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Gnáthamharc

Milk Prices.

Dáil Éireann Debate, Tuesday - 21 June 2005

Tuesday, 21 June 2005

Ceisteanna (423, 424)

Seymour Crawford

Ceist:

444 Mr. Crawford asked the Minister for Agriculture and Food the steps she has taken at EU level to protect the price of milk to dairy farmers who are currently under serious income pressure; her views on whether a further price fall will lead to many more commercial dairy farms being forced out of production; and if she will make a statement on the matter. [20790/05]

Amharc ar fhreagra

Brian O'Shea

Ceist:

452 Mr. O’Shea asked the Minister for Agriculture and Food the action she proposes to take to bring about the setting of sustainable dairy product prices which will return adequate profitability in dairying. [21134/05]

Amharc ar fhreagra

Freagraí scríofa

I propose to take Questions Nos. 444 and 452 together.

The price of milk paid to dairy farmers is a commercial matter between milk producers and milk purchasers and I have no direct role in this area. Milk prices are influenced by a number of factors, both internal and external. These include the structure of our domestic dairy operations, the prices paid in international markets for dairy products, the type and final destination of product and the overall operation of the EU market support mechanisms.

The Luxembourg agreement in 2003 provided that the intervention price for milk products would reduce in the period 2004-2007 and these reductions would be compensated by the introduction of a direct payment. In 2004 farmers were compensated to an amount of €60 million or 1.2 cent per litre. Further compensation of 2.4 cent per litre, amounting to €120 million, will be paid this year as part of the single farm payment and this will rise to 3.6 cent per litre equivalent, or €180 million, in 2006. This payment, taken together with the market value of milk has resulted in a higher return for dairy farmers in 2005.

As regards market management at EU level, I have consistently challenged the reduction in support level implemented by the Commission in recent months in view of the negative effect these will have on the dairy sector. I secured strong support for my position from a number of member states at the May Agriculture Council meeting. In my view, it is crucially and strategically important that the EU consolidates its international market share while challenging competition on its domestic market. I have urged the Commission to maintain a competitive combination of aids and subsidies to achieve these objectives.

As regards the maintenance of commercial dairy farms, the Agri Vision 2015 committee concluded that following the reductions in intervention prices for dairy products and given the preference for part-time farming, dairy farm numbers are expected to decline. However, I strongly believe that if the dairy sector is to maintain a competitive position we must look at increasing the scale of operations, reducing costs where possible, and encouraging a profitable future in the sector based on market returns.

The Luxembourg agreement has extended the quota regime until 2014-15 and, working within that framework, I have made changes to the milk quota regulations which will allow dairy farmers to plan ahead with greater certainty, thereby enabling the restructuring programme to operate more effectively having regard to the need for more competitive milk production.

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