Mattie McGrath (Tipperary, Independent)
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40. To ask the Minister for Agriculture, Food and the Marine if he will address the ongoing price volatility in the dairy sector; and if he will make a statement on the matter. [27970/17]

Michael Creed (Cork North West, Fine Gael)
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Whilst dairy markets are currently broadly stable, the Deputy will be aware that between mid 2014 and the end of 2016 dairy markets experienced significant difficulties. This was due to a combination of factors including increased global supply, the effects of the Russian ban on the import of EU agri-food products and reduced global demand, notably for dairy products in China.

During that phase of volatility, the EU Commission, both prompted and supported by Ireland, among other Member States, responded to these difficulties through the deployment of support measures. Among the main elements of these packages have been the extension and broadening of more ‘traditional’ support measures such as intervention and aids to private storage, as well as more flexible, targeted, direct aid allocated to Member States to spend in accordance with their national circumstances.

Ireland welcomed and used many of the options provided in the various packages. These include the private storage of cheese, the buying of skimmed milk powder (SMP) into intervention, the payment of direct aid of €26.4 million to dairy producers. Also the advance payment of annual direct payments to all farmers was a welcome provision of cash flow for farmers at a difficult time. In addition, a Milk Production Reduction Scheme, allowed almost  44,000 farmers across the EU (circa 4,000 from Ireland) agreed voluntarily to reduce their milk production, represented significant market stabilising efforts.

Global supply and demand dynamics evolved more favourably as 2016 progressed with a better  market environment emerging as a consequence. In spite of these signals of market recovery, the situation remains uncertain in particular product sectors, such as SMP. The long-term fundamentals of the global dairy market are strong. However it is necessary to be cognisant of the on-going challenge of price volatility, which will continue to be a feature of international markets. In this context  dairy processors have a significant role to play, with instruments such as fixed price and margin contracts a useful addition to the suite of measures that can be deployed to mitigate the impact of price volatility.  

I will continue to work with industry, with other member states and with the EU Institutions to consider how we can refine and improve mechanisms to help farmers to cope with downward price cycles when they arise. In general the outlook for the sector must remain cautiously optimistic, with the resolve to engage in measures to mitigate volatility should it re-emerge.