Milk Production Partnerships: most applicants well inside allowed off-farm income limits

By Mairead Lavery

New figures on participation rates in the New Entrant/Parent Milk Production Partnerships (MPPs), show that the vast majority of applicants fall well inside the allowed off-farm income limits.

The limits have proved a thorny issue with some critics claiming they should be set at the level of the average industrial wage.

Currently the off-farm income limit for a New Entrant is set at €24,000 but the Partnership committee has recommended that it be raised to €26,000 for this year. The Parent off-farm income limit is €27,000 and it is recommended that this be increased to €29,000.

However, when you examine the off-farm income earned by new entrants in 2004 over half (54%) earned no off-farm income at all and all told a massive 84% had off-farm incomes of less than €22,000.

Just over 3% of existing scheme members fell outside the required income limits and six partnerships were dissolved because of failing the off-farm income criteria. In cases such as this the partner can apply for the threshold to be increased for a specific tax year, subject to the permission of the Minister for Agriculture.

Referring to the off-farm income limits, Macra na Feirme president Colm Markey has said that while he appreciated that some people were frustrated at being excluded, it was important that the scheme stood up to scrutiny.

"The fact that so many of the current applicants are well inside the current limit is encouraging and shows that the new entrants in the partnerships are committed to dairying,'' he said.

This view was backed up by IFA Dairy chairman Richard Kennedy who said he wants to prioritise those who will be making their full income from farming and if the bands are opened too wide these farmers would be left with a smaller milk pool. "In my opinion the bands are high enough,'' he said.

The number of New Entrant/Parent Milk Production Partnerships (MPPs) has risen from 265 to 344 in the past year. Cork leads the field with 105 partnerships followed by Limerick on 49, Tipperary on 32 and Kerry on 28.

According to dairy partnership registrar, Ben Roche, MPPs have proved an effective mechanism for bringing new entrants into the dairy business. "The scheme is now in its third year and its purpose was to improve the viability of new entrants and it is doing that. Another plus is that new entrants can have full management involvement in the dairy enterprise without parents having to sign over any land.''

This view is shared by Colm Markey who said that for many people the ability to acquire quota in their own name has been the difference between staying involved in dairying or doing something else while they wait for the their parents to retire.

Getting access to quota is a big plus of the scheme with New Entrants entitled to claim from the 25% pool and from Category 1. Take for example a Glanbia supplier who has been in the scheme for the full period, their accumulated quota entitlement to date means they could have acquired about 16,000 gallons of milk. In other co-ops the entitlement would have been higher and in some others it might have been less.

In the New Entrant/Parent MPPs only the New Entrant (in most cases) has access to quota in restructuring and other quota schemes. This quota can then be milked on the parents' premises. The maximum combined quota of the parents and the new entrant can be no more than 500,000 litres.

Standard MPPs are the other form of partnerships and to date only 53 such partnerships have been formed with the majority being in Cork and Tipperary.