Suppliers warned by minister to expect heavier superlevy fines
The ICMSA estimates over-quota farmers will have to pay anything from €30m up to €40m. This is far higher than the €16m they paid collectively in 2011/12, when Ireland was 1.05% over quota.
The 1.63% over quota figure is an aggregate of the nine months to December 2013. The dairy industry widely views this figure as a reliable indication of Ireland’s likely 12-month position. The quota year runs until Mar 31, 2014.
The 1.63% over quota for December compares to 3.73% under quota this time last year, and is up from being 1.38% over quota at end of November. The figure takes into account the relevant butterfat adjustment.
Agriculture Minister Simon Coveney said: “With the continued monthly increases in production it is almost certain that Ireland will now exceed its milk quota allocation and that some suppliers will incur a superlevy fine.
“I would again remind farmers to have regard to their quota position in planning their production over the remaining 13 months of the quota system.”
While Ireland avoided a superlevy fine last year, this was largely due to the challenging weather conditions. Output for the remaining months in the current quota year are likely to add to the size of the fine.
While some industry groups are still requesting a ‘soft landing’ from the EU, Mr Coveney reiterated the decision has been taken at EU level that quotas will continue until the end of March 2015.
The minister also reminded suppliers who are in, or approaching an over quota position, that they should only sell their milk through their usual purchaser in compliance with the milk quota regulations and that to sell through any other channels is an offence.
Meanwhile, ICMSA deputy president, Pat McCormack, calculates that the quota figures as of Dec 31 would render the state liable for a superlevy bill of €25.6m.
Mr McCormack, who also chairs the ICMSA’s dairy committee, said that industry observers had noted carefully the most up-to-date statistics from Kerry and Aurivo. “The fact that Kerry and Aurivo have filled their quotas and drastically reduced the possibility of any fleximilk in a national context has, more or less, decided the final outcome, and while certain factors remain to be confirmed — spring production, for instance — we are proceeding on the basis that the superlevy will be somewhere between €30m and €40m.”
Along with other farmer groups, the ICMSA has argued 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 already in the countdown to a situation where – literally overnight – they’ll be able to produce as much as they want,” said Pat McCormack. “That has always seemed illogical and we still think that Minister Coveney should be making the case for drastically reduced superlevy liability.”
Turning to the latest IDB index (133.59), Mr McCormack said the case for a price rise to farmer-suppliers that would bring their milk price to in excess of 40 cents per litre was now unanswerable.
He said that farmers had been due a price that would have given them in excess of 40 c/L in the latter half of Q3 in July and August and had been turned down then because the processors and Co-ops argued the market trend was downwards.
