There is quite a range of questions and I will try to address them in the order in which they were put. Deputy Timmins referred to the unique position of the Irish dairy sector, and he is absolutely right in what he said about the 70,000 gallon quota. That figure is contained in the 2010 document, which resulted from the work of an expert committee. The view of the committee was that the dairy producer needed to produce around 70,000 gallons to be viable.
The Deputy referred to the unique position of dairying in Ireland. This was probably easier to argue in 1984 than it is now, because in 1984 the dairy sector represented around 70% of GDP. That situation has changed very significantly. I do not have the current figure but it is certainly less than 2%. Even in 1999, in the Agenda 2000 negotiations, there was some recognition of the fact that Ireland was among the group of countries which should get favourable treatment and we did get an additional quota in Agenda 2000.
The Agenda 2000 quota, namely, the 32 million gallons which was allocated to Ireland in 1999, does not attract direct payment. We have to remember that was part of the Agenda 2000 agreement. The Agenda 2000 agreement already provided for reductions in support prices and compensation for those reductions. It was clearly part of that agreement that the additional quota being given out then would not attract the direct payment. That is the same for other member states which received an additional quota then, such as Italy, Spain, a relatively small amount in Northern Ireland and Greece, which had a significant increase.
I have heard the point members have made about the national envelope. The direct payment is compensation for price cuts which will be felt at all levels in the dairy sector. I acknowledge that sector has gone through a difficult time, particularly in 2002. Thankfully, 2003 was a bit better. Producers at all levels have suffered.
A number of members made a point that quota size of itself is not an absolute determinant. The efficiency of producers is a very important factor. Some producers with quotas as low as 40,000 or 50,000 gallons can derive as good an income as certain producers who have 70,000 and 80,000 gallons. This comes down to efficiency and costs. Some people may have costs arising from having to acquire land and meet interest payments.
Deputy Upton referred to the question of replacing commodity products. She is absolutely correct in identifying that. It is clear to commentators and everybody in the industry that we have been over-dependent on commodity products for many years. To take the example of intervention, in both butter and skimmed milk powder the stocks that Ireland holds represent almost 25-30% of the total EU stocks. Our milk output represents about 4.5-4.6% of the EU total. That shows the imbalance that exists concerning our dependence on these commodity products.
The report was commissioned by the Minister in conjunction with Enterprise Ireland and the industry. The report, Prospectus, was launched in May 2003. It identified a number of points, one of which was that we were over-dependent on commodity products and that we needed to move in the direction of more value added products. In addition, it suggested that the processing industry needed to move in the direction of greater rationalisation and that we were losing competitiveness in the marketplace. Noting international comparisons, we lose out on the area of scale at both producer and processor level.
A number of members of the committee referred to supports for smaller-scale farmers. Over the years, priority has been given to them in all the schemes that have operated. In restructuring schemes, temporary leasing and in any other schemes where quota became available there was always a bias in favour of the smaller-scale producer. Notwithstanding that, it is true that many producers are leaving the industry.
Deputy Wilkinson said that in some cases young people are making their own decisions. The Deputy is absolutely right and this is more a feature of recent years. It is also fair to say that people have opportunities that they did not have previously to get employment elsewhere.
We need to take account of the fact that at EU level there is still considerable support for the agricultural and dairy sectors. Currently, there is a budget of almost €3 billion for the dairy sector, some to fund intervention but some also to subsidise the use of butter in skimmed milk powder by certain industries. These are costly schemes. There is also the payment of export refunds which is a very costly undertaking because of the price gap between European prices and prices on the world markets. The position at both EU level and at national level is that there is considerable support for smaller-scale producers.
We have to remember that we are in competitive markets which are becoming more competitive. We produce a lot of basic products and we are competing on world markets with the likes of New Zealand and Australia which practise something approaching factory farming. We are a long way from factory-farming in Ireland now and for the foreseeable future.
I need to come back to a point raised at the outset by Deputy Timmins which I did not answer completely. It related to the quota allocated to Ireland under Agenda 2000. A decision has not been made on how the direct payment will be made. No decision has been made that would exclude the specific people who got quota out of that scheme. Many producers did so. Apart from the particular people to whom the Deputy was referring, there were young farmers who got about 3,000 gallons each. Roughly 90% of all producers got something out of it. These would have been relatively small amounts, about 700 gallons on a flat rate.
A decision still has to be made on how that will be dealt with, whether by some across the board method or some other means. It is a decision still to be made. There may be other points which I have missed. If so, I apologise. It is not obvious to me that there is any other point which I need to address at this stage.
