Dan Neville (Limerick West, Fine Gael)
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Question 70: To ask the Minister for Agriculture and Food the discussions she has had at EU level to protect dairy supports; and if she will make a statement on the matter. [18787/06]

Mary Coughlan (Donegal South West, Fianna Fail)
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The Irish dairy industry continues to contribute very substantially to the national economy, with an annual output value of some €2.3 billion. Last year Irish dairy exports performed exceptionally well totalling €2 billion, despite downward adjustments to EU market supports brought about by the implementation of the Luxembourg Agreement on the reform of the CAP.

A loss of competitiveness on world markets caused by greater competition and the strengthening of the Euro against the US dollar (now at €1/$1.29) have meant that 2006 is proving to be a more challenging year for the industry. Recent increases in the export refunds for butter and WMP are a very welcome development but the value of these increases has been eroded by market and exchange rate factors. Moreover the EU Commission continues pushing the internal market prices of dairy products downward to the Mid Term Reform levels through the market management measures.

When the Commission moved aggressively to reduce internal aids and export subsidies to the new intervention price levels last year, which caused a high degree of volatility, I very strongly resisted and pressed the Commissioner at the Council of Ministers to redirect policy and restore market stability. With the support of other Ministers I succeeded in having the market for the remainder of 2005 stabilised and market competitiveness restored. As we move towards the further agreed intervention price reductions next July I will continue to emphasise the need for stability on the market. Indeed I have frequently raised this matter with the Commissioner bilaterally, most recently last week, and she is fully aware of my view that market stability is essential to allow the dairy industry time to adjust to the current market realities and adapt their business strategies accordingly.