Éamon Ó Cuív (Galway West, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

1. To ask the Minister for Agriculture, Food and the Marine the steps he is taking to protect the incomes of dairy farmers in view of the sudden drop in the price of milk; and if he will make a statement on the matter. [48485/14]

Éamon Ó Cuív (Galway West, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

As the Minister is aware, Teagasc is forecasting a drop of 50% in profits in the dairy sector next year. It also forecasts that the price of milk will fall to 27 cent a litre. This is particularly challenging for farmers with high borrowings. We need to know what the Minister is doing about this at national and European level.

Simon Coveney (Cork South Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I thank the Deputy from raising this important issue. Prices in dairy markets are impacted on by global events. We sell dairy products throughout the world, as well as in the European Union. Factors such as production levels in the United States, New Zealand, Australia and the European Union, on the back of very good harvests and quite good weather for the past two years, have meant that for the first time in many years supply has been increasing faster than the demand for and consumption of dairy products. On top of this, the embargo imposed on European countries by Russia has also impacted on the agrifood trade.

A combination of factors has resulted in Teagasc and others predicting that we may see a sharp reduction in dairy prices in the coming months, for which, of course, we need to plan and prepare. It is fair to say most people anticipate this will be a temporary price reduction, but we still need to prepare for it. At national level, I have met all of the banks to discuss the issue. Some dairy farmers did take on significant debts in planning for expansion and we have always said such debts should be on the basis of the price being 28 cent a litre and no more than this. That said, of course, some will be put under pressure. Banks need to show flexibility and have stated they will do so because it is in their interests to ensure farmers stay in business. We are working with Teagasc at an advisory level in working with dairy farmers to get them through a difficult pricing period.

At European level, the European Commission can use three tools under the Common Agricultural Policy - aid to private storage, export refunds and intervention pricing. This week the Council of Ministers made it clear to the Commissioner who happens to be Irish, Mr. Hogan, that the Commission should be open to using these tools in full as a way of stabilising markets in the new year, if necessary. It has already shown a willingness-----

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
Link to this: Individually | In context | Oireachtas source

I will let the Minister back in again.

Simon Coveney (Cork South Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

-----to use aid to private storage, from which Irish companies have benefited significantly.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
Link to this: Individually | In context | Oireachtas source

I ask Members to keep an eye on the clock because I do not want to interrupt.

Simon Coveney (Cork South Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Several Members asked the same question.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
Link to this: Individually | In context | Oireachtas source

I know, but I am obliged to stick to the time limit.

Éamon Ó Cuív (Galway West, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Absolutely agreed. We must recognise that this it is a world issue and the Minister need not spell this out. The one certainty in life at present is that there is total uncertainty. We knew from the very beginning that price volatility would always be a big issue. The Minister mentioned the ban imposed by Russia. That is the type of issue which happens out of the blue and cannot be foreseen, but it must be built into the calculations. At what level has the Minister proposed that European Union intervention, in all of its forms, clip in? Milk must be at a realistic price, well north of 27 cent a litre, as otherwise we will have a problem. At what level has the Minister proposed to the European Union that the market supports should clip in and begin to stabilise the market? There is no point in allowing a big crisis to arise and then finding it is too late to deal with it.

Simon Coveney (Cork South Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

It is important that we do not talk ourselves into a crisis. The price in Ireland are still above 30 cent a litre. We are in a period during which many dairy farmers are in drystock farming and not as much milk is being produced. The key issues are anticipating what the price will be for milk in the spring and allowing co-ops to offload much of the produce they have in storage, whether it be cheese, butter or powder. To date, the Commission has facilitated the provision of storage assistance which has been very helpful. Ireland has drawn down 40% of the funding available at European level for the provision of storage assistance in the case of butter. We would like to see the provision of storage assistance expanded to include cheese. This was the case, but the Commission pulled back, largely because of Italy - it was a huge ask - which was not in the spirit of what we were trying to do.

On the intervention price, we have made it very clear that it equates to 21 cent a litre and that we cannot allow milk prices to reduce to this level. If we are to use an intervention price, it must be at a more realistic level, certainly well above a figure in the mid-twenties.

Éamon Ó Cuív (Galway West, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

The Minister can sing it. There is another issue at European level.

Now that the Minister has a good friend there - the Commissioner - perhaps he might take up this issue with him to get him to resolve it. The Minister knows that many farmers have a huge Damocles sword hanging over their heads in the form of the superlevy. This is an issue the European Union could tackle immediately. As a totality or unit, it is under the production limit and the quota.

Simon Coveney (Cork South Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Yes.

Éamon Ó Cuív (Galway West, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

It is time for the Minister to get this issue sorted out in the European Union in which there is a new Commissioner, but the Minister might not have heard of him. He is a guy called Monsieur Hogan. He used to be Mr. Hogan or Minister Hogan when he was here. Perhaps the Minister might go and tell him to sort out the superlevy issue.

Simon Coveney (Cork South Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I have spoken to Commissioner Hogan about these issues on many occasions in the past couple of weeks. I am glad to say we speak regularly. The intervention I made this week, when I called for an open mind on the use of intervention measures, is on record. If this tool is to be used, there should be a realistic intervention price, as otherwise it will act as a price drag in reality. Nobody has been championing the superlevy issue more than me in the past two years. Anyone who has been following the EU debate will know that Ireland leads on it practically every time. The truth is that even though a majority of EU member states would like something to be done about the superlevy, we could not and still cannot get a qualified majority to agree at Council level. There is a particular eagerness to change butterfat levels, which would have helped to solve the problem. In effect, it would have given us an extra 1.5% or 2%. We are looking to do other things in the case of the superlevy. For example, we are trying to extend the repayment period over a number of years. This would make the cashflow issues pertaining to the superlevy much more manageable. We are making good progress in that regard.