Kathleen Lynch (Cork North Central, Labour)
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Question 83: To ask the Minister for Agriculture, Fisheries and Food the steps her Department is taking to combat food price inflation; and if she will make a statement on the matter. [13077/08]

Mary Coughlan (Donegal South West, Fianna Fail)
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Changes in food prices are primarily a function of market forces operating at international, EU and national levels. Consistently strong economic growth in developing countries is the main driver of changing world food demand towards high-value agricultural products and processed foods. Slow-growing supply, low stocks, and supply shocks at a time of increasing demand for feed, food and fuel have led to price increases globally. Biofuel production has also contributed to the changing world food equation. In common with the EU, Ireland is not impervious to this evolving change in context.

In addition, rising input costs, at both producer and processor levels have fed through to put upward pressure on food prices. Pressure on input prices, in particular energy and raw material including feed costs, has combined with strong competition on world dairy and cereal markets in increasing producer prices.

The most recent annual data available from the Central Statistics Office relates to 2007 when food and non-alcoholic beverages prices, as measured by the food price index, increased by 2.8% on average for that year. This is a lower level of increase than the overall annual rate of inflation, as measured by the Consumer Price Index, which averaged 4.9% during the same year. More recent monthly data, for February 2008 indicate that food and non-alcoholic beverage prices increased by 1.8% in the month and by 8.5% in the year to February 2008. This compares to an increase of 1.1% for the year to February 2007 and mirrors the upward trajectory in food prices as evidenced globally and across Europe throughout 2007 and into 2008.

In response to this situation the EU Council of agriculture Ministers has suspended set-aside, in order to increase cereal production, and has recently agreed a 2% increase in milk quota for 2008. Further measures are being considered in the context of the current discussions on the ''Health Check'' of the CAP.