Bernard Durkan (Kildare North, Fine Gael)
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Question 396: To ask the Minister for Agriculture and Food her views for the future development of the dairy industry with particular reference to competition on both home and export markets; and if she will make a statement on the matter. [24976/06]

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 again in 2005. Overall, exports of Irish dairy products and ingredients amounted to some €2 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 on the threshold of the third year of implementation of the Luxembourg Agreement on the reform of the CAP and whilst we have seen some deterioration in market performance, particularly as regards butter in recent months, nonetheless the market overall for dairy products has remained strong though producer prices have reduced somewhat in recent months.

Further reductions in intervention prices, together with a weakening dollar and higher oil prices mean that the dairy market will be more challenging overall in 2006. The butter market continues to experience difficulties and intervention now operates under a tendering system since the 50,000 tonnes limit was reached at the end of May. The maintenance of a competitive tendered export refund for butter should facilitate the export of significant quantities of butter to international markets. Against this background 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 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. On the domestic front I am anxious to move ahead with a new approach to transferring milk quotas with the aim of consolidating holdings and increasing competitiveness at producer level. I am also actively engaged with the dairy processing sector with a view to securing new investment and increased efficiency.