Written Answers. - Dairy Industry.

Martin Ferris

Question:

135 Mr. Ferris asked the Minister for Agriculture and Food his views on the recommendation of the Prospectus-Promar international report on the future of the dairy industry that the sector ought to be actively encouraged in the direction of greater concentration, with one large processor controlling 70% of non-liquid milk processing and that the average output of dairy farms more than double to match levels in countries like Denmark; and if he will make a statement on the implications this will have for thousands of farmers who will be forced out of dairying. [10876/03]

The strategic review of the dairy processing sector was jointly commissioned by my Department, Enterprise Ireland and the dairy industry itself. The study focused on the existing structure of the dairy processing industry, the market opportunities for dairy products and the product options to exploit these opportunities. The report was presented on 19 March and has been broadly welcomed by the industry. It makes a number of recommendations on actions to improve the efficiency and long-term competitiveness of the industry. One of the key strategies identified by the consultants is the need to increase the scale and cost efficiency at both producer and processing level.

The need to increase scale and cost efficiency is not a new issue within the dairy industry and a number of reports have indicated the need for consolidation. The history of the sector in Ireland shows a considerable degree of consolidation, both at production and processing level. Furthermore, there has been considerable movement in this direction in competitor countries in recent years and the Irish industry must respond to ensure that it remains competitive on international markets. The increased size of dairy holdings in Ireland indicates that producers themselves recognise the importance of greater scale and efficiency. In this regard, I will continue to encourage committed active producers to grow and develop their enterprises to an optimal level. The decision on whether to remain in the industry is one which individual producers must make based on their own circumstances and the prevailing conditions within the industry.