Dan Neville (Limerick West, Fine Gael)
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Question 127: To ask the Minister for Agriculture and Food the discussions she has at EU level to protect dairy supports; and if she will make a statement on the matter. [40483/06]

Mary Coughlan (Donegal South West, Fianna Fail)
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The Irish dairy industry continues to contribute very substantially to the national economy, with an annual output value of some €2.3 billion. In 2005 Irish dairy exports performed exceptionally well totalling €2 billion, despite downward adjustments to EU market supports brought about by the implementation of the mid-term reform of the CAP.

After a number of successful years, 2006 has been more challenging for the Irish dairy industry. The butter market, in particular, experienced difficulties for much of the year. However the protein market has performed very well and Irish and EU processors and traders benefited from the strong prices and demand, particularly on the Internal market. In addition butter prices have now stabilised, although the relatively high stocks of intervention butter in the EU will limit any price increase. The price of oil and the value of the US dollar/Euro exchange rates will continue to be important factors in determining the success of Irish and EU traders to compete on the global market. In the wider context of WTO, I have strongly defended the CAP as a whole and have advocated a EU position which fully takes account of the needs of Irish agriculture including the dairy sector in the areas of internal support, export support and market access.

I remain concerned about the determination of the Commission to reduce internal aids and export subsidies to the new intervention price levels and I have regularly requested the Commissioner to redirect policy to support both the internal and international butter markets. The Commissioner is fully aware of my view that market stability is essential to allow the dairy industry time to adjust to the current market realities and adapt their business strategies accordingly.