Dáil Éireann Debate, Tuesday - 13 February 2018
64. Deputy Jackie Cahill asked the Minister for Agriculture, Food and the Marine the way in which he plans to mitigate the guaranteed negative impact for milk producers in view of the fact that the floor price for skim milk powder has been removed; and if he will make a statement on the matter. [7015/18]
View answerAs the Deputy 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 .
Whilst 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 (SMP) across the EU since September 2015.
There are now approximately 376,000 tonnes of SMP in public intervention stocks, effectively overhanging the EU SMP market. My Department and I engaged at Council of Ministers meetings and directly with the Commission on recent measures to limit further stock piling of SMP in 2018 without due justification, including the Commission's proposal, to which the Deputy refers, to reduce the fixed price ceiling to zero.
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 per COUNCIL REGULATION (EU) 2018/147 of 29th January 2018, which came into effect the following day, 30th January.
I have clearly stated previously, at Council of ministers meetings and elsewhere, that it is imperative for the Commission to remain vigilant in monitoring the market situation, and to have contingencies in place in the event of market volatility re-emerging, particularly in relevant markets, namely raw milk, butter and SMP in particular.
In common with the vast majority of EU Member States where dairy production is of significance, I recognised that the current situation in respect of 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 SMP; a significant divergence between SMP 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 that the system, as it evolves, will need to display flexibility in respect of adapting to market contingencies, including flexibility around proposed SMP buying-in prices at tendering rounds, to react to the broader market situation at any given point in time.
However, the issue of current stocks cannot be disentangled from the issue of managing SMP intervention in 2018 and beyond. 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 effective status as among the world’s biggest players on the SMP market, and as such their capacity to affect market sentiment, it would be appropriate that they continue to act prudently and responsibility in the disposal of stocks. I am satisfied to date that the Commission has managed these stocks in a prudent manner.
My Department has and will continue to engage with the Commission, with other Member States, and with national stakeholders on these important issues.
