Bernard Durkan (Kildare North, Fine Gael)
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Question 377: To ask the Minister for Agriculture and Food her preferred options for the development of the dairy industry in the future; if this is in accord with EU policy; and if she will make a statement on the matter. [14588/05]

Mary Coughlan (Donegal South West, Fianna Fail)
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The future development of the Irish dairy industry will depend on a number of factors including how it responds to the mid-term reform of the Common Agricultural Policy, how it reacts to the obligations imposed by the World Trade Organisation and how it avails of the increased marketing opportunities presented in the enlarged European Union and the wider global economy.

The new intervention limits and reductions in intervention prices imposed by the MTR and preparations for the next round of the WTO reforms has focused the industry on the need to become less reliant on commodity products and to increase the added value nature of output. The Prospectus report commissioned by my Department and published in 2003 made clear recommendations on the response required from the dairy industry to meet international competitive challenges as well as the change in emphasis from market support to direct income support. The focus has to be firmly on increased efficiency and competitiveness at all levels of the industry. Response at individual company level to the issues raised by Prospectus are a matter for decision by the companies themselves.

The past year has seen strong demand for dairy products on EU and international markets and this is likely to continue. However further reductions in support prices are due on 1 July as part of CAP reforms. It is vital that the period ahead is used by the dairy industry to position itself to meet the demands of a more competitive marketplace. I will continue to examine market developments to ensure that EU market management policies are managed sensitively and are utilised in a manner that will allow the industry to continue to grow, develop and increase its presence on competitive international markets.