the report is not accurate, according to my information.

It is important to address the particular question the Deputy asked. This is not the first time I have addressed it, as he has spoken on this issue before. If we had been able to establish a bilateral arrangement with the United Kingdom under which we could use unused quota from Northern Ireland, we would have done it months ago. Unfortunately, however, such an arrangement cannot be made between member states. We have an agreed health check policy that was supposed to provide a soft landing for countries in advance of 2015, but it is certainly not achieving this for at least five countries within the European Union. We will have a review of that soft landing policy towards the end of the year which the Commission will be facilitating and I will have an opportunity to raise all these issues again. In the meantime, we are trying to achieve agreement on a butterfat correction which would at least allow some flexibility and help to keep us within quota, but it has not been possible to get agreement on it either, mainly because France and Germany are opposed to it.

In terms of lobbying, there is a need to put together a strong coalition in order that the concerns of countries such as Ireland, Denmark, the Netherlands, Belgium and Cyprus, with a number of others, are taken seriously. If it were as easy as simply saying, "Farmers in the UK are not using their full quota, and we need more quota, so we can just take some of theirs," we would have done this long ago. Unfortunately, it is not legally possible to do it. As much as many of us in this House would like Northern Ireland to be part of the Republic of Ireland, it is not. It is considered to be a separate jurisdiction and countries cannot transfer national quota across borders. I would like us to be able to do this, but it is not possible. I will continue to raise this issue - in fact, at my next Council meeting I intend to raise it under the heading of any other business - and we will continue to push for more flexibility.

Michael Kitt (Galway East, Fianna Fail)
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I will give the Minister a further two minutes after Deputy Kirk has spoken.

Simon Coveney (Cork South Central, Fine Gael)
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I will finish on this point. Farmers must take responsibility for themselves in the meantime. At the end of 2011 they were just under quota, but there is a significant danger that if they produce as much milk in the first three months of this year as they did last year, they will be significantly over quota and super-levy fines will be applied at 28 cent a litre. This is a significant fine for any dairy farmer who is over quota. I caution farmers to continue to do what they have been doing, that is, to act responsibly to try to remain within quota.

Séamus Kirk (Louth, Fianna Fail)
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The Minister is right in saying Deputies have raised this issue a number of times in the House. That it has been raised is a reflection of the fact that constituents are asking what is being done about the matter and whether progress cannot be made on it. They find it hard to comprehend unused quota down the road cannot be transferred. In the case of my constituency of Louth it may well be that there are dairy farms in the next county with unused quota. Farmers cannot comprehend the position that quota cannot be transferred, given that Ireland and the United Kingdom are within the same economic zone in the European Union.

I am looking at this issue from the point of view of the transitional arrangements between now and 2015. There is no question but that the economy could benefit from the significant exports represented by even a 5% or 10% increase in milk production in Ireland. I am sure the Minister for Finance would very much appreciate the increased revenue and also the improved balance of trade statistics. There is a demand on the world market for this product and we do need a transitional arrangement. There is no point in saying that today, in March 2012, we can have a production level of such and such, as in two years time the production level is expected to be increased.

Simon Coveney (Cork South Central, Fine Gael)
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That is exactly what the last Government signed up to.

Séamus Kirk (Louth, Fianna Fail)
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Given the nature of the dairy industry, it is not going to work. We need a realistic transitional arrangement. I am not expecting the European Union to just open the floodgates and allow us to produce milk ad infinitum, but we need a transitional arrangement to allow the industry to expand on an orderly, planned basis.

Simon Coveney (Cork South Central, Fine Gael)
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I do not want to take a political view, but the milk health check was signed up to by the previous Government to achieve what the Deputy would like to see, a soft landing in the transition from a quota to a non-quota system. With the benefit of hindsight, it has not worked. It does not matter at this stage whose fault that is, we must change it and I will try to do that. The Deputy has been in politics a long time; he knows we cannot just order the European Commission to do something. There must be agreement among a qualified majority of member states for a change to a health check that was voted through and agreed by everyone.

In the Commission's eyes, the Republic of Ireland availing of excess quota in Northern Ireland is no different from Luxembourg using excess Belgian quota. Unfortunately, it sees it as two different jurisdictions. I must impress on my colleagues at the Council of Ministers that the soft landing is not working and a number of countries support that position. Unfortunately there are not yet enough to have a blocking minority to force a change of policy. The Commission says if we want to raise this issue, it is up to member states to do it and we are doing that at every possible opportunity.

I would like Ireland to have the capacity to slowly increase milk production between now and 2015 in order that we do not have a situation where we are operating within the reins of a quota system that just gets released after April 2015, resulting in a 15% to 18% increase over a 12 month period in the volumes of milk produced in Ireland. Supply problems would result from that in terms of dealing with that increased quantity and there is potential for price problems as a result of that significant increase, which is not in anyone's interest across the EU. We need a transition where there is a gradual increase in the volume of milk produced across the European Union in countries that want to produce more and we should be able to facilitate that at a time when the EU quota for milk is about 5% to 7% under quota.

Five countries were fined last year for being over their quota; Ireland was just under. I hope this year we will be just under again but farmers must behave responsibly for the remaining weeks for that to happen. In the meantime, we will continue to work politically to find ways to be more flexible and change the soft landing approach between now and 2015, using the review mechanism at the end of the year to do that.