Other Questions - Dairy Sector.

Thursday, 15 October 2009

Dáil Eireann Debate
Vol. 692 No. 1

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  7.  Deputy Niall Collins  Information on Niall Collins  Zoom on Niall Collins   asked the Minister for Agriculture, Fisheries and Food  Information on Brendan Smith  Zoom on Brendan Smith   the outcome [79]of recent meetings of EU Agriculture Ministers, including the special meeting in Brussels in early October 2009, in relation to the dairy market, both in Ireland and in the EU; and if he will make a statement on the matter. [36057/09]

Deputy Brendan Smith: Information on Brendan Smith  Zoom on Brendan Smith  The dairy market has been discussed at Council of Ministers meetings every month since March this year. At these meetings, my ministerial colleagues and I have continually pressed the Commission to take all appropriate measures to deal with the situation and this has helped to stabilise the market. The measures taken this year include the restoration of export refunds for dairy products and these were increased twice in June. Intervention for butter and skimmed milk powder has continued beyond the mandatory fixed limits. In July, it was agreed to implement a special measure to extend intervention beyond August to February 2010 and to 2011, if necessary. This provision will be formally adopted at the October Council meeting which will be held in Luxembourg next Monday and Tuesday.

At the last formal Council meeting in September, the Commissioner presented the dairy market report which set out some options for the sector. At that meeting, I joined Ministers from 15 other member states in seeking major improvements in support for hard-pressed dairy farmers. We signed a statement calling for a comprehensive EU approach that would combine immediate short-term measures along with a medium-term strategy to deal with volatility in the milk sector. I attended a special Council meeting last week to look at medium to long-term measures for the dairy sector. At that meeting it was agreed to set up a high level group of member states, chaired by the Commission’s agriculture director general, to examine the type of arrangements to be put in place.

The high level group will examine medium and long-term ways of stabilising dairy farmers’ incomes and improving market transparency. In its work towards delivering a comprehensive report by June 2010, the group will examine means through which contractual arrangements in the supply chain can contribute to the highest possible returns for producers, giving them more bargaining power in the process and providing a buffer against extremes of market volatility such as those being experienced at present. It will also examine existing market instruments and consider what other means, including a dairy futures market, could contribute to the objective of price stability in the longer term.

Last week, I announced the establishment of a consultative group to advise me on the issues emerging at the high level group. In particular, the ideas, knowledge and expert opinion of the Irish dairy sector will provide key perspectives on how the sector needs to be developed and supported into the future. The consultative group will be representative of all the stakeholders and I will be asking all the main organisations to nominate representatives and these arrangements are being put in place at present.

I also welcomed the commitment given by Commissioner Fischer Boel at last week’s special Council to manage the release of stocks from intervention in a prudent manner.

Deputy Michael Creed: Information on Michael Creed  Zoom on Michael Creed  I am glad the Minister had the opportunity to read the last sentence of his reply because I intended asking him, in view of the delicate recovery under way in global dairy prices, what assurances he has been given that products now in intervention arising from efforts at EU level to support the industry will not be prematurely released back onto the market, thereby bringing the recovery to a halt.

In light of that recovery, has the Minister and his Department any estimate of to what level milk prices per litre will return in 2010? Dairy farmers have taken a particular hammering and [80]are anxious to budget and plan for 2010. What price on average does the Minister expect for milk in 2010?

The Minister and his Department have frittered away the dairy investment fund with no strategic objectives achieved in terms of efficiencies in the dairy processing sector. How does the Department, either directly or by means of other State agencies such as Enterprise Ireland, propose to assist in the endeavours under way to bring greater efficiencies to the dairy processing sector?

Deputy Brendan Smith: Information on Brendan Smith  Zoom on Brendan Smith  With regard to Deputy Creed’s last point, I do not accept that the dairy investment fund was not worthwhile. It was exceptionally worthwhile and in many instances——

Deputy Michael Creed: Information on Michael Creed  Zoom on Michael Creed  It was frittered away.

Deputy Brendan Smith: Information on Brendan Smith  Zoom on Brendan Smith  It was not frittered away.

Deputy Michael Creed: Information on Michael Creed  Zoom on Michael Creed  There was no strategic objective at all.

An Leas-Cheann Comhairle: Information on Brendan Howlin  Zoom on Brendan Howlin  Allow the Minister to reply.

Deputy Brendan Smith: Information on Brendan Smith  Zoom on Brendan Smith  Perhaps Deputy Creed and his colleagues could identify——

Deputy Michael Creed: Information on Michael Creed  Zoom on Michael Creed  A bit around the Border maybe.

An Leas-Cheann Comhairle: Information on Brendan Howlin  Zoom on Brendan Howlin  Please allow the Minister. Deputy Creed stated his question without interruption and he should allow the Minister to state his reply without interruption.

Deputy Brendan Smith: Information on Brendan Smith  Zoom on Brendan Smith  In response to Deputy Creed’s last point, I do not think that any of colleagues up in my constituency would disagree with giving grant aid to Lakeland Dairies for a very substantial and worthwhile investment at their Bailieboro plant.

Deputy Michael Creed: Information on Michael Creed  Zoom on Michael Creed  The Minister should have a chat with the dairy farmers up there.

An Leas-Cheann Comhairle: Information on Brendan Howlin  Zoom on Brendan Howlin  Please, Deputy Creed.

Deputy Brendan Smith: Information on Brendan Smith  Zoom on Brendan Smith  Lakeland Dairies is not paying the worst price, unfortunately, as there are prices below what it is paying. The investment being put into the Bailieboro plant is very worthwhile and will create greater efficiencies. Greater production and efficiencies go back to the individual primary producer. I was in north Cork, Deputy Creed’s county, with Dairygold and I saw very worthwhile investment there. Very worthwhile investments have been made throughout the country. All applications were adjudicated upon and went through a thorough analysis on the benefits they would bring in regard to efficiency and value added new product. I was in Carbery, west Cork also——

Deputy Tom Sheahan: Information on Tom Sheahan  Zoom on Tom Sheahan  The Deputy received a warm welcome.

Deputy Brendan Smith: Information on Brendan Smith  Zoom on Brendan Smith  Yes I did and I do not mind that. I received a very warm welcome and I saw the great work going on in that plant as well as the supply from its four constituent dairy co-operatives. That investment has been very worthwhile. Naturally, we wish to see greater collaboration and co-operation. In early September, I travelled to Finland and Denmark with the major dairy companies and we met all the major dairy companies there. [81] They outlined to us the rationalisation process they went through, the scale of production issues and the research and development undertaken, to which the Minister of State, Deputy Killeen, referred earlier. There is co-operation between Teagasc in Moore Park and many of the leading research institutes in Scandinavia as well. I am keen for the whole area of collaboration to proceed. There is plenty of scope for efficiencies to be introduced and for new product development as well.

I spoke with the EU Commissioner early in the summer regarding the release of intervention stocks. We also raised the matter at the Council of Ministers meeting. I put it that when the recovery comes there must be a prudent release of intervention stocks in the future, not when the market is recovering because we do not wish to have downward pressure on prices again. That commitment has been given and it was written into a Council decision.

Deputy Michael Creed: Information on Michael Creed  Zoom on Michael Creed  What will the price of milk be next year?

Deputy Brendan Smith: Information on Brendan Smith  Zoom on Brendan Smith  I do not know who in the world could answer the question of what price milk will be next year.

Deputy Seán Sherlock: Information on Sean Sherlock  Zoom on Sean Sherlock  The Agriculture Council will meet next week. Will that meeting give rise to a new regulation regarding a CMO, common market organisation, for milk or dairy, or will the status quo remain for political intervention in the market, given that there is a slight increase in the price and a slight recovery at present? Is the strategy within the European Union to do nothing at present? It is possible a logical strategy would be to wait to see if there will be a further recovery, or will there be further intervention? I did not quite understand the Minister’s original reply.

Deputy Brendan Smith: Information on Brendan Smith  Zoom on Brendan Smith  The intervention by the European Commission since January has involved the activation of market support measures. That is the nature of the support the European Union can give to the dairy sector. The aids to public and private storage were brought forward to 1 January and the other market support measures were activated from March onwards. Normally, they end in August but at the July Council we reached agreement with the Commissioner to continue those measures beyond August. A mechanism is in place now such that should the need arise for the continuation of those measures, they can continue until March 2011. We all hope these measures will not be needed, that there will be buoyancy in the market, that the price will return to the proper level and that those market supports would not be needed. However, the very important decision that will be taken on Monday next is that the Commission will give a formal guarantee that it will release the intervention stocks in future in a prudent manner and that it will not create downward pressure on the market and bring us back to where we were.

Last Monday, I was in Vienna and I met representatives from 19 like-minded member states. We have worked together to put pressure on the Commission to ensure the market support measures would be used to the best possible effect. Some 21 countries including France, Germany, Belgium and many others have signed a declaration that will come before the Council of Ministers next Monday. This will put to bed once and for all the quota issue and it will not be revisited. Baseless arguments have been made in recent months to the effect that the quota increase we received through the Common Agriculture Policy health check one year ago was the cause of the fall in price this year. Nothing could be further from the truth. As a country we are more than 8% under quota.

[82]Another very important step for the medium term is that enhanced measures should be put in place to deal with volatility and we must prepare for the ending of quotas in 2015 as well. That was first decided in 2003 and it was confirmed in the health check of November last year. It was also confirmed in the Heads of Government meeting last June.


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