I thank the Deputy for the question. As he is aware, the Irish dairy market, following on from broader EU and international trends, is currently in a much improved position compared to the relatively recent past. Of course, we remain extremely vigilant in monitoring the current market and emerging trends, particularly as we approach the peak period for Irish milk production.
While the overall dairy sector is now in a much better place, particularly at the farm gate, the issue of intervention stocks overhanging that particular market remains a cause for concern arising from the significant recourse to this market measure for skimmed milk powder across the EU since September 2015.
There are now approximately 376,000 tonnes of skimmed milk powder in public intervention stocks, effectively overhanging the EU skimmed milk powder market. My Department and I engaged at Council of Ministers meetings and directly with the Commission on recent measures to limit further stockpiling of skimmed milk powder in 2018 without due justification, including the Commission's proposal to reduce the fixed-price ceiling to zero, to which the Deputy refers. I strongly argued that this measure should be specified as for 2018 only to avoid setting a precedent for the longer term. This point was accepted and agreed in the final version of the measure as adopted by the Council through Regulation No. (EU) 2018/147 of 29 January 2018, which came into effect the following day, 30 January.
I have clearly stated previously, at Council of Ministers meetings and elsewhere, that it is imperative that the Commission remains vigilant in monitoring the market and that it have contingencies in place in the event of market volatility re-emerging, particularly in relevant markets, particularly the raw milk, butter and skimmed milk powder markets. In common with the vast majority of EU member states where dairy production is of significance, I recognised that the current position on existing stocks could not be allowed to persist indefinitely and that there is general acceptance that doing nothing is not an option.
It is important to note that this measure does not represent a change to the fundamental provisions of the intervention mechanism, nor to the necessary supports that intervention provides during periods of market volatility. Ireland has welcomed and made use of intervention during such periods of instability. This measure responds and is framed around a very specific set of circumstances, namely, very significant intervention stocks of skimmed milk powder, a significant divergence between skimmed milk powder and butter prices in negative and positive directions, respectively, and a generally more favourable market context in the EU dairy sector, including the farm gate in respect of more recent raw milk returns.
I have clearly stated the system, as it evolves, will need to display flexibility in respect of adapting to market contingencies, including flexibility around proposed skimmed milk powder buying-in prices at tendering rounds, to react to the broader market situation at any given time. The issue of current stocks cannot be disentangled from the issue of managing skimmed milk powder intervention in 2018 and beyond, however. The issues involved, with respect to both market management and sentiment in the sector, are complex and require ongoing careful management.
Given the Commission's status among the world’s biggest players on the skimmed milk powder, SMP, market, and as such its capacity to affect market sentiment, it would be appropriate that it continues to act prudently and responsibly in the disposal of stocks. I am satisfied to date that the Commission has managed those stocks in a prudent manner. My Department has engaged and will continue to engage with the Commission, with other member states, and with national stakeholders on these important issues.