Simon Coveney (Cork South Central, Fine Gael)
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Question 95: 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. [40471/06]

Mary Coughlan (Donegal South West, Fianna Fail)
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While the price of milk is obviously a key determinant of dairy farmers incomes, other elements impacting on farmers' incomes include direct payments, scale and efficiency and returns from the market. This year's milk price, taken together with the single payment entitlement of 3.6 cent per litre is similar to recent years though clearly there is greater pressure now on producer prices than heretofore.

The price paid to milk suppliers is a commercial matter between the supplier and purchaser over which I have no influence. Milk prices paid to producers have reduced over the past few months arising from a number of factors including the new policy framework where market forces are the key drivers of dairy product prices as well as market developments in product areas which have a dominant role in our product mix. Greater efficiency and economies of scale at both producer and processors levels are key to competitiveness in the market.

At EU level, I have consistently challenged the pace and level of reduction in support level implemented by the Commission. In my view it is important that the EU consolidates its international market share while ensuring there is balance on the EU market. I have urged the Commission to maintain a competitive combination of aids and subsidies to achieve these objectives.

At producer level, I have introduced 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 much milk quota should be transferred, affording them far greater scope to decide the volume and price of quota they wish to buy and sell.

I am confident that the Irish dairy industry at both producer and processor level will make the necessary adjustments to adapt to new market conditions. In the meantime I will continue to encourage the Commission to carefully manage the market to ensure a smooth transition through the final phases of the 2003 Luxembourg Agreement.