Over-quota suppliers likely to face superlevy fines of 28.6c per litre

With Ireland facing a likely national superlevy fine of up to €40m, Lakeland Dairies has told over-quota suppliers to expect to pay fines of around 28.6 cent per litre.

The Cavan-based dairy processor told its members fines are inevitable for those who have exceeded their supply quota. Overall, the co-op is 3.4%, or 13 million litres over quota, with a run of heavy milk-producing weeks to go to the March 31 end of the quota year.

“December 2013 milk supplies were 27% ahead of December 2012 and there is no easing of supply,” Lakeland said in its January newsletter. “Suppliers over quota and continuing to supply are increasing their superlevy liability. The over quota position is being compounded by a high milk price, good silage and under-quota suppliers taking every action to fill their quotas.

“Superlevy deductions are continuing from the increasing list of suppliers over quota. Superlevy milk deductions will have serious implications for cash flow on these farms as we head into high cost spring milk production, and alternative funding may have to be sourced to keep farm input bills under control.”

Other co-ops throughout the country find themselves in a similar quota situation. Aurivo and Town of Monaghan are the only dairies thought to be under quota, so there will be little or no fleximilk to redistribute.

However, with some co-ops paying from mid-30s up to 40cpl for milk, many dairy farmers continue to supply, capitalising on the 10cpl or so payment above the 28.6cpl superlevy fine. Co-ops are withholding the estimated cost of superlevy fines from milk cheques.

ICMSA deputy president, Pat McCormack, said that in the context where every per cent point in excess of the national quota represents around €16m, that it was looking increasingly likely that the superlevy would be between €30m and €40m.

“ICMSA remains convinced that some degree of ‘soft landing’ or ‘tapering off’ should have been possible in the countdown to next year’s quota abolition. It doesn’t make any sense to us that you have this situation where farmers are going to be fined very considerable sums for exceeding a quota when we’re in the countdown to a situation where — literally overnight — they’ll be able to produce as much as they want. That has always seemed illogical and we still think that Minister Coveney should be making the case for drastically reduced superlevy liability,” Mr McCormack said.

The last Department of Agriculture quota update showed Ireland at 1.38% over quota nationally as of Nov 30, when account is taken of the butterfat content of milk deliveries during the same period. Estimated butterfat adjusted deliveries in November were 292,245,038 litres.

This compares to the published position in Nov 2012 where Ireland was 3.36% under quota when account was taken of the butterfat content of milk deliveries. Butterfat adjusted deliveries as submitted to the department by milk purchasers in the period November 2012 were 241,466,608 litres.

The department is also conducting an investigation into ‘black milk’ — the illegal sale of over-quota milk which Munster dairy farmers are said to be selling to buyers north of the border. The department reminds farmers this is illegal.

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