Coughlan must heed anger over quota plan

SOME quarters of the dairy sector have reacted very negatively to the quota system that Agriculture Minister Mary Coughlan plans to introduce in 2007.

The boss of Lakeland Dairies, Ed Prendergast, condemns the cheque-book approach to quota transfer as unworkable and dismisses the concept of farmers buying quota from each other at mart as "inconceivable".

Mr Prendergast argues that the impact of this proposal will hurt hardest in the north-east, the north-west and the west.

In those areas, most farmers are significantly below the national average quota size. They will not be strong enough to buy quota coming on the market and will be forced off the land unless they have realistic farming options available to them.

Lakeland's prognosis is so stark that Mr Prendergast's words hint at civil strife if the cheque book comes to dominate the quota transfer system.

It used to be a case of brother against brother in the dark days of the emerging State - now he warns farmers will be sucked into a different kind of conflict, "a bidding war against their neighbours, leaving them with heavy debt burdens to carry against a backdrop of declining product prices and rising input prices".

As this process unfolds, he envisages farmers in the north and west transferring their milk to where it will sell for more.

As the end result, the likes of Dairygold and Glanbia - not mentioned specifically in the statement - will thrive, while Lakeland, NCF and others in the poorer areas of the country will find it hard to survive.

Loss of milk in those poorer areas will hurt efficiency and result in farmers who stay loyal getting paid less for their milk as the lower throughput of milk pushes up costs.

It's a pretty grim scenario and Mr Prendergast is not alone in airing concerns over the quota proposals.

The Irish Creamery Milk Suppliers Association (ICMSA) believes the minister, in announcing when she did, has done untold damage to farmers, who this year planned to acquire 40 million gallons of quota to give themselves a better chance of a living from dairy farming.

ICMSA dairy spokesman Dominic Cronin slammed the minister's announcement which followed two days after she announced the Restructuring Scheme for this year.

He said the minister's statement was "either intentionally made to undermine the Restructuring Scheme or the minister and the department are utterly confused regarding their quota policy".

According to the ICMSA, the scheme as proposed, where farmers bid for quota on the basis of a calculated average price, would add e40 million to farmers' costs - the equivalent of the net profit on 100 gallons of milk.

It says the quota system will increase costs and not hasten restructuring, which is supposed to be the main objective of the plan.

What Lakeland and the ICMSA have to say is in stark contrast to the plea made by Glanbia chief executive John Moloney some weeks ago when the group issued its results.

Mr Moloney said the quota issue called for leadership from Government and suggested plenty of models already existed across Europe which the Government could use in determining a scheme best suited to Ireland's needs.

Glanbia backed its call with a study carried out on its behalf by Maynooth College that showed Ireland was way behind in terms of the herd size needed to survive in the tougher emerging market conditions.

That looks to be a given. How we get there will have massive implications for the less well-off regions of Irish agriculture.

Long term, it is difficult to see how those operating in the more vulnerable parts of rural Ireland will survive.

But Mr Prendergast has made it clear there is more at stake here than just expanding quota and the minister and her adviser will do well to take heed of the concerns so well put by him in his recent statement.