Michael Creed (Cork North West, Fine Gael)
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Question 434: To ask the Minister for Agriculture, Fisheries and Food if he will evaluate and quantify financially the benefit of recent market support initiatives for the dairy sector here as approved by the EU Commission; the way this initiative is impacting on the price paid to primary producers; his views on the required level of market support initiatives to ensure that primary producers are paid a price above the cost of production; and if he will make a statement on the matter. [7509/09]

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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Dairy product prices reached record high levels in 2007 and early 2008 and producer prices also peaked in that time. Most CAP market instruments were suspended as they were not necessary at 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 I, along with other Agriculture Ministers, made clear to Commissioner Fischer Boel that a range of supports would help to restore confidence and put a floor under market prices.

The Commission initially responded in November by commencing the 2009 butter private storage scheme two months early. Then, in January, 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 on 22nd January.

The activation of these measures is an important step in the process of stimulating demand for dairy products. The second tender for export refunds took place at last week's management committee meeting and the level of refunds was increased generally. Intervention for butter and SMP will open on the 1st March and should help stabilise the market. When the Intervention quantity limits are reached, a tendering process will operate for the purchase of additional quantities. However, it is important that the Commission is vigorous in the implementation of these market measures and my Department will continue to press for them to be set at an appropriate level to support the dairy sector.

It is worth noting that 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. 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.