Written answers

Thursday, 26 November 2009

Department of Agriculture and Food

Dairy Sector

5:00 pm

Photo of Niall CollinsNiall Collins (Limerick West, Fianna Fail)
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Question 15: To ask the Minister for Agriculture, Fisheries and Food the position regarding the milk super levy; the impact that quota increases agreed in the Common Agricultural Policy Health Check have on milk prices; and if he will make a statement on the matter. [43436/09]

Photo of Brendan SmithBrendan Smith (Minister, Department of Agriculture, Fisheries and Food; Cavan-Monaghan, Fianna Fail)
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Based on estimated milk deliveries as submitted by milk purchasers for the period up to 31 October 2009, Ireland is just over ten per cent under quota when account is taken of the butterfat content of milk deliveries during the same period.

The milk quota increases agreed under the CAP Health Check have had no impact on milk prices. Indeed, the experience of the last two years on the dairy market has provided stark illustration of the relevance of quotas and has comprehensively proven that the levels of supply and demand are the defining criteria.

The high prices that prevailed in late 2007 and early 2008 were primarily caused by increasing global demand for dairy products combined with a reduced level of supply from Oceania as a result of drought. Irish producers were able to benefit from this situation, and increased production gave rise to a super levy in respect of the 2007/2008 milk quota year.

Unfortunately the ensuing global increase in supply coincided with a collapse in demand caused by the financial crisis and the general economic downturn in 2008 and 2009, and the result was a significant reduction in prices. Production also fell in response. No super levy arose in Ireland in respect of the 2008/2009 milk quota year and current delivery trends suggest it is unlikely to arise in the current year. As I mentioned at the outset, butterfat adjusted deliveries in Ireland were just over ten per cent under quota at the end of October. When one considers that quotas have effectively been increased by only five per cent in the last two years, it is clear that they are having no effect on the movement of milk prices.


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