Carol Nolan (Offaly, Sinn Fein)
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502. To ask the Minister for Agriculture, Food and the Marine the action he plans to take to protect farmers from price volatility in the dairy sector; and if he will make a statement on the matter. [42357/17]

Michael Creed (Cork North West, Fine Gael)
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As the Deputy is no doubt aware, the ending of the milk quota regime represented an exceptional opportunity for the dairy industry to increase milk output and reach the 50% target set out in Food Harvest 2020. In tandem with opportunity, challenges such as volatility must be faced.

The period between mid-2014 through to Q4 2016 was extremely challenging for the dairy sector. Factors contributing to global price volatility in 2015 and 2016 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.

While the outlook in 2017 has been more positive, there are a number of factors which continue to contribute to price volatility in the sector, including political factors outside our control. Notwithstanding challenges on the horizon, amongst which Brexit is paramount, stakeholders in the Irish dairy sector are well placed to benefit from expanding global demand.

In terms of market returns to primary producers, raw milk prices remain in the region of 35 to 36 cents per litre which is ahead of the EU average and over 50% ahead of where prices were this time last year. Peak production months have passed in Ireland and by end September circa 80% plus of the average dairy farmer’s annual production has been completed. This combination of good prices and stronger supply means that 2017 can be expected to be a very good year for Irish dairy farmers in terms of market returns for their raw milk, which is welcome in the context of a very difficult 2016 in particular.

I remain conscious of the pressure volatility in dairy markets can exert on farmers and I can assure the Deputy that I am committed to utilising measures at our disposal, including EU market measures such as intervention, aids to private storage and exceptional market measures, as necessary.  The legislative provisions underpinning these measures were finalised during the Irish Presidency of the European Union in 2013.  

I have already outlined the measures taken to assist Irish  farmers, including  dairy farmers,  on a number of occasions. These include the launch of a €150 million low-cost Agriculture Cashflow Support Loan Scheme, increased funding under the Rural Development Programme, as well as the allocation of additional €6.75 million to Bord Bia to provide supports to companies in terms of diversification of markets. My Department continues to support and fund initiatives that help Irish farmers verify the high standards and quality of their production, including Origin Green and the Sustainable Dairy Assurance Scheme.

In recent years dairy markets have been characterised by periods of both high and low prices and the challenge is to ensure that farmers have the tools available to manage their enterprises through the more difficult periods. The industry itself has a critically important role to play and I welcome initiatives such as fixed price and margin contracts, which offer producers stability for a proportion of their supplies of milk going forward. In our taxation policy, we have made it possible for farmers to average their income over a period of five years.

I will continue to carefully monitor market developments and engage with the EU Commission, with other member states and with industry stakeholders to ensure that measures are in place to help farmers through periods of uncertainty and volatility.

I recently hosted the fifth meeting of the Dairy Forum with key stakeholders from the Irish dairy sector to discuss how best to future proof the sector by formulating a cohesive approach to dealing with ongoing challenges.

I can assure the Deputy that I will continue to work closely with the dairy sector, with EU colleagues and International counterparts to ensure the development and maintenance of a sustainable dairy sector in Ireland.