Care urged over quotas as farmers narrowly avoid incurring super levy

DAIRY farmers should either buy extra quota or destock in the build-up to the end of the quota era in 2015, cautions ICMSA president Jackie Cahill.

The milk organisation leader welcomed the Department of Agriculture, Food and the Marine’s estimation that Ireland managed to stay under quota by just 0.43%, but urged farmers to carefully manage production for the year ahead. Brussels, he insists, is extremely unlikely to relax its quota regulations.

“We have been in Brussels lately and I wouldn’t be hopeful about any relaxation of the rules,” Mr Cahill said.

“You have to get a qualified majority to agree on any change to the overall dairy package and I can’t see that happening.

“We will continue to lobby for relaxation, but there’s no point in leading anybody into a fool’s paradise. There is some chance of raising the quota for butterfat, but thinking that the overall dairy package is as much a long shot as backing a horse in the Grand National. It sounds harsh, but the processors have made it clear that going over quota will be the farmer’s own liability.”

Ireland’s marginal leeway on butterfat dates back to its entry to the quota system in 1983.

Irish farmers have, in the past, gained up to 1.25% raised quota in relation to butterfat content, but only because the Commission can offer this concession without referral to the Council of Ministers and without necessitating a change to the overall dairy package.

Agriculture Minister Simon Coveney said: “Although these figures are still to be confirmed, and a definitive final position will not be available for some time, it appears at this juncture that the country has, fortunately, avoided a super levy. However, given generally favourable market forecasts and the increased rates of heifer retention in recent years, I am concerned about the real danger of going over quota in the 2011/2012 milk quota year, and in subsequent years.”

The past year saw a dramatic increase in milk production, a remarkable turnaround from a position where the country was 10% under quota at the end of the 2009/2010 milk quota year to one in which a super levy appears to have been only narrowly avoided. He also alluded to anecdotal evidence which suggests that milk supplies are already running ahead of expectations in the first two weeks of the new milk quota year.

Mr Coveney said: “In such circumstances it is appropriate to again remind all dairy farmers of the need to carefully plan their production activities and to pay close attention to the limitations imposed by the quota regime if they are to avoid potentially very damaging super levy fines.

“Even allowing for a further increase of 1% in the national quota since April 1, 2011, recent delivery trends, if repeated, will put the country in serious danger of going over quota. It is therefore incumbent upon every milk producer to exercise the necessary caution and to seek advice from, for example, Teagasc on the most sensible approach to be taken in managing their enterprises as they enter a crucial phase of the preparations for the abolition of quota.”