asked the Minister for Agriculture and Food if he is concerned at the sharp decrease in the sale and value of dairy products in the United States market and at the alarming drop in butter sales not alone in this country but all over Europe; his views on whether all the indications are that the price of milk will drop by six to ten pence per gallon in this country during 1990; and if he will make a statement on the matter.
Ceisteanna—Questions. Oral Answers. - Dairy Products.
3.
I am aware that there has been a downturn in the butter market in recent weeks. However, to put this development into context it is important to remember that butter prices and indeed dairy product prices generally have been at record levels during 1989 and 1988. This buoyancy was brought about by a number of factors, in particular the reform of the EC milk regime and the elimination of intervention stocks which has resulted in a more marketorientated system. The sector is now more sensitive to changes in demand and supply.
At this stage, the butter market is experiencing a fall-off in demand, particularly from third countries, and as a consequence there is a dampening effect on prices. Developments into 1990 are difficult to predict because actual price levels will be influenced by the level of production in the Community and world wide, and by demand in domestic and international markets.
Returns to producers will, of course, be affected by reductions in the price for butter, on which we remain excessively dependent. Therefore, it is important that we expand our range of dairy products and reduce our exposure to fluctuations in the returns for the commodity products.
May I take it that the Minister is aware of the huge fall off in home consumption of butter, which forms only a small part of the overall problem? Is it true that EC funding for the National Dairy Council has been cut off and, if so, what are the reasons for this? Furthermore, can the Minister tell us what steps he is taking to prevent what is obviously going to be a big drop in the price per gallon paid to the farmer? The experts seem to agree that it will be of the order of 8p or 9p per gallon. What steps are the Minister and his Department taking to soften this blow?
Let me remind the Deputy that in the year prior to my taking up office the price of milk per gallon was 75p.
We know that.
Let us hear the Minister's reply without interruption.
The price is now £1.07 per gallon.
The Minister took credit for that.
Therefore there has been a dramatic increase in the price levels. In relation to the fall-off in that very high profit return, which I am sure the Deputy and farmers are aware of, there is no indication as yet of what slight reduction there will be in those significant profit levels. It is premature to start speculating on what that minimal reduction in major profit levels will be next year.
Arising from the Minister's reply——
A final question, Deputy.
There are a great many farmers who would not agree that a 10p reduction in the price per gallon is a minimal one. The Minister will surely hear about this in due course. I am terribly disappointed that the Minister is not prepared to adopt a strategy, either with the EC Commissioner or with the Commission, to do something about this before it happens. The Minister has been forewarned. It appears that the Minister is totally prepared to allow——
The Deputy is not asking supplementary questions. Let us have Question No. 4, please.
The success of my strategy is evident in the increase in the price from 75p per gallon to £1.07 per gallon.
That is like last year's snow.
Let me assure the Deputy that we will continue with that strategy and I have no doubt that the reduction in profitability which is what we are talking about will be minimal.
We will get back to the Minister on that.