Written answers

Tuesday, 24 May 2016

Department of Agriculture, Food and the Marine

Dairy Sector

Photo of Pat DeeringPat Deering (Carlow-Kilkenny, Fine Gael)
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541. To ask the Minister for Agriculture, Food and the Marine his plans to deal with the serious cash flow issues in the dairy sector; and if he will make a statement on the matter. [11620/16]

Photo of Michael CreedMichael Creed (Cork North West, Fine Gael)
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I am fully aware of the pressures on dairy farmers right now and I am committed to working with all players in the sector here to address these issues and ensure that we have a sustainable dairy sector going forward. As one of the proposers of the Dairy Forum my goal is to ensure that it continues to work constructively as a vehicle for addressing issues of concern to farmers and others in the sector. The Forum has come forward with some good initiatives for farmers already, including an initiative on improving cashflow planning at farm level, which will be rolled out shortly. 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 2016. Factors contributing to this global price volatility include 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 there is no doubt that 2016 will continue to be a challenging year.

Dealing with price volatility is a major challenge for the sector. The Single Farm Payment provides some measure of income stability, and EU market support measures will have a role to play. These measures are not enough on their own, however. The sector needs to look at measures to reduce costs on farms, and at the development of new tools, including fixed price contracts, futures markets and more flexible financing arrangements for farmers. I expect all of the stakeholders in the sector, including processors and banks, to play an active role in the development of such instruments.

I very much welcome the EU Presidency conclusions on a package of support measures to address challenges in the dairy and pigmeat sectors agreed in Brussels at Council in March. This follows on from an earlier package of measures agreed in September of last year and takes account of the ongoing difficulties in the sector.

The package includes a number of proposals by Ireland to the Commission in advance of Council, in particular the doubling of the intervention ceiling for skimmed milk powder and butter.

In terms of input costs at farm level, Ireland has called on the Commission to consider temporarily suspending EU import tariffs on fertilisers. I understand that the Commission is examining this request at present. At national level, I will continue to support the work of Teagasc, the Irish Cattle Breeding Federation and Animal Health Ireland to increase on farm efficiency and reduce input costs. The EU Presidency conclusions also refer to the possibility of advance payments under CAP, as was done in 2015. In addition my Department recently paid €26.4m in direct aid to dairy farmers, co-funded by the exchequer and the EU, to assist with liquidity and cash-flow issues on dairy farms.

I also 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. My Department will continue to engage with the Irish banking system to ensure there is a full appreciation of the temporary impact of downward price volatility on farm enterprises which are financially sound in the medium term.

I have also recently raised the question of a further extension of the period for payment of superlevy with Commissioner Hogan.

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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