asked the Minister for Agriculture if in view of the fact that milk producers in the small and medium farm sectors are being unfairly penalised for the milk surplus situation, he will reintroduce the two-tier price system or a similar system of pricing in favour of the small and medium farm producer.

The producer price of milk is now derived from the intervention prices for butter and skim milk powder which are fixed on a community basis by the EEC Council of Minister. Member states are precluded from fixing or supporting producer prices on a national basis.

Is not the co-responsibility levy in fact the same thing as far as the producer is concerned except that it is a penalty rather than an inducement? I am seeking an inducement for the small man rather than penalising the big man.

Certain areas of the country and certain farmers are excluded from the co-responsibility levy which is now at 0.5 per cent. It is no possible within the European Community to determine prices nationally and if I understand the Deputy correctly that is what he is looking for. I think that he is looking for the introduction of a two-tier price system and this is no possible under Community law at present.

On the one hand the Minister says it is not possible and on the other he says it is operating in fact——

No, we are talking of different things.

——by way of the penalty clause. The net effect, I submit is the same except that in the case of two-tier or differential weighting in favour of the smaller farmer, it is not discriminate in that the suggestion would be and is that it would be the first number of thousands of gallons that would get the higher price and without penalising those who produce the higher number of gallons. In fact, what I suggest is much more acceptable within Community rules than what is being done at the moment. The £180 million cut which is now proposed by the budget committee will bring about certain things that we will not like.

I think the Deputy is mistakenly trying to equate the exaction by the Community of a co-responsibility levy which is a variable one and may well be varied upwards, and the introduction of a tiered price system of payment for milk. This is not possible. The exaction of a levy has a specific purpose—to restrain over-production of milk. It is just as unpalatable to the Irish Government as it is to a great many others but there is a very real oversupply situation in the Community and the sooner people face up to that the better.

Is it not fact that the over-supply through the larger output of larger producers is where the problem arises and that the penalisation by way of the co-responsibility levy is only the beginning, that the £180 million cut proposed on milk this year will hit the entire industry if it is not restored? I am suggesting a way in which we can have the best of both worlds rather than the worst.

I do not follow the Deputy's reasoning. I understand him to be advocating the extension of the co-responsibility levy in order to procure a situation where the bigger producers are penalised for being big.

That is a weird deduction from what I have been saying. The Minister is well aware of what I am talking about because he had it there and wiped it out when he became Minister a week or a fortnight after I had been booted out of the Department.

Milk production shot up afterwards.

You see what I mean about Deputy Blaney?

It was a very serious impediment to the development of the Irish industry.