Dairy expansion reliant on industry
Published 03/08/2010 | 05:00
Expansion in the dairy sector will be totally reliant on funding from within the industry in the wake of capital spending announcements last week.
Government plans to cut capital spending have left little room for any new investment in dairy production, despite the sector's growth potential in the post-quota regime.
Grant aid for on-farm investment will be very restrictive, according to the budgetary allocations for the sector in the Government's Financial Framework 2010-2016.
IFA rural development chairman Tom Turley described the €40m per annum for the 2012-2016 period as "very tight" with very little provision for grant aid towards development of infrastructure on farms.
Nonetheless, some individual dairy processors have expressed confidence in dairy production increasing by 30-40pc from a combination of greenfield dairy developments and expansion by existing producers.
However, the capital investment required for such expansion in dairying will be vast.
A sizeable percentage of the scaled-down allocation of €672m for the full period will be required to fund the outstanding deferred payments to farmers by the Department under the Farm Waste Management (FWM) scheme.
The framework provides €196m for 2011, of which €134m will be required to pay the outstanding liabilities to farmers under the FWM deferred payments. Interest payments on the withheld grant aid are expected to total €13m.