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Friday 9 December 2016

Avoid superlevies by seizing the chance to apply for free quota

Show genuine interest in becoming a dairy farmer and you'll have a great chance of qualifying

Aisling Meehan

Published 05/04/2011 | 05:00

Judging by the results of the latest round of the milk quota trading scheme, with quota trading in some co-ops for as much as 35c/l, it is well worth looking into the scheme for the allocation of milk quota to new entrants to see whether you can qualify for free quota.

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The closing date for applications for allocation of milk quota to new entrants is Friday, so potential applicants should get working fast. The scheme is open to three sets of people:



  • Category A -- New entrant to dairying;
  • Category B -- Purchaser of quota as a new entrant through the Milk Quota Trading Scheme;
  • Category C -- Purchaser of milk quota as a successor through the Milk Quota Trading Scheme.


What else do you need?



  • Education -- The 'Green Cert' or its equivalent;
  • Land -- Either owned or leased. Note, the applicant does not need to have the land leased before they send in the application on April 8. They can wait until they see if they get the quota first.
  • Herd number -- Again, the applicant can wait to see whether they get the quota first before applying, if they do not already have a herd number.
  • Milking and storage facilities -- Perhaps the applicant could lease the facilities and the land from a retired dairy farmer until they can afford to put up their own facilities.


So, realistically, in order to apply, all you need is to have the 'Green Cert' or its equivalent and you can finalise the remaining requirements afterwards.

However, a word of warning: even if you are able to tick all of the requirements above, this does not mean that you are guaranteed an allocation of milk quota.

The applicant must be able to demonstrate a real and long-term commitment to dairying.

So how does one do that?



  • Education -- Applicants whose education is focused on dairying will get a bigger leg up;
  • Background -- Being able to demonstrate that you were out helping dad milk the cows as soon as you were able to walk will be a bonus;
  • Business plan -- A plan which ends after three years will look suspicious because this is the minimum period for which you are required to retain the quota allocated under the scheme before you can merge with some other producer.
  • Financial input -- Ploughing all your hard-earned cash from laying blocks during the boom years into your dairy enterprise will engender a positive response.
  • Independence -- Working off- farm with no input into your new dairy enterprise while allowing an existing dairy farmer to run your enterprise for you will be viewed negatively. Those planning on going into a Milk Production Partnership straight away need not apply.


Committed

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As you can see from the above, common sense prevails -- if you are genuinely interested and committed to becoming a dairy farmer, you have a good chance of being allocated milk quota.

On the other hand, if you are applying because your father or some other relation is stuck for quota, this will, in all likelihood, be seen through and chances are that you will not get any allocation of quota. In order to apply you must fill out a relatively short, two-page application form and also submit a business plan. This plan will require a bit of work and perhaps involvement from your accountant.

After all, if your plan does not make financial sense, the Department of Agriculture will be reluctant to dish out free quota to you when it is so much in demand.

When will you know whether you have been successful?

Generally about 6-8 weeks after submitting the application -- so at the end of May to the beginning of June.

What do you do then?

Successful applicants under categories A and C will be required to start milk production by April 1, 2012. Category B applicants are expected to comply with the existing milk quota trading scheme commitment to start production within 15 months of receiving their allocation.

Successful applicants will be required to attend training facilitated by Teagasc, which will take place over a two-day period initially and will be followed by three one-day sessions thereafter.

Finally, I understand that of the 111 applications received last year, 73 were identified as worthy of quota allocations.

So what have you got to lose by sending in the application?

Disclaimer: The information in this article is intended as a general guide only and detailed rules are available. No responsibility is accepted by solicitor and tax consultant Aisling Meehan for errors or omissions. Aisling can be contacted at 061 368 412.

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