Michael Creed (Cork North West, Fine Gael)
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Question 118: To ask the Minister for Agriculture, Fisheries and Food if he has plans to facilitate a more efficient processing of the Irish milk quota; and if he will make a statement on the matter. [44020/08]

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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One of the major challenges in the medium term will be to ensure that Irish farming and the agri-food sector is at the heart of an evolving high-value food market, which is focused on quality and innovation. This is at the core of Government strategy, evidenced by the National Development Plan 2007-2013, AgriVision 2015 and the Partnership Agreement Towards 2016. A key element of this strategy was the Dairy Investment Fund launched in 2007.

My Department provided funding of €114 million towards investment in dairy processing and a total of 19 capital investment projects were approved and awarded Government grant assistance under the Fund, which will generate an estimated capital spend of €286 million at full production. The purpose of the Fund is to increase the efficiency of the main dairy outputs by supporting the upgrading of plant and buildings. This will assist operators in capturing new business in global markets and in developing new valued added products. I am pleased to note that several of those projects have already been completed and others are progressing to the implementation phase. This investment will help improve the efficiency of the dairy processing sector.

The recent CAP Health Check agreement had a positive outcome for the Irish dairy sector in two significant areas. The importance of keeping critical market instruments and using them effectively to respond to price volatility in the period of transition to quota abolition in 2015 was a key priority for me. Despite stiff opposition intervention for butter and skimmed milk powder, including the buying-in quantities at the fixed price of 30,000 tonnes and 109,000 tonnes respectively were maintained intact. Moreover, the private storage aid for butter was also left unchanged. This is particularly important for Ireland given our seasonal pattern of production and is a major boost for the processing sector over the next seven years.

With regard to milk quotas, it was agreed that they would be increased by 1% per year for the next five years. This is on top of the 2% increase already granted in the current quota year. In addition, there will be an adjustment to the butterfat correction mechanism in 2009 and this is equivalent to a 2% increase in Ireland's quota. Ireland is especially well placed to benefit from these changes due to our additional production potential. Taking all these together, there will be a cumulative increase in Ireland's quota of 9.3% by 2014, or almost 500 million litres more than our quota in 2007. That equates to around 130 million euro of additional income at farm gate level. The net effect is that our producers and processors now have policy clarity and can plan their investments with a greater degree of certainty about the future.