Éamon Ó Cuív (Galway West, Fianna Fail)
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1. To ask the Minister for Agriculture, Food and the Marine his views on the latest Teagasc report that family farm incomes were down 9% in 2015; and if he will make a statement on the matter. [2366/16]

Éamon Ó Cuív (Galway West, Fianna Fail)
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We must be concerned about the average reduction of 9% in farm incomes. Can the Minister confirm that this is mainly due to the reduction in the price of milk and that there has been a catastrophic drop in the incomes of dairy farmers last year which is impacting, in particular, on farmers with high borrowings? What will be done to rectify this issue?

Simon Coveney (Cork South Central, Fine Gael)
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First, I will clarify the statistics regarding farm income. The Deputy is correct. The average farm income last year, as estimated, is directly related to the fact that in the dairy sector the average income has fallen from nearly €68,000 in 2014, which is a very good income for an average farm income, to €47,000. However, there has been better news in all of the other sectors. There has been an increase in the cattle rearing, other cattle, sheep and tillage sectors. Incomes were increasing in all sectors except dairy last year. Farmers will be aware that there was a very significant drop in dairy commodities internationally and the base price for milk prices fell substantially. As a result, the sector that is traditionally the highest income sector is still the highest income sector but the average income has fallen from nearly €70,000 to approximately €47,000, which is still quite a good average compared to the other sectors.

That said, the dairy sector is in transition at present. Many farmers are investing to expand and grow. There has been investment of approximately €1 billion over the past three to five years on Irish dairy farms in preparation for expansion and growth post-quota. That is happening. Last year, despite the dairy price drop, there was a 13% increase in dairy output, so there is still a great deal of belief and confidence in the dairy sector. We introduced a €25 million package to support the dairy and pigmeat sectors. Due to the price drop farmers received a support payment of approximately €1,400 each, with a top-up of €800 for young farmers. We are supporting this sector. The sector understands price volatility and that this is a temporary problem. It also understands that we will help it get through it.

Éamon Ó Cuív (Galway West, Fianna Fail)
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We are talking about a drop of income in the dairy sector from €68,000 to €48,000. That is not hugely above the average industrial wage. In this case we are discussing people who are on the job for 365 days a year. With regard to income in the other sectors increasing, the Minister will be aware that incomes in those sectors are very small. Is he concerned that this huge drop in income in dairying will put many farmers, particularly new entrants, in dairy farming under pressure, just as they have made these big investments? The amount of money paid in the package is very small compared to an average loss of €20,000 in income. What will be done here and in the EU to address this issue after the abolition of quotas? It is a serious issue. They are not all in the same situation. Some can ride out the decline better than others.

Simon Coveney (Cork South Central, Fine Gael)
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I have spent a great deal of time with the dairy sector, and the dairy forum is discussing these issues. I speak to representatives of co-operatives and to dairy farmers on a regular basis. To put this in context, in 2013 and 2014 there were exceptionally high global prices for dairy products, and dairy farming was a profitable business with average incomes of nearly €70,000. In 2012, the average income was €49,000, which is very similar to what it was last year. The price drop last year, which was very dramatic, was disguised somewhat by the fact that we had a very good grazing season. Grazing right up to December was good on many dairy farms, so the quality of milk was very high. Farmers were getting bonuses on top of a low base price, which was disguising the fact that the base price had fallen so low. The concern this year is that when spring milk comes out, the farmers are unlikely to have that quality of milk because animals will have been kept in on silage, so a very low base price would be concerning. Obviously, we must do everything we can to work with the Commission to ensure we use the market intervention tools available to the European Union to try to get the base price for commodity traded dairy products back to some type of normality, which is significantly higher than the level at present. I am working with our Commissioner to do that.

Éamon Ó Cuív (Galway West, Fianna Fail)
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Yes, but that still does not deal with the key problem we face, that despite the good grazing season, there is still a €20,000 drop in average dairy farm income. Many people are doing better than that but for every person who is doing better, there is somebody who is doing a lot worse. What will be done in particular for those who borrowed substantially and for new entrants? They were repeatedly encouraged to invest. Many of these people will be under severe pressure now and, in fact, will be losing money. What will be done to sustain them over what the Minister admits could be a very difficult year?

Simon Coveney (Cork South Central, Fine Gael)
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First, we have put a €25 million income support package in place. Second, I think the Deputy is underestimating dairy farmers. With respect, most of them understand how the market works. They understand price volatility. They understand that there will be good and bad years as does the banking system and co-operatives who help to finance them. I have had meetings with all the CEOs of top banks in Ireland and they have made it clear to me that they see their role as helping dairy farmers who have high debt. Most dairy farmers do not have high debt but some of them do. They see it as their role to help those dairy farmers get through what they see as a temporary pricing problem. In the medium term, everybody is still optimistic and confident around where the Irish dairy industry is going. We have had a difficult year last year from a volatility point of view, which is continuing into this year. The predictions are that in the second half of this year there will be an improvement in price and dairy factors have to factor that in, in terms of how they manage their businesses. Banks that are financing the expansion in some of these businesses also have to factor that in and I believe they will. There are multiple support programmes in place for dairy farmers whether it is TAMS, basic payments, GLAS or any of the other schemes they are availing of. The extent of the interest in dairy farmers is evident in the facts.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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The Minister is over time.

Simon Coveney (Cork South Central, Fine Gael)
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While I will check the number of applications, there was significant interest in the dairy TAMS. Therefore, there is still interest in further investment and expansion but we need to get through a temporary pricing period. We will watch very closely and help dairy farmers as that progresses.