Twin headaches on the horizon for dairy farmers

Dairy farmers must brace themselves in the coming year for the significant double-threat of punitive superlevy fines due to follow the present price squeeze.

Noting the latest announcement by the Department of Agriculture, Food & Marine has shown that the official milk quota position at the end of September was 6.94% over quota, ICMSA deputy president, Pat McCormack, said there was now a clearly identifiable threat of dairy farmers facing huge drains on their resources at the outset of the first post-quota year.

Mr McCormack said that it was incumbent upon serious observers to present the facts as they were and issue warnings where real threats could be recognised and on that basis he was in no doubt that on present figures a very challenging cash-flow situation comparable to Spring 2013 for the farmers affected by a super-levy.

You’ve said the “red lights are flashing” with reference to 2015 for milk suppliers, what do you mean, and why has the situation changed from the optimism that was around quota abolition?

We have to deal in facts and a clear picture is starting to emerge that clearly points to serious challenges on a number of fronts. We have last week’s announcement by the Department of Agriculture, Food & Marine showing that the official milk quota position at the end of September 2014 was 6.94% over quota and that has to be set against a background of an already existing price squeeze. Taking those two together, ICMSA is saying there is now a clearly identifiable double-threat in the form of punitive superlevy fines coming on top of the pressures on price. It’s incumbent upon serious observers to present the facts as they were and issue warnings where real threats can be recognised. On that basis I’m in no doubt that, on present figures and for farmers affected by a super-levy, we are looking at a very challenging cash-flow situation potentially comparable to Spring 2013.

How do you see the final super levy figures turning out?

We’re working on the basis of a projected super-levy of approximately €110m given the current percentage overruns and we consider it significant that instead of slowing down in September we saw a further increase in the projected super-levy figure. Farmers need to be very mindful and much more alert to the scale of the potential fine that will come their way. The amount of flexi-milk will be minuscule and the likelihood is that producers under 350,000 litres will also find themselves very much exposed as all co-ops are either on-quota or actually well ahead of quota. There won’t be too much room for manoeuvre next yea; that’s why I’ve said — and repeat now — the red lights are flashing very bright right now.

Do you see any possibility of some action at Commission level that will remove the threat of super-levy? For instance, there were rumours around an immediate abolition of quotas?

These rumours of a last minute miracle being produced at European level need to be quashed. There’s no possibility as there are Member States within the European Union not in favour of the elimination of super-levy at all, let alone a pre-emptive abolition in advance of next Spring. The only possibility is a butterfat adjustment — which ICMSA continues to lobby for.

We must treat the final year the same as all of the previous thirty years and realise that the same rules apply. Even with a relaxing of the rules on butterfat and the holding of milk for the final days of the March, the country will still pay the highest super-levy of the quota period if production stays as it is. We need to proceed very carefully from this point and we’ll need some recognition from the Minister of Agriculture that his priority is going to be the sustenance of our family dairy farm sector through what is starting to look like a very challenging period indeed.

What action do you want to see from the EU that might address this ‘double-threat’?

The very first thing to do is to urge all Irish MEPs to reject an EU Commission proposal for the transfer of €450 million of recouped CAP funds out of the budget allocated to helping farmers deal with the fall-out arising from Russia’s import ban and into EU Humanitarian Aid and development commitments.

ICMSA isn’t advocating a lessening of EU aid programmes but it is desperately unfair to fund such programmes through the simple expedient of stripping monies away from the EU’s farmers who are sector most specifically affected by the Russian decision — which was itself a reaction to a political decision taken by the EU.

If the Commission’s proposal goes through it will have the net effect of double-penalising the EU’s farmers by allowing the Commission to take a decision with regards to Russia that was always going to impact farming and food production disproportionately and then — having set up a fund for emergency aid to those farmers most affected by their decision and the consequent Russian reaction — permitting the Commission to ‘dip in’ to these allocated funds to top-up emergency aid and development programmes.

European dairy farmers’ sense of injustice will be compounded by the fact that the recouped CAP funds were mostly comprised of superlevy fines and spending errors and that, as such, had actually come from farmers in the first place and not out of other general funds. Extra funding for humanitarian aid and development programmes must come out of sources other than the overall CAP budget.