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Coughlan: "Dairy Quota Expansion must be more ambitious"

Minister Coughlan says Quota Expansion should free up the sector to respond to market signals

The Minister for Agriculture, Fisheries and Food, Mary Coughlan T.D., has today written to EU Commissioner Mariann Fisher Boel to emphasise her strong reservations concerning the proposal circulating widely of changes to the dairy sector as part of the CAP Health Check. The Minister also reminded the Commissioner of her concern to see more specific and practical commitments to simplification and to emphasise the major difficulty she had with higher levels of compulsory modulation.

As regards the dairy sector Minister Coughlan expressed her disappointment at the low level of ambition in the figures circulating concerning quota expansion in the period leading to its abolition. In accepting at face value what the Commissioner has repeatedly stressed in the past two years, that she would not propose the continuation of quotas after the current Regulation expires in 2015, the Minister said that she fully agreed with the Commissioner that the means of achieving this must be through a 'soft landing' so that market turbulence is avoided.

The Minister noted that the EU Commission's own impact analysis clearly demonstrated that gradually phasing out quotas through annual increases up to the point of abolition would allow production to respond to growing consumer demand. In doing so it would avoid an immediate production increase and a serious price drop that would otherwise accompany a sudden end of the regime and lead to a 'hard landing'. The Minister acknowledged that what constituted a 'soft landing' for one Member State might be seen as a 'hard landing' in another. In her opinion the two scenarios modelled offered comfort that the production response generated by an annual 2% increase was within the tolerances required to define a 'soft landing', and that crucially, prices would remain relatively stable over the period.

Minister Coughlan made clear her view that the most sensible and logical way to achieve a 'soft landing' is to gradually increase quotas over the period, but expressed serious doubts that a genuine 'soft landing' could be achieved with the very modest figures that are currently circulating. In her letter the Minister urged the Commissioner "to adopt a more ambitious approach so as to enable countries such as Ireland to make a more dynamic contribution to the forecast growth in world markets for dairy products". Otherwise, according to the Minister, "the Health Check may be seen as a missed opportunity and producers whose production potential and natural advantages in milk have been constrained for too long by quotas might feel that the Community has failed to live up to its long-held view that farmers should respond to market signals".

Finally, the Minister emphasised the need to make firm policy decisions and to stick with them, while maintaining the full range of market support measures to cater for any price volatility that may occur with the expiry of production controls. This is what stakeholders need so that they can plan their production and processing decisions over the coming years with some degree of certainty as they move into a more competitive environment.

Date Released: 05 March 2008