Written answers

Wednesday, 20 April 2016

Department of Agriculture, Food and the Marine

Dairy Sector

Photo of Brendan SmithBrendan Smith (Cavan-Monaghan, Fianna Fail)
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188. To ask the Minister for Agriculture, Food and the Marine the outcome of discussions at the recent European Union Agriculture Council in relation to the serious problems facing the dairy sector; the proposals there are to provide additional and much needed assistance at European level; and if he will make a statement on the matter. [7694/16]

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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The price of milk and dairy commodities is determined by a range of factors, including supply and demand at international level. Food commodity markets including dairy markets have been characterised by significant levels of volatility for a number of years and this trend has continued throughout 2015 and into early 2016.

Factors contributing to global price volatility in 2015 included the Russian Ban and the softening of Chinese demand on one side, coupled with increased production among key global producers including the EU on the supply side. The longer term demographic and demand perspectives remain positive, but 2016 will be a challenging year.

Production decisions are made by producers, taking prevailing market conditions as well as their efficiency of production and price of inputs into account. The challenge posed by price volatility has been highlighted by my Department and others over a number of years, and indeed my Department has, including through its agencies, invested significant resources in providing farmers with advice and technology designed to improve on farm efficiency, reduce production costs, and make farm businesses more resilient in times of downward price pressure. The abolition of dairy quotas in April 2015 allows farmers the freedom to make these production decisions on a commercial basis.

That said, we obviously must offer support to the sector in times of prevailing difficulty such as we are now experiencing. In this respect, I very much welcome the Presidency conclusions on the proposal for the package of support measures to address challenges in the dairy and pigmeat sectors which was agreed in Brussels at last month’s Council. This follows on from an earlier package of measures agreed in September of last year and takes account of the ongoing difficulties being experienced in the sector, where the duration of market turbulence has gone well beyond previous expectations.

The package includes a number of proposals by Ireland to the Commission and other Member States in advance of Council, in particular the doubling of the intervention ceiling for skimmed milk powder and butter. I also welcome the Commissioner’s undertaking to consider further flexibilities in the PSA scheme for Skimmed Milk Powder, and to look at further flexibilities in the State Aid regime.

In terms of input costs at farm level, I have called on the Commission to consider looking at temporary suspension of EU import tariffs on fertilisers to reduce input costs for Irish and EU farmers and I understand that the Commission is looking favourably on this request. The Presidency conclusions also refer to the possibility of advance payments under CAP, as was done in 2015. In addition my Department is in the final stages of issuing €26.4m in direct aid to dairy farmers funded by the exchequer and the EU.

Furthermore, with respect to financial instruments, I welcome the proposal for the European Investment Bank (EIB) and member states to work together with the Commission on the feasibility of an EU export credit tool.

It remains clear that we need to deal urgently and effectively with this temporary problem. We must ensure that EU farmers are protected from the worst impacts of low commodity prices in an appropriate way, but remain well placed to avail of emerging opportunities when markets recover. Ireland is strongly positioned as a competitive producer of dairy, and while conditions are extremely difficult at present, Irish dairy farmers will be well placed to avail of the opportunity presented by market recovery in due course.

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