Brian O'Shea (Waterford, Labour)
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Question 336: To ask the Minister for Agriculture, Fisheries and Food his proposals to pursue at EU level a guaranteed floor price per litre for dairy farmers; and if he will make a statement on the matter. [14313/09]

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 major 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. I have made clear to Commissioner Fischer Boel that a range of supports would help to restore confidence and put a floor under market prices. My efforts so far have resulted in the restoration of export refunds for butter, skimmed milk powder, whole milk powder and cheese, the early opening of APS for butter, and the operation of butter intervention purchasing at close to the intervention price. I believe that the key elements that will lead a recovery are competitive export refunds that allow the sale of dairy products onto world markets and the continuation of intervention under the tendering mechanism provided that these arrangements remain relatively attractive.

At the recent meeting of the Agriculture Council in March the Commission was reminded forcefully by me and other Ministers of the importance of fully using all available supports to manage the market in the coming period. I will continue to monitor developments in the dairy sector closely and intervene again with the Commissioner as the market situation evolves.