Bernard Durkan (Kildare North, Fine Gael)
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Question 211: To ask the Minister for Agriculture and Food her future plans for the expansion of the dairy industry, with particular reference to exports; and if she will make a statement on the matter. [6285/06]

Mary Coughlan (Donegal South West, Fianna Fail)
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The Irish dairy sector has enjoyed much success on international and EU markets in recent years and performed solidly in 2005. Overall, exports of Irish dairy products and ingredients amounted to €1.82 billion, as Irish exporters responded to strong market demand worldwide.

Despite considerable policy changes at EU level export performance has been very resilient in recent years. We are now in the second year of implementation of the Luxembourg agreement on the reform of the CAP and there has been no material change in market performance nor have the predictions of price deterioration materialised. Indeed, the contrary is the case. The dairy prices and demand for Irish dairy products on EU and global markets held strong throughout the year.

World prices for both butter and skimmed milk powder averaged 8% above 2004 levels and this solid market performance meant that use of intervention was particularly low for both products. In practical terms Ireland used intervention last year only to the extent necessary to take advantage of a rising market. The casein market also performed very well with an average price increase of 25% in 2005 over the previous year.

The outlook for 2006 suggests a more challenging world market as increased output levels from Oceania, US and Argentina impact on the market. Despite this, world prices are expected to remain relatively stable. While oil prices and the value of the US dollar-euro exchange rates will be important factors in determining the competitiveness of Irish and EU traders on world markets, nonetheless global demand for dairy products is set to rise and I am convinced that Ireland is well positioned to take full advantage of these international trading opportunities.

The negotiations on the new WTO round will present challenges and opportunities alike for the dairy sector. The removal of international trade barriers will create new trade opportunities and the main challenge for the Irish dairy sector will be to make the necessary market adjustment to ensure that the sector both protects its global competitiveness and secures its share of this growing market.

I will continue to work constructively with the Irish dairy industry in addressing the competitiveness issues that it faces as it adapts to the new policy framework. In this respect the main priority will continue to be concentrated on having an appropriate market policy at EU level incorporating a competitive set of aids and subsidies that reflect the real needs of the industry and meet the challenges of export competitiveness.