Dáil Éireann Debate, Tuesday - 17 May 2016
1074. Deputy James Browne asked the Minister for Agriculture, Food and the Marine the measures he is taking to address the ongoing challenges by farmers in the dairy sector; and if he will make a statement on the matter. [10577/16]
View answer1075. Deputy Brendan Smith asked the Minister for Agriculture, Food and the Marine his proposals to assist dairy farmers through present financial difficulties; and if he will make a statement on the matter. [10580/16]
View answerI propose to take Questions Nos. 1074 and 1075 together.
I am fully aware of the pressures on dairy farmers right now. I’m committed to working with all players in the sector here to address these issues and ensure that we have a sustainable dairy sector going forward. I was one of the proposers of the Dairy Forum and I will be ensuring that it continues to meet to discuss relevant issues of concern to farmers and others. The Forum has come forward with some good initiatives for farmers already, including an initiative on improving cashflow planning at farm level, which will be rolled out shortly.
The price of milk and dairy commodities is determined by a range of factors, including supply and demand at international level. Food commodity markets including dairy markets have been characterised by significant levels of volatility for a number of years and this trend has continued throughout 2015 and into 2016. Factors contributing to global price volatility in 2015 included the Russian Ban and the softening of Chinese demand on one side, coupled with increased production among key global producers, including the EU on the supply side. The longer term demographic and demand perspectives remain positive, but there is no doubt that 2016 will be a challenging year.
Dealing with price volatility is a major challenge for the sector. The Single Farm Payment provides some measure of income stability, and EU market support measures will have a role to play. These measures are not enough on their own, however. The sector needs to look at measures to reduce costs on farms, and at the development of new tools, including fixed price contracts, futures markets and more flexible financing arrangements for farmers. I expect all of the stakeholders in the sector, including processors and banks, to play an active role in the development of such instruments.
Production decisions are made by producers, taking prevailing market conditions as well as their efficiency of production and price of inputs into account. The challenge posed by price volatility has been highlighted by my Department and others over a number of years, and indeed my Department has, including through its agencies, invested significant resources in providing farmers with advice and technology designed to improve on farm efficiency, reduce production costs, and make farm businesses more resilient in times of downward price pressure. The abolition of dairy quotas in April 2015 allows farmers the freedom to make these production decisions on a commercial basis.
That said, support must be offered to the sector in times of market difficulty . In this respect, I very much welcome the EU Presidency conclusions on a package of support measures to address challenges in the dairy and pigmeat sectors agreed in Brussels at Council in March. This follows on from an earlier package of measures agreed in September of last year and takes account of the ongoing difficulties in the sector, where the duration of market downturn has gone well beyond previous expectations.
The package includes a number of proposals by Ireland to the Commission in advance of Council, in particular the doubling of the intervention ceiling for skimmed milk powder and butter.
In terms of input costs at farm level, Ireland has called on the Commission to consider temporarily suspending EU import tariffs on fertilisers. I understand that the Commission is examining this request at present. At national level, I will continue to support the work of Teagasc, the Irish Cattle Breeding Federation and Animal Health Ireland to increase on farm efficiency and reduce input costs. The EU Presidency conclusions also refer to the possibility of advance payments under CAP, as was done in 2015. In addition my Department recently paid €26.4m in direct aid to dairy farmers, co-funded by the exchequer and the EU, to assist with liquidity and cash-flow issues on dairy farms.
I also welcome the proposal for the European Investment Bank (EIB) and member states to work together with the Commission on the feasibility of an EU export credit tool. My Department will continue to engage with the Irish banking system to ensure there is a full appreciation of the temporary impact of downward price volatility on farm enterprises which are financially sound in the medium term.
It remains clear that we need to deal urgently and effectively with this temporary problem. We must ensure that EU farmers are protected from the worst impacts of low commodity prices in an appropriate way, but remain well placed to avail of emerging opportunities when markets recover. Ireland is strongly positioned as a competitive producer of dairy, and while conditions are extremely difficult at present, Irish dairy farmers will be well placed to avail of the opportunity presented by market recovery in due course.
