Dáil Éireann Debate, Thursday - 18 December 2014
235. Deputy Bernard J. Durkan asked the Minister for Agriculture, Food and the Marine the extent to which price fluctuations to dairy and beef producers may be anticipated with the objective of putting in place stabilisation measures; and if he will make a statement on the matter. [49417/14]
View answerThe reply is as follows.
Beef
Price volatility in the beef sector has perhaps never been more evident as it has been over the last three years. Prices rose steadily from €3.22 a kilo at the start of January 2011 to an unprecedented peak of over €4.40 per kilo in June of 2013, but declined to €3.51 in September of 2014 before recovering to the current prices of €3.77. In looking at these changes, we cannot ignore normal supply and demand factors. This year we have slaughtered nearly 10% more animals than last year and over 18% on 2012. Added to this supply increase, there has been a drop in Beef consumption throughout Europe. The combination of these points is clearly having an impact.
Putting structures in place to alleviate the impact of these price changes, and assisting farmers to be better prepared for these fluctuations, have been central to this Government’s term in office. The €1.2 billion per year secured in direct payments each year forms a constant and secure income for farmers, and this is a particularly important buffer as prices fluctuate. In addition, the need to ensure a viable future for the beef sector has been central to the draft €4 billion Rural Development Plan submitted to the EU Commission in July.
The RDP includes a number of elements which will be of benefit to Beef farmers throughout the country, including the beef data and genomics measure which will be worth around €300 million over a 6 year period and should bring about long term improvements to the sector though improving the genetic quality of the beef herd. Also, the continued support under the new agri-environment scheme GLAS and the €195 million per year support for disadvantaged areas will be of significant benefit to beef farmers.
Reducing input costs and improving efficiencies on farms has also been a key focus, and in this regard the funding by my Department to Teagasc, ICBF and Animal Health Ireland is critically important. I have also been active in developing new market opportunities for Irish beef and in recent years markets such as Japan, Singapore, Egypt and Iran have been opened, and we are at an advanced stage in opening the US and Chinese markets and this process is ongoing.
Dairy
In respect of the dairy sector, prices are clearly a function of global market dynamics, with supply and demand issues in markets across the globe affecting prices across different dairy commodity groups in domestic markets. Price volatility is a continuing feature of dairy commodity markets, and it is clear that managing the price peaks and troughs in a way that allows farmers and others to plan ahead is a significant challenge for the sector. This issue was very much in focus at the recently held National Dairy Conference which I hosted in November.
The consensus emanating from the Conference based on numerous analyses is that the long-term fundamentals of global dairy market are strong and intact and that the Irish dairy sector is well placed to gain from the opportunities that will arise. Notwithstanding this any objective analysis indicates that we are currently facing into a period of downward price movement following a prolonged period of high prices. Managing the impact of this kind of volatility, particularly on farmer suppliers, remains a key challenge. Market support measures will have a role and I have called on the EU Commission to deploy them as appropriate to support the markets. Processors and the lending sector will also have a role to play through measures such as fixed price contracts and flexible financing arrangements.
Some market support measures have already commenced. Private Storage schemes for butter, cheese and SMP have already been introduced by the Commission in September in a move which I both advocated and welcomed. The Schemes have been extended to the end February for butter and SMP. The Private Storage scheme for cheese has been discontinued due to overuse by non Russian ban affected countries. Furthermore the commencement date under which intervention will be available in 2015 has been advanced to 1 January. These steps already taken by the Commission, some of which have been utilised in Ireland, are certainly welcome, but all possibilities, including a targeted export refund mechanism, or potentially an increase in the intervention rate, need to be considered. In the context of Private Storage schemes, it is critically important to retain some flexibility around the release date to allow for market conditions.
In terms of tools to monitor the market and anticipate the volatility now inherent in it, it is obvious that any market analysis tools that contribute to our better understanding of the market and which facilitate policy makers in an underpinning of their actions with a clear evidentiary basis is to be welcomed. The availability of timely and accurate market information is of course a critical success factor for in any effort to manage price volatility. At EU level, the primary aim of the Milk Market Observatory (MMO), which was founded earlier this year, is to provide the EU dairy sector with more transparency by means of disseminating market data and short-term analysis in a timely manner. At the most recent EU Council of Ministers meeting and along with a number of other like-minded Ministers, I stressed that the role played by European Milk Market Observatory is critical, noting that the challenge for the observatory is to ensure that the data is as close to real time as possible. It is only through timely possession of this information that all of the actors in the sector will be able to respond appropriately with the measures required. At that meeting the Commission indicated an openness to an examination as to how the MMO could be strengthened further including the provision of more relevant data and trend analysis.
