Written Answers. - Dairy Industry.

Billy Timmins

Question:

74 Mr. Timmins asked the Minister for Agriculture and Food his plans to assist the dairy industry; and if he will make a statement on the matter. [19257/03]

The final agreement on the CAP mid-term review was a satisfactory conclusion as far as Ireland is concerned across the deal as a whole. It is useful to outline the specifics of the agreement in relation to milk. The quota regime was extended to 2014-15, thus providing producers and processors alike with a stable environment within which to plan for the future. In the absence of agreement on MTR the quota system was due to end automatically in 2008. The reduction in intervention price support amounted to about 4% over and above what had already been agreed under Agenda 2000 in 1999. The fact that the additional reduction is compensated for at the rate of 80% means that its actual impact is limited. The extent to which milk prices will reflect the support price reduction is dependent on a number of factors, in particular the level of prices on the market, the type and range of products produced and the extent to which milk processors and the industry generally rely on intervention as an outlet. The Commission's proposal would have resulted in a cut of 10% over and above Agenda 2000 with compensation only at the rate of 56%.

In relation to the intervention ceiling for butter, the Commission proposal would have resulted in restricting this to 30,000 tonnes from next year. Despite considerable opposition and no support I succeeded in having that limit increased to 70,000 tonnes next year and dropping gradually so that the limit of 30,000 tonnes will not be reached until the year 2008-9. This will allow the industry a certain amount of time and space to adjust.

The expansion of quota at EU level, which was part of the earlier proposal and which would have put further pressure on the market, is not being proceeded with for the present. On the issue of quota increases, Ireland has already availed of an increase of 2.86% in its quota under Agenda 2000, the benefit of which has been granted to Irish farmers over the past three years.

There is no doubt that the Irish dairy industry faces considerable challenges. The relatively modest changes introduced by the MTR, beyond what was already agreed under Agenda 2000, do not change that situation in any significant way. It was in recognition of these challenges, and in the context of the developments in the CAP and the WTO, that I initiated discussions with the industry which led to the commissioning of the Prospectus report. It identified weaknesses in the industry including a lack of appropriate scale for today's conditions and an over dependence on commodity products and on intervention. It also recommends greater expenditure in research and development to allow the development of a greater range of consumer-value added products.

The report's key message is that the success and long-term survival of the industry is critically dependant on its ability to transform itself and deliver on the key strategies set out. That message is understood by the main players in the industry. Since the publication of the report, and in an effort to move it forward, I have had a series of meetings with representatives of most of the main processing undertakings. I shall continue these contacts with the industry in the future and I shall encourage it to take the appropriate steps.

It is well recognised by those involved in the industry, and those outside it, that the ultimate decisions which are required to meet the present challenges and to reposition the industry for the future, will have to be made by the industry. The industry will respond positively and effectively as it has done many times in the past.