John Carty (Fianna Fail)

I move amendment No. 1:

To delete all words after "Seanad Éireann" and substitute the following:

- recognising the current severe downturn in dairy product prices and the direct economic consequences arising for the sector at producer and processor levels;

- mindful of the need to address the issue of competitiveness at farm and factory level; and

- cognisant of the role that EU market management mechanisms play in stabilising the milk market;

commends the Government's

- continuing efforts to secure the best available market management supports at EU level;

- ongoing efforts to extend existing support measures in order to stabilise the market; and

- policy of support for an efficient and cost competitive dairy sector at producer and processor level, and

supports the Minister's efforts at the EU Agriculture Council to

- extend intervention purchases of butter and skimmed milk powder beyond the end of August;

- extend the closing dates for private storage aid; and

- remove the 'free at frontier' price for cheese, that is blocking the use of export refunds for certain cheeses.

I welcome the Minister and look forward to his contribution. I welcome the motion before the House because the matter to which it refers deserves a great deal of attention. The dairy industry and the farming community are experiencing an extremely difficult time, with the price of milk at an historic low . To a degree, we are suffering as a result of the fact that the price of milk reached a record high in 2007. In addition, dairy markets are extremely weak. Turmoil in the international financial and banking sector has also contributed to the difficulties we face. Prices were so high in 2007 that there was an increase in global supply. The recovery in New Zealand milk production following a drought-related decline was also a factor.

In the light of the current low price, everyone agrees farmers face severe difficulties. The position is exacerbated by the fact that producer prices are below the cost of production. It is vital, therefore, that the European Commission's efforts to stabilise the situation should continue and, where possible, be intensified. In recent months the Minister has engaged in a great deal of lobbying at EU level on measures such as export refunds and internal subsidies which have been suspended since 2007 as a result of the high price of milk. During the negotiations relating to last year's CAP health check he argued strongly and, ultimately, successfully for the retention of the dairy market management mechanisms. Since the conclusion of those negotiations, he has repeatedly pressed the Commission and Commissioner Fischer Boel for the early introduction of supports to restore confidence and create a floor for prices.

Following the Minister's intervention, the Commission has, since the beginning of the year, reactivated a range of support measures to help stabilise the dairy market. I have no doubt the Minister will allude to those in his speech, including the storage aid for butter which was introduced two months earlier than normal, as well as the public intervention schemes for butter and skimmed milk powder, SMP, that were opened, which allowed the purchase of product to set limits at fixed prices. Since then, the Commission has continued to buy butter and SMP into intervention and EU prices have stabilised, albeit at a low level. Ireland and other member states continue to stress the importance of continuing to accept butter and SMP into intervention at levels close to the intervention purchase price under a subsequent tender system when the mandatory limits have been reached.

There is scope for further action and I am aware the Minister has pressed the Commission on a number of fronts. In the current market situation, where cheese prices have dropped considerably, the free-at-frontier price for cheese that is blocking the use of export refunds should be removed. This is a self-imposed technical impediment that is no longer warranted and is hindering exports of Irish cheddar in particular. Intervention purchases of butter and skimmed milk powder should be extended beyond the end of August, as should the closing dates for private storage aid. Given the ongoing weakness in the market situation, the extension of these schemes would greatly assist the sector and give it a much needed boost. In addition, there is greater scope for exports of dairy products outside the EU and more attractive export refunds which would greatly improve the export potential of the Community. That would be of great benefit in this regard.

Milk quotas have been mentioned, but I believe we must be careful in this regard. There is a suggestion abroad that EU quota increases are the reason for the current low prices for milk. This is not a valid argument and we should be very careful about this. The fact is milk production is below the level it was at before the quota increase took effect in 2008. If EU production is to be constrained by quotas, that will prevent Ireland from benefiting from future upturns in dairy markets and in that scenario the only winners will be our global competitors, of whom there are many.

In the retail sector, over recent weeks we have seen one of the major multiples in this country cutting out Irish brands and introducing its own home brands. A number of foods are suffering from this, such as Dubliner cheese, Brennan's bread, Clonakility sausages and other products produced by the farming community. They are being crammed into small spaces. The information I have is that Kerrygold is vying for room in that multiple's supermarkets while Danish butter and other dairy products are being allocated more space, which is most worrying. I appeal to Irish consumers at this stage. While there may be a short-term gain from getting cheap food, the day will come, if our people are put out of business, when consumers will pay dearly for this. Our farmers will be out of business and we will be importing much more at prices dictated by the multiples. This would be regrettable so we should be very careful in case this happens.

The Minister has done a good job through his negotiations in Europe and brought a number of things to the Commission's attention. He has been consistent in arguing for better prices and supports and through his good offices has been able to get Brussels around to his way of thinking. However, Europe will have to play a bigger role in this to ensure at all times we will have enough food because I believe that in the next few years there will be food shortages and therefore we have to keep the farming community and our dairy producers in business. If not, we will ultimately pay a high price. It might not happen within the next five to seven years but it is definitely on the cards and we should be aware of the dangers.

I again welcome the Minister to the Seanad and look forward to his presentation as I am sure he will have many important points to lay before the House.