Seymour Crawford (Cavan-Monaghan, Fine Gael)
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Question 388: To ask the Minister for Agriculture and Food if she is satisfied that every effort possible is being made to maintain milk prices at farm level; her views on whether it is difficult for commercial dairy farmers to see their income drop by anywhere from €60 plus per week when companies (details supplied) are seen to make a profit of €4 million plus using milk as a loss-leader to gain custom and profit; her further views on whether many dairy farmers, especially in disadvantaged areas will be forced out of business; and if she will make a statement on the matter. [16323/06]

Mary Coughlan (Donegal South West, Fianna Fail)
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My role as Minister for Agriculture and Food, is to ensure that policies within my scope of influence are implemented in a manner which enables the dairy sector remain competitive and thereby continue to develop and support farmers incomes. The price paid for milk is essentially a commercial matter between milk producers and purchasers. A combination of the international market for dairy products, the product mix and the efficiency of the processor as well as the overall operation of the EU price support mechanisms determine the manufactured milk prices. I will continue to insist that all EU market support mechanisms are fully utilised.

The latest milk price communicated to the Commission was 27 cent per litre for February 2006, 3.6% or 1 cent per litre lower than the corresponding period last year. Producers received compensation of €120m in 2005 (2.4 cents paid per litre) for reductions in intervention prices of butter and skim milk powder brought about by the Luxembourg Agreement. This year the decoupled premium will rise to 3.6 cent per litre equivalent to €180 million.

There has been considerable structural change in dairy farming in recent years. The number of active milk producers has declined from 29,076 in 2001 to 22,386 this year. During this period the average quota size has increased by 25% facilitated by the Milk Quota Restructuring Scheme. This trend towards increased scale is a key condition for the successful future of the dairy industry in Ireland. The AgriVision 2015 report predicts a reduction in the number of active dairy producers to 12,500 by the year 2015; such a scenario will be dependent on developments in the dairy sector as a whole at both national and international levels.

Bearing these developments in mind, I recently announced changes to the Milk Quota system for 2007 and beyond. These changes are aimed at better meeting the future needs of the industry. I am currently consulting with the main stakeholders in order to agree a more market based system that will deliver the type of structure that will best contribute to more competitive milk production in Ireland.