Simon Coveney (Cork South Central, Fine Gael)
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Question 130: To ask the Minister for Agriculture and Food the steps she is taking to support dairy incomes; and if she will make a statement on the matter. [32733/06]

Dan Neville (Limerick West, Fine Gael)
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Question 151: 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. [32755/06]

Mary Coughlan (Donegal South West, Fianna Fail)
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I propose to take Questions Nos. 130 and 151 together.

Dairy farmers' incomes are made up of the market price paid for milk and direct income support from the EU. The price paid to milk producers is determined by a number of factors including 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.

The average price paid to producers from January to August 2006 was 25.9 cent per litre. Added to this each producer receives a dairy premium of 3.6 cent per litre which gives an average return of 29.5 cent per litre in 2006. This is similar to the return to producers in the previous three years.

I am strongly of the view that the EU market management measures must be implemented in a manner which enables the dairy sector remain competitive and thereby continue to develop and support farmers' incomes.

I have continually made this case to the Commission and have argued that that the EU must maintain international market share while the transition to a market-driven dairy sector proceeds. I have maintained pressure on the Commission, most recently during Commissioner Fisher Boel's visit to Ireland, to ensure that a competitive combination of aids and subsidies are in place to support this transition. I have also used every opportunity to gain support for this position among other Member States. Nationally, I strongly believe that if the dairy sector is to maintain a competitive position we must look at increasing the scale of operations at producer and processor level, reducing costs where possible, and encouraging a profitable future.

To support these aims at processor level I have introduced a significant investment package to stimulate necessary investment in the sector and ensure the long-term competitiveness and viability of the dairy industry in Ireland. The Government will contribute €100m by way of grant assistance to the sector.

At producer level I also announced the establishment of a new Milk Quota Trading System which will create a more open market system of transferring quota. The new system will allow farmers much greater freedom to make choices about how milk quota should be transferred, affording them far greater scope to decide the volume and price of quota they wish to buy.