01 Sep 2016
EU PRODUCTION REDUCTION SCHEME MUST FOCUS MINDS OF CO-OPS AS WELL AS FARMERS ON AUTUMN/WINTER MILK PRICE – O’LEARYDairy
Speaking after this issue was discussed at this week’s IFA National Executive Council meeting, Dairy Chairman Sean O’Leary said co-ops will have to take account of the EU production reduction scheme as well as fast improving market returns in making autumn and winter milk price decisions.
He said, farmers, on the other hand, must weigh up the pros and cons of the scheme, which pays 14c/kg (14.4c/l) to farmers who reduce their October to December 2016 milk supply in comparison to the same period in 2015. Detailed information and guidance on this scheme is available here.
“Within days, a farmer application form and information helpsheet, already drafted by the Department, will be available for co-ops, and while I urge co-ops to ensure their suppliers all have an opportunity to avail of the scheme, I would encourage interested farmers to be proactive in securing those documents,” Mr O’Leary said.
“Farmers will be paid 14c/kg for the extent to which they reduce their October to December 2016 production relative to the same period in 2015, within a maximum of 50%, and a minimum of 1,500 kgs. They must return their application forms to the co-op by 15th September, indicating their Oct-Dec 2015 production, and how much they intend to reduce it by in the same period in 2016. The extent of their proposed reduction will be adjusted downwards if the EU-wide, first-come first-served scheme is oversubscribed for this first period. Three more consecutive three-month periods with later application dates are also provided for in the scheme, though they may be academic as they will be cancelled in the event of such oversubscription,” he said
“Our advice to interested farmers is, therefore, to apply for the first period. They do not have to reduce production for each month, but for the total of the three-month period, so they could produce as normal in October, say, and dry off early for November and December – provided they remain within the 50% limit, beyond which they will not be paid,” he said.
“The farmer will have to apply for the payment, verifying the production reduction, within 45 days of the end of December, and payment will probably be made by March/April 2017. We would urge farmers to make realistic reduction commitments as under delivering on a level of reduction will result in reduced payments,” he said.
“We believe there is an even greater onus now on co-ops to help farmers decide to continue production by ensuring that, over the coming months, milk prices reflect fully the improved market circumstances, and by giving farmers as much visibility of this as early as possible,” Sean O’Leary concluded.