Bernard Durkan (Kildare North, Fine Gael)
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Question 185: To ask the Minister for Agriculture and Food if her attention has been drawn to the drop in milk prices paid to the producer; if this is being passed on to the consumer; and if she will make a statement on the matter. [32904/06]

Mary Coughlan (Donegal South West, Fianna Fail)
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While the price of milk paid to dairy farmers is a commercial matter between milk producers and milk purchasers for which I have no direct responsibility, I am aware that market prices have been reducing in recent months.

Prices paid to milk producers are determined by 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. 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 €180 million or 3.6 cent/litre in 2006 and added to the market price has maintained an average return similar to the aggregate price return of the past three years.

My Department has no function in regard to the retail price of milk or milk products. This price is related to general competition matters and to the functioning of the market at retail level.