Bernard Durkan (Kildare North, Fine Gael)
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Question 141: To ask the Minister for Agriculture, Food and the Marine the full extent of benefits or otherwise likely for the dairy sector after the abolition of milk quotas; and if he will make a statement on the matter. [28886/12]

Simon Coveney (Cork South Central, Fine Gael)
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The decision to abolish milk quotas with effect from 1st April 2015 was made in the context of the CAP Health Check in 2008. Ireland strongly supported their abolition, on the basis that quotas were widely regarded by both the Irish dairy sector and market analysts as a brake on the potential of the Irish dairy sector to respond positively to market opportunities.

The ending of milk quota regime represents an exceptional opportunity to increase milk output, and the Food Harvest 2020 Report has targeted a 50% increase in milk production in the period to 2020. 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. The Dairy Expansion Activation Group, which was established to identify specific actions needed to deliver on the Food Harvest target, 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, and 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.

More than 85% of Irish dairy production is exported, and the price of milk in Ireland is ultimately determined by global demand and supply. Last year exports of dairy products were valued at €2.66 billion, an increase of 17% on the previous year. Ireland currently has access to markets worldwide and exports dairy products to over eighty countries and I am working with industry to further 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.

Milk production volumes are, to a great extent, determined by market demand and by price considerations. While the dairy sector has experienced severe volatility in product prices in recent years, primarily caused by an imbalance of supply and demand in international markets, the medium term prospects for global dairy markets are good. Growth in global population 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 and I can assure the Deputy that 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.

While the supply management arrangements that currently exist will no longer apply after 2015, I am confident that the processing industry will work with the milk producers to ensure a coherent and thriving dairy industry post quotas that will exploit the undoubted potential in existing and new markets, maximize efficiency at production and processing levels and respond effectively to market demand.