Dáil Éireann - Volume 665 - 30 October, 2008

Written Answers. - Dairy Industry.

Deputy Seymour Crawford asked the Minister for Agriculture, Fisheries and Food the steps he is taking to promote the sale of milk and milk products; if he is satisfied that the price being passed on to farmers will retain an industry for the future; and if he will make a statement on the matter. [37551/08]

  Deputy Brendan Smith: The Irish Dairy Board and the National Dairy Council are the main bodies responsible for promoting the sale of dairy products. The Irish Dairy Board is a commercial co-operative that markets Irish Dairy products internationally and is jointly owned by the milk processors who sell their products through it. Of course, the dairy processing firms also take a lead role in the marketing of their products on international markets. The National Dairy Council plays a key role in supporting growth in consumption of milk and dairy products in Ireland. Over the years it has been the main voice promoting the benefits of dairy products to Irish consumers. Last year, dairy exports increased by 13% to €2.36 billion, an increase of €270 million on the previous record achieved in 2006.

Dairy farmers’ incomes are comprised of the market price paid for milk and direct income support from the EU. Market forces have a significant and increasing influence on the price paid for milk. World market prices determine the returns received by dairy processors and these in turn are reflected in the price paid to farmers. In essence, farm gate prices normally reflect the returns from international markets of dairy product sales.

The key challenges in the medium term will be to ensure that Irish farming and the agri-food sector is at the heart of an evolving high-value food market, which is focussed on quality and innovation. This is at the core of Government strategy, evidenced by the National Development Plan 2007-2013, AgriVision 2015 and the Partnership Agreement Towards 2016. A key element of this strategy was the Dairy Investment Fund launched in 2007. My Department provided funding of €114 million towards investment in dairy processing and a total of 19 capital investment projects were approved and awarded Government grant assistance under the Fund, which will generate an estimated capital spend of €286 million at full production. The purpose of the Fund is to increase the efficiency of the main dairy outputs by supporting the upgrading of plant and buildings. This will assist operators in capturing new business in global markets and in developing new valued added products.

At EU level, one of the CAP Health Check proposals is to increase milk quotas in order to provide a ‘soft landing’ towards the abolition of quotas in 2015. This will provide Irish and EU dairy farmers with a new opportunity to respond to global demand. I have consistently pressed for increased quotas to ensure a soft landing and to allow Irish dairy farmers to avail of those opportunities to increase production and capture new market share.