Brian O'Shea (Waterford, Labour)
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Question 1323: To ask the Minister for Agriculture, Fisheries and Food the proposals he has to support the income of those smaller milk producers who have suffered a considerable loss in their income; and if he will make a statement on the matter. [1447/09]

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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Dairy farmers incomes are comprised of the market price paid for milk and direct income support from the EU. Market forces have a significant and increasing influence on the price paid for milk. World market prices determine the returns received by dairy processors and these in turn are reflected in the price paid to farmers. In essence, farm gate prices normally reflect the returns from international markets of dairy product sales.

Dairy product prices reached record high levels in 2007 and early 2008 and producer prices also peaked in that time. Since then international dairy product prices have fallen back considerably, although the average Irish producer price for 2008 was only marginally down on the 2007 price. Indications are that markets will remain weak in the first half of 2009 and I have made clear to Commissioner Fischer Boel in recent weeks that a range of supports would help to restore confidence and put a floor under market prices. The Commission initially responded by commencing the 2009 butter private storage scheme two months early. Subsequently, on January 15th the Commissioner announced further measures to assist the dairy sector including a commitment under the Intervention system to purchase more than the fixed quantities of butter (30,000 tonnes) and SMP (109,000 tonnes) if the market situation requires it. In addition, she announced the reintroduction of export refunds for butter, SMP, WMP and cheese and these were reinstated last week.

During the Health Check negotiations I argued very strongly in favour of keeping critical market instruments in place and using them effectively. These support measures can now be used to respond to price volatility in the current market situation and will benefit the milk sector in Ireland, including all dairy producers, large and small.

While we are facing short-term uncertainty, analysis shows that the long-term outlook is bright. Global growth in wealth and population will provide opportunities for quality producers like Ireland, and all areas of the dairy sector can expect to reap the rewards. In the meantime, I will continue to monitor developments in the dairy sector closely and intervene again with the Commissioner as the market situation evolves.