Written answers

Thursday, 14 June 2012

Department of Agriculture, Marine and Food

Dairy Sector

4:00 pm

Photo of Niall CollinsNiall Collins (Limerick, Fianna Fail)
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Question 18: To ask the Minister for Agriculture, Food and the Marine the steps he will take in relation to instability in the milk market; and if he will make a statement on the matter. [28520/12]

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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Volatility in dairy prices is caused by imbalances of supply and demand in international markets, which are cyclical in nature. However, while there will always be short term fluctuations in dairy prices, the medium term prospects for global dairy markets are good. Growth in global population and wealth is forecast to stimulate strong levels of demand for dairy products. Against that background, I believe that prospects and opportunities for the dairy sector will expand significantly over the coming years. My Department and its agencies will continue to play their part in providing an appropriate framework to support the development of this critically important industry. The best way to deal with market instability is to develop a competitive dairy sector that can deal with the challenges and benefit from the opportunities that a global market provides.

The positive medium-term forecasts are what the Food Harvest 2020 report seeks to exploit in setting out the strategic vision for the agri-food and fishing sector. From a dairying perspective, the ending of milk quotas in 2015 represents an exceptional opportunity to increase our milk output, and Food Harvest 2020 has targeted a 50% increase in milk production in the next decade. This target is ambitious but I also believe it is realistic, because the dairy sector has the capability to expand at producer and at processor level, and to exploit the significant potential in expanding international markets.

In that context, the Dairy Expansion Activation Group established to identify specific actions needed to deliver on the Food Harvest targets, has produced a Road Map setting out 55 actions required to achieve the 50% increase in milk production. All of the stakeholders are being encouraged to discharge the responsibilities assigned to them, and the response will be monitored and reported on. Key areas for action include the identification of markets, the improvement of efficiency at processing level and improving production efficiency at farm level. While many of these actions will be taken at commercial level, my Department and its agencies are working with industry to provide a framework to support the necessary development. I am personally chairing the High Level Implementation Committee in order to monitor progress and take appropriate action to support the successful implementation of Food Harvest 2020.

Exports of dairy products in 2011 were valued at €2.66 billion, an increase of 17% on the previous year. Ireland already has access to markets worldwide and exports dairy products to over eighty countries. Nonetheless I am working with industry to raise the profile of the Irish dairy sector, and the Irish agri-food sector generally, in emerging markets in the Far East, North Africa and elsewhere. I have been very active in developing relationships in new and expanding markets in order to build the kind of confidence in Irish production and control systems that provide a platform for long-term trading relationships in the future. As part of that effort, I recently led a trade mission to China to further develop this important relationship. I met my ministerial counterparts in the Agriculture and Quarantine Ministries to help raise the profile of the Irish agri-food industry, including the dairy sector, in China.

At farm level, it is important for producers to focus on profit rather than milk price, and therefore to focus on increasing efficiency and reducing cost. My Department provides €6 million per annum through the Dairy Efficiency Scheme to encourage the adoption of technology and best practice at farm level. This scheme will help to equip farmers with the knowledge and skills necessary to maximise their output, reduce their costs of production and increase margins. In addition, a Dairy Equipment Scheme to encourage capital investment at farm level is available under the TAMS (Targeted Agricultural Modernisation Scheme) to ensure farmers are equipped to gear up for expansion. The scheme provides grant aid for milking machines, cooling equipment and other ancillary items.

Furthermore, a number of incentives were introduced in this year's budget to encourage new farmers including a stock relief incentive for milk production partnerships, a stamp duty reduction on agricultural land and restructuring of retirement relief. Also Teagasc, which is funded by my Department, provides research, education and advice at both farm and processing level and is working closely with industry in the critically important product development area, while Bord Bia is working with operators in the sector on the development of an accredited sustainability model.

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