Jonathan O'Brien (Cork North Central, Sinn Fein)
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Question 5: To ask the Minister for Agriculture; Food and the Marine if he will provide a breakdown, by co-op, of the percentage that the milk quota was exceeded by up to the end of March 2012; and if he will make a statement on the matter. [23551/12]

Simon Coveney (Cork South Central, Fine Gael)
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Under the milk quota regulations the approximately 80 registered purchasers of milk are obliged on 31 March each year, which is the end of the milk quota year, to draw up a statement for each of the 18,250 milk producers that supply milk to them. The statement should set out, as a minimum, the quantity and fat content of the milk delivered by each producer during the quota year. Each purchaser is then obliged to submit to my Department, before 15 May of each year, a declaration summarising the statements received from the milk producers. It is only when these declarations are received that my Department will be in a position to make a definitive statement on Ireland's liability regarding a super levy fine.

However while awaiting this definitive information my Department did gather preliminary information from the purchasers, as it does at the end of each month, to give farmers and the industry in general an earlier estimated position. On Tuesday, 24 April last I announced that with 99% of the returns then received from the co-operatives, the level of milk deliveries up to end of March 2012 was estimated to be at 0.69% above quota, following estimated adjustments for the butter fat content and the leap year. Based on these estimates a national super levy fine in the region of €11 million liability was expected. I hope by the end of next week to be in a position to announce more accurate figures on the national milk quota position.

This is an unfortunate situation which had been predicted. We had a very strong first three months in terms of the growing season. We had a very mild winter this year which meant grass grew and dairy farmers produced more this year than last and this pushed our producers over quota. We were not able to get the flexibility which five or six countries had come together to seek with regard to butterfat adjustments which would have kept us within quota but I had been predicting since late last year this would be very difficult.

Towards the end of this year we will have a review of the so-called "soft landing approach" and a milk health check and this will be an opportunity for us to debate more flexibility on quota management between now and 2015 when quotas go. At present it is clear our industry is bursting at the seams. It wants to expand and grow but is being held in the straitjacket of a quota system. We need to try to ease out of this slowly and this is in the interests of everybody, including other European countries, rather than having a situation in which people are held back and all of a sudden a great deal of extra milk is released into the system. This is why we need a serious debate at the end of the year when we will review quota management policy at European level.

Additional information not given on the floor of the House.

It will not be possible, however, to provide the specific information requested by the Deputy for some months to come because staff in my Department have to engage with the co-operatives and the milk suppliers on milk quota transfers, dormancy allocations, allocations under the animal disease and hardship schemes, as well as distribution of any surplus quota that may be left in the national reserve, referred to as "fleximilk". This task should be completed by late August, thereby allowing the co-operatives notify each milk producer who has a super levy liability of what that liability is and request that it be paid to my Department by 1 October 2012. My Department is then obliged to make a payment of 99% of the full national levy to the Commission before 1 November 2012.

As I have acknowledged previously, farmers were faced with very difficult choices over the past 12 months in trying to get a balance between the very attractive prices being paid in response to a strong global demand for dairy products and the limitations placed on them by their individual milk quota allocations. There is no doubt that last March presented all of the elements for successful milk production with increased calving, good weather and good grass growth, and this resulted in the volume of milk produced in March 2012 being about 8% higher that the corresponding month in 2011.

I have to remind farmers that, notwithstanding the annual 1% increase which is allocated again this year as part of the soft landing and a softening in the global markets, the three remaining quota years are going to be equally challenging for farmers to remain within quota. Consequently farmers should plan their production activities carefully and pay close attention to the limitations imposed by the quota regime.

For my part, I intend to continue my efforts to raise the issue of the soft landing at every opportunity with member state colleagues and with the Commission in order to ease the transition to the post quota situation for Irish farmers. At this point however, it would appear that a majority of member states do not support any further adjustment to the soft landing, and therefore farmers should plan for the continuation of the quota regime until March 2015.

Jonathan O'Brien (Cork North Central, Sinn Fein)
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The Minister mentioned that the milk quotas will end in 2015. Our system is currently bursting at the seams, but farmers are increasing their herds because there is a fear prices might collapse when the quota system is finished. It is difficult to juggle both increasing one's herd and trying to keep within quota limits. It is a European issue which must be dealt with at European level, and I trust the Minister will do that. In the meantime, however, we do not want young farmers to be discouraged from dairy farming as a result of trying to comply with the quota but exceeding it. The sum of €11 million eventually trickles down to the farmers, who will ultimately end up paying it. We do not wish to discourage young farmers from dairy farming because that will do no good for the Irish economy. What steps will the Minister take to try to ease the transition for farmers between now and 2015 and to try to ensure they do not exceed quotas?

Simon Coveney (Cork South Central, Fine Gael)
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This question has been asked on many occasions by my colleague. We are already doing a great deal on this issue. I have met a series of Ministers on a bilateral basis to try to build a coalition on the need to change policy. The so-called soft landing approach is not working for Ireland or for the Netherlands, Denmark, Luxembourg and a number of other countries that are also over quota and will incur super levy fines. There must be recognition of that. It is, perhaps, more difficult to make the argument for that when milk prices are weakening, as they are at present. We are into the high producing months of the year in terms of milk volume and we are seeing a softening of milk prices, which is a diplomatic way of saying that milk prices are reducing slightly, due to the large volumes of milk produced. However, I am still fully committed to arguing, and to reassuring other countries, that we must do something to change the current approach to managing milk quota between now and 2015 if we are to avoid a dramatic increase in milk volumes over a relatively short period of time, which is not in anybody's interest.

In the meantime, we can do a great deal to ensure there are new markets for our extra milk. In 2015, milk production could increase within 12 months in Ireland by approximately 15%. That is why I have been very active in places such as Algeria, which spent €35 million buying Irish cheese last year, and China, which is predicting a 43% increase in dairy consumption between now and 2019. We need to go to these countries and put supply contracts in place so we have an outlet for the large volumes of the high quality milk we will be producing after 2015. That is an exciting prospect. It offers huge opportunities and potential for growth, expansion and wealth creation, but it must be managed in a way that does not result in over-supply and a dramatic reduction in price.

A twin track approach is necessary. First, we must find new markets and develop them. That is happening. Second, we require a different political solution for the phasing out of quotas over time from the current proposed policy.