Farm Ireland
Independent.ie

Wednesday 7 December 2016

Dairy industry freed from shackles of milk quotas - but at what cost?

Published 08/06/2015 | 02:30

Milk quotas will be abolished next year
Milk quotas will be abolished next year

The shackles are off the dairy industry as it pumps out 'white gold' in the new quota-less era. First introduced in 1984, milk quotas were touted as a solution to help curtail the EU's infamous 'milk lakes' and 'butter mountains' as production fast outstripped demand.

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Yet the clamour for their removal mounted over the years from both farmers and the industry champing at the bit to get a slice of the burgeoning marketplace. It finally came to a head at midnight on March 31. There were parties held in milking parlours around the country, as lorries waited to take the overflow.

"It was a bit like driving a car," muses former all-Ireland winning Kilkenny hurler John Power. "Except you didn't want to go over 50mph, while the car could do 120mph."

The 49-year-old family man, who farms 1,200 acres with his two brothers Edmond and John, says the opportunities in the new era remain strong - despite volatile prices.

"I went to agricultural college in 1983 in Rockwell and this is my first year to produce milk without quota," he says. "That is a lifetime really."

Statistics show just how farmers responded - with a 14.5pc surge in milk production during April, and 775.5 million litres produced.

The optimists have been forecasting up to 10,000 extra jobs, many in rural locations, as the money trickles down into jobs in construction, transport, factory work, meat processing and on the land.

But it's not all plain sailing, as in recent weeks farmers have been finding the 'sting in the tail' as the €69m superlevy bills arrive on the doormats. For most the bill was expected. It was a carefully calculated move, and it was counted into the cost of ramping up their production in advance, yet for some it has been another bill they can ill afford.

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"We had a great start to the summer but the question is - what will the rest bring?" says TJ Flanagan from the Irish Co-operative Organisation Society.

The talk of the country's creameries and milk processors being hit with a 'wall of milk' was a bit on the dramatic side, says Mr Flanagan.

He stressed the fundamentals of dairying remain strong.

At the moment, farmers are keeping watch as they wait to see what price they'll be offered for their milk.

Ireland is not alone, with Poland, Holland, Denmark, parts of Germany, France and the UK all expecting a mini-boom in the dairy industry.

David Owens, dairy ingredients senior manager with Bord Bia, says the sector is being impacted by a number of factors as global production is higher than ever.

John Donworth, Teagasc regional manager in Limerick, says the quota removal is "playing with some farmer's minds" and blinding them to the more practical financials of it. He urged them to be careful of salesmen knocking at their door to sell them products to help deliver more milk.

But many feel that on the whole, the removal of the quotas will deliver more opportunity.

Irish Independent