Dairy Industry change required?

By Jack Kennedy

The ball is in your court. I am giving you a chance to get your act together. These were not the words Franz Fischler used but the message was the same.

The commissioner was in very defiant mood in defending and spelling out the road the dairy industry needs to take. "I know there are still concerns about the impact of price cuts on butter producers, but I maintain that these are necessary and that they will be effective in the long term."

Fischler went on to say "too much money is spent on buying butter into intervention each year, and if there isn't the market then we shouldn't produce it. As a low cost producer I am confident that Ireland can diversify into fresh and value added dairy products for which the demand is growing. So not only will the price cuts guarantee Irish producers a more stable and predictable future, but the compensation offered in return will give you the chance to adapt to current market realities".

Andy McGarrigle, Department of Agriculture in a well-delivered presentation confirmed how compensation will work. Milk quotas will continue until 2014/2015. Dairy premium is coupled until 2007.

Many only realised when they saw it in Andy McGarrigle's presentation that the national ceiling for compensation for the dairy premium is based on national quota for 1999/2000.

It is important to note that the individual farmers coupled dairy premium will be based on quota (including leased in) available to the producer on his holding on 31 March of year in question.

Compensation in 2004 of 1.2 c/l (5.5 c/gal) will be based on quota held on the farm on the 31 March 2004.

Every farmer's payment will be cut by 2.4% to allow for the extra quota given to Ireland in 2000.

Example 1: [2004; Coupled dairy cow premium] A farmer had 454,000 l (100,000 gal) in 1999/2000. He increased the quota held on the farm by 45,460 l (10,000 gal). On the 31 March 2004 the farmer has 500, 060 l (110,000 gal). Compensation in 2004 is 1.2 c/l (5.5 c/gal) (500, 060 x 1.2c/l = €6,050). Area does not come into the equation in 2004 as the premium is still coupled.

Payment is to be made in full between 1 December of year of application and 30 June of the following year.

Example 2: [2007; Decoupled dairy cow premium]. On the 31 March 2007 a farmer has 181, 840 l (40,000 gal) and 30 ha. Compensation in 2007 is (181,840 x 3.65 c/l (16.6 c/gal) = €6,640/40 = €221.33/ha. This is added to the existing single payment on the farm. If no existing single payment pertains to the farm the number of owned hectares in 2007 is taken.

Query: I set up milking as a new entrant in 2000 and bought quota every year since. Will I only get a top up for my quota owned in 2000 or will the quota I purchased since 2000 be included?.

Answer: The quota both owned and leased on the 31 March 2004 will be used to calculate the amount of compensation due. If further quota is bought in 2005 compensation will be adjusted and quota held on the 31 March 2005 is used to calculate compensation.