Calls for milk quota clarification
Director general, John Tyrrell, said at the ICOS national conference in Dublin this week that, in many parts of the country, there was a recognition that the quotas needed for skilled, full-time dairy farmers would be significantly higher than the current average.
“Some estimates have put the future viability level at 80-90 cows, in order to achieve the average national industrial wage. Something clearly needs to be done,” Mr Tyrell said.
“Those who are considering expanding, or exiting, will require advance notice of any changes, so that they can make informed choices. In this respect, it is our view that the minister should give a very clear signal before Christmas about what system will apply in 2004 and 2005,” he said. Mr Tyrrell said the ICOS was exploring the options available and its board would consider the issue at its November meeting.
“One key question that arises from this expected, higher rate of restructuring milk quota will be ‘what happens to the share capital held by dairy farmers who exit and those who are expanding’? I believe that there is a need to provide a mechanism where milk producers have share capital in their co-op in proportion to their milk supply,” he said.
“Thus, as their milk supply expands, they purchase more shares, and, as their milk supply falls, they have these shares redeemed. This would be neutral in cash terms for the co-op, because those who expand will fund those who exit. This is the current practice in New Zealand, Australia and the USA,” Mr Tyrell said. He said a mechanism of phasing in the contribution of new members could be used to ease demands on cash-flow. “The key point is to ensure that those who supply the milk own and control the processing and marketing structure in proportion to their use of the facility,” he said.
