Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

Question 74: To ask the Minister for Agriculture, Fisheries and Food his views on the difficulties facing dairy producers due to a collapse in prices for dairy products; the measures he will introduce to support the industry; and if he will make a statement on the matter. [4974/09]

Brendan Smith (Cavan-Monaghan, Fianna Fail)
Link to this: Individually | In context

The dairy sector is facing a period of market volatility across the globe at present resulting from supply/demand disequilibrium in international markets. Having reached record high levels in 2007 and early 2008, dairy product prices 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 similar to the 2007 price. Indications are that markets will remain weak in the first half of 2009 and it looks like being a challenging year for the dairy sector.

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 help support the dairy sector in Ireland. The wisdom of that approach is now evident and the retention of the intervention system for butter and SMP, as well as the Private Storage Scheme for butter, can now be utilised for the benefit of the entire sector. Indeed, in view of the market difficulties, I made clear to Commissioner Fischer Boel that the activation of the full range of supports would help to restore confidence and put a floor under current market prices. The Commission initially responded by commencing the 2009 butter private storage scheme two months early. Then, on January 15th, the Commissioner announced further measures to assist the dairy sector. These included a commitment under the Intervention system to purchase more than the fixed quantities of butter (30,000 tonnes) and Skimmed Milk Powder (109,000 tonnes) if the market situation requires it. In addition, she announced the reintroduction of export refunds for butter, milk powders and cheese and these were reinstated at the milk management committee meeting on 22nd January. Irish operators can now avail of these refunds and my Department will continue to examine the position and urge the Commission to set the refunds at an appropriate level to support the dairy sector.

While we are facing short-term uncertainty, analysis shows that the long-term outlook is bright. The main international forecasting organisations predict global growth in wealth and population in the medium term. This will present new opportunities for quality producers like Ireland, and all areas of the dairy sector can expect to reap the rewards. 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.

As part of this overall strategy, my Department provided funding of €114 million towards investment in dairy processing. 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.

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.