Bernard Durkan (Kildare North, Fine Gael)
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18. To ask the Minister for Agriculture, Food and the Marine arising from the recent report from Teagasc which drew attention to a serious downturn in income for dairy producers in the wake of the abolition of milk quotas, his Department's proposals to address such issues, with particular reference to the need to ensure the future of the family farm and the importance of the dairy and agrifood sector in the context of the national economy; and if he will make a statement on the matter. [48416/14]

Simon Coveney (Cork South Central, Fine Gael)
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The dairy sector accounted for exports of over €3 billion in 2013, which is a massive contribution to the national and in particular the rural economy. We currently have almost 18,000 milk suppliers, operating predominantly from family farm supplying 90 registered milk purchasers. Total annual production currently stands at 5.4 billion litres approx, with Food Harvest 2020 targeting a 50% increase in the volume of milk produced by 2020. These statistics speak for themselves regarding the sector's socio-economic importance.

Dairy Prices are a function of global market dynamics, with supply and demand issues in markets across the globe affecting prices across different dairy commodity groups in domestic markets. Price volatility is a continuing feature of dairy commodity markets, and it is clear that managing the price peaks and troughs in a way that allows farmers and others to plan ahead is a significant challenge for the sector. This issue was very much in focus at the recently held National Dairy Conference which I hosted in November.

The consensus emanating from the Conference based on numerous analyses is that the long-term fundamentals of global dairy market are strong and intact and that the Irish dairy sector is well placed to gain from the opportunities that will arise. World dairy consumption is projected to rise considerably over the next 10 years and much of this is expected to be driven by developing markets in Asia, the Middle East and Africa. This rising demand coincides with the ambitious strategy as outlined in Food Harvest 2020 for growing the dairy sector. In turn the abolition of dairy quotas is expected to be a key driver of the growth envisaged. In tandem with opportunity comes challenge, and chief amongst those is price volatility.

Whilst the long-term fundamentals of the global dairy market are strong objective analysis indicates that we are currently facing into a period of downward price movement following a prolonged period of high prices. Managing the impact of this kind of volatility, particularly on farmer suppliers, remains a key challenge. Market support me assures will have a role and I have called on the EU Commission to deploy them as appropriate to support the markets processors and the lending sector will also have a role to play through measures such as fixed price contracts and flexible financing arrangements.

In terms of how the market will evolve in the medium term, Teagasc, in common with a number of other commentators, anticipate that lower milk prices will lead to a slowdown in the expansion of milk production globally through 2015, with global dairy markets set to witness signs of recovery as the year progresses. In the medium to longer term population growth and increasing affluence in developing countries will continue to drive strong growth in demand for dairy products, and Irish producers will be well placed to take full advantage of this demand.

Notwithstanding the aforementioned, in preparing their enterprises for the post quota era, I have at all times urged that farmers have regard for the fact that milk quotas would remain in place until April 2015, along with the associated superlevy regime, and I would take this opportunity today to reiterate this call. I would again urge farmers to use the time period between now and the removal of milk quotas to identify, with their dairy adviser, steps to manage both their milk supply and their dairy herds so that they have an efficient herd as they enter the post quota era.