James Browne (Wexford, Fianna Fail)
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586. To ask the Minister for Agriculture, Food and the Marine the steps he will take to ease the financial burden dairy farmers are currently experiencing due to the low price of milk, given the European Commission's refusal to facilitate a further deferral of superlevy payments. [15071/16]

Michael 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 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.

In relation to Direct Payments I have asked the Commission to make the maximum possible provision for advance payment of the €1.2 billion in direct payments to Irish farmers. I believe that this would be a particularly useful measure to improve cash flow for farm families at this time.

I also believe that we should seek EU funding for further direct targeted aid for dairy farmers. I acknowledge that finding these funds within the EU budget will be a real challenge but in the very difficult circumstances in which our farm families now find themselves I am determined to exert the maximum pressure on this point.

The package previously announced 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. This extra allocation has been utilised in the interim and recently Commissioner Hogan has indicated the Commission’s willingness to further increase this threshold to 350,000 tonnes. SMP intervention is the key EU support tool for dairy markets and helps to put a floor under prices in this extended period of downward price volatility. This extension will be particularly welcomed by Irish producers in the context of Irish dairy production patterns in the dairy sector which peak during the current period.

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.

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.