Prudent Cash Flow Planning Required for the Last Year of Superlevy
Milk supplies to the end of June exceeded quota by a record 7.05%, the Department of Agriculture has announced, and January to May production was up 8.5% according to CSO. IFA National Dairy Committee Chairman Sean O’Leary said strong profitability, exceptional weather conditions and good availability of high quality fodder would push Ireland’s milk supplies over quota and into a potential record superlevy situation for the last year of the quota regime.
He said this would impose a high cost on farmers, which they needed to plan for prudently, with assistance from advisors, co-ops, and banks to first minimise, and then finance this extra cost of expansion without damaging cash flow or herd potential.
“Irish milk supplies reflect the global trend of exceptionally fast output growth, and for the same reasons: conditions and on-farm profitability are both good. However, farmers need to remember that superlevy is with us for one last year – and production looks set to exceed our quota quite considerably over the coming months, as farmers gear up for the end of the regime,” he said.
“Our efforts in Brussels will continue, but even in the increasingly unlikely event that sufficient agreement can be achieved between member states, the best farmers can expect is the equivalent of a 2% improvement in the size of their quota – with superlevy having to be paid in full on the excess,” he stressed.
“It is crucial that farmers would seek assistance from their Teagasc or private advisor to adopt husbandry and production techniques which will allow them minimise their production surplus without impeding the future potential of their herd,” he said.
“It is also vital that farmers be assisted by their co-ops and banks in financing the superlevy bill a very large number will face next year. This must be planned as early as possible, and the cash flow of farmers protected as much as possible in the process,” he concluded.