It will be early September before full details are known about the €500m European Commission farmer aid package announced last week.

It includes €150m to support EU-wide voluntary milk supply measures, with a further €350m of conditional adjustment aid. The UK allocation of this adjustment aid is €30.19m. According to sources in the Commission, “it is too soon to say” how much of this money will end up in NI.

In terms of the voluntary milk supply measure, the proposal is that farmers who cut supply for a three-month period can submit an application for aid worth approximately 12p for each litre of reduced supply compared with the previous year.

Applications must be made by 19 September to the relevant paying agency (DAERA or the Rural Payments Agency in Britain) for milk delivery reduction in October to December 2016. There are also three other three-month windows proposed, the latest one being an application submitted by 12 December 2016 for milk delivery reduction in January to March 2017. Each producer can only apply once, and as part of the application, they will be expected to notify the total milk produced in the reference period (the previous year) and the total likely to be produced in the reduction period.

What is not yet known is if the amount per individual will be capped. There will be a maximum volume allowed into the scheme, so essentially it will be first come, first served. However, in theory, a farmer who is retiring could continue to milk a few cows to the end of the year and receive somewhat of a financial windfall. “We are conscious of such perverse incentives,” said a Commission source.

There is also the potential for member states to use some of their allocation of the €350m conditional adjustment aid to add funds to the voluntary milk supply measure. If the UK decided not to do this, it is also not clear if NI could take a different path.

Reaction

In NI, reaction to the proposals has been mixed. The Ulster Farmers’ Union dairy committee chair William Irvine said that his committee were “highly sceptical” that the scheme would benefit NI dairy farmers in the long term.

On the other side of the argument, local dairy lobby organisation Fair Price Farming has called for the Government to allocate as much funds as possible to the measure. It would like to see a higher rate of aid, and possibly the extension of the scheme for six months, not three. Fair Price Farming continues to point out that this is a European wide problem of over-supply, requiring a European-wide solution.

Sources in dairy processing maintain that they would like more detail before commenting.

While the €150m voluntary milk supply measure is targeted solely at dairy farmers, the €350m of conditional aid can go to other livestock sectors. The draft EU legislation talks about supporting farmers “affected by market disturbances” with aid confined to “more sustainable farming methods”.

It will be up to member states to draw up programmes to support these farmers, but the principle is that it goes to support areas such as small-scale farming, extensive production or environmentally friendly production. “It should be used to meet the overarching policy aim of bringing balance to the market, particularly the dairy sector,” said the Commission source. Any money will probably have to be paid out by 30 September 2017.

That leaves arable farmers, who are under severe pressure due to low prices, but have again been excluded in any of these support measures.