Dairy processors could seek a slice of the compensation funding that goes along with any voluntary cow reduction scheme opened to farmers, Dairy Industry Ireland (DII) has said.
In its submission to the Food Vision dairy group, DII stated that it does not currently accept the voluntary dairy cow reduction scheme proposal recommended by the dairy group at present, given the lack of detail surrounding it.
The billions invested in processing facilities to cater for a post-quota milk output rise is only now starting to see near-optimum capacity, it told the group in its submission.
Around €2.5 billion has been invested by processors since quota abolition was announced.
“In our view, there is a case for compensation if milk output shrinks and cannot grow due to a prohibition on land use or other constraints, such as the nitrates regulations impacting on the return on the capital investment, which was previously driven and greatly encouraged by the Government.”
It did not put a value on the compensation it would seek if a scheme was established.
DII warned that a cow reduction scheme could give rise to less stable national finances, as the State’s tax take would become even less dependent on indigenous industries if cow numbers were to fall.
It stated that a 10% dairy herd reduction would be the equivalent of €1.3bn out of the rural economy every year and would raise carbon leakage concerns.
A reduction scheme covering only the dairy sector “makes little sense” if the beef sector does not see a reduction scheme introduced in parallel to any dairy scheme, DII also argued in its submission. DII is the body representing the milk processors.
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