Bernard J. Durkan
Question:210 Mr. Durkan asked the Minister for Agriculture and Food his plans for the future and success of the dairy industry; and if he will make a statement on the matter. [20542/04]
View answerTuesday, 6 July 2004
Questions (177)
Written answers
The future of the Irish dairy sector will be influenced by a range of factors, some of which relate to commercial aspects of international supply and demand and others to developments in CAP and WTO. The extent to which the industry equips itself in all aspects to deal with international competition will be a key element in its long term success.
The implementation of the mid term reform, MTR, of the CAP and the enlargement of the EU which took place on 1 May 2004 are key factors. The enlargement of the EU will provide increased marketing opportunities in the new member states while also bringing increased competition on the EU market. The MTR, by setting new intervention limits and reducing intervention prices, has highlighted the need to become less reliant on commodity products and to increase the added value nature of our output. This was also identified by the Prospectus report which concluded that the future success of the industry was dependent on a number of factors including its ability to increase scale and efficiency, reduce costs, and increase research and development. There is a real need to ensure that our product mix meets the demands of the marketplace and allows for reasonable return on production.
I have met with most of the major players in the dairy sector in order to discuss the implementation of strategies for the future and to identify any areas where I may be able to assist or facilitate with the changes required in the Irish dairy industry. It is clear that the Prospectus report provided the industry in general with an opportunity to examine its strengths and weaknesses and, to consider the best options for its future development, against the background of international benchmarks. While my Department and the other relevant state agencies will provide whatever assistance is possible in this process, the ultimate decisions in relation to processing structure and product mix are a matter for the management and boards of the individual undertakings.
On production at farm level, producers will also have to look at increasing the scale of their operations, reducing costs where possible, and improving the quality and composition of the milk they produce. The MTR has ensured the extension of the quota regime until 2014-15. There is a clear need now, more than ever, to assist those who wish to expand their operations within this new environment. The decision which I made to bring forward the decoupling of the dairy premium to 2005 should help those who wish to expand. Producers who have activated their entitlement will be able to cease production while retaining the direct payment, thus freeing up additional quota for those who remain in production.
In May last, my Department organised a meeting of representatives of the main bodies in the industry, to address the key issues arising in the quota regime, with particular emphasis on the restructuring of milk quota. The views put forward at that meeting will contribute to the ongoing debate on the main issues that face the sector at this juncture and in particular to decisions in relation to future quota restructuring. It will continue to be my policy that milk quota becoming available in Ireland benefits, as far as possible, those active, committed producers who need to expand and on whom the future of the industry depends. The year 2004 has seen strong demand for dairy products on the EU and international markets and while there have been reductions in export refund levels recently, this reflects the extent to which markets have strengthened and the improved level of demand for EU exports. I am hopeful that the current period of strengthening markets for dairy products will continue into the future.
I will continue to monitor market developments to ensure that all of the EU market management mechanisms available are utilised in the best interests of the industry. I am pleased to see the Irish dairy sector taking advantage of this current positive market situation and I am confident that the industry will continue to grow, develop and increase its presence on the competitive international dairy markets.