Willie Penrose (Westmeath, Labour)
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Question 101: To ask the Minister for Agriculture and Food the action she has taken at EU level to protect the income of dairy farmers; and if she will make a statement on the matter. [24606/06]

Mary Coughlan (Donegal South West, Fianna Fail)
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Dairy farmers' incomes are made up of a combination of the market price paid for milk and direct income support. The price of milk paid to dairy farmers is a commercial matter between milk producers and milk purchasers and I have no direct role in this area.

Milk prices are influenced by a variety of factors including the structure of the dairy operation at producer and processor level, the prices paid in international markets for dairy products including currency fluctuations, the product type, the final destination of the product and the overall operation of the EU dairy market support mechanisms.

The Mid Term Reform of CAP provided that the intervention prices of milk products would reduce in the period 2004-2007 and these reductions would be compensated by the introduction of a direct premium payment. This compensation amounts to 3.6 cent per litre equivalent to €180 million in 2006.

I have consistently challenged the pace and level of the milk product price reduction towards the new MTR levels. In my view it is crucially and strategically important that the EU consolidates its international market share while challenging competition on its domestic market. I have consistently urged the Commission to maintain a competitive combination of aids and subsidies on both the internal EU market and on international export markets to achieve these objectives.