Marian Harkin (Sligo-Leitrim, Independent)
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Question 394: To ask the Minister for Agriculture and Food the steps she intends to take to ensure that milk quota ring fencing will remain in place and that the milk industry in the west and north east will not be deprived of essential milk supply; and if she will make a statement on the matter. [13262/06]

Mary Coughlan (Donegal South West, Fianna Fail)
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The term "ring fencing" can be used in the milk quota context to describe two different sets of rules. The first relates to the movement of quota from a less-favoured area, LFA, arising from the transfer of dairying lands and the second concerns the distribution of milk in milk quota restructuring schemes.

Where land in an LFA to which quota attaches is transferred by way of sale, lease, gift or inheritance, only milk produced on the transferred farm or on other lands within 48 km of it can be delivered in respect of that quota, that is, the new quota holder cannot use the quota on lands more than 48 km away from the original holding. An exemption is available to a producer who sells his or her entire holding and buys a new holding more than 48 km away.

The term "ring fencing" has also been used in the context of the restructuring scheme. This scheme is operated at co-operative level according to detailed rules set each year by my Department. A primary condition of the scheme is that quota sold into the restructuring pool by a co-operative's suppliers is available for purchase by that co-operative's suppliers in the first instance. Surplus quota in a co-operative's restructuring pool would be distributed on a national basis.

I recently announced my intention to move to a more open market system for transferring milk quotas, which will come into effect on 1 April 2007. I made this decision because the current restructuring model will not meet the future needs of the industry and a more effective response is required in order to meet future competitive pressures. In making my announcement I made it clear that the new system would continue to operate at co-operative level. Intensive consultation with farming organisations and with the industry has already begun in relation to the detailed arrangements to give effect to this new approach.