Farmers could face €140m superlevy fine after milk supply surge
Published 29/07/2014 | 00:00
A massive surge in milk supplies since April this year means dairy farmers could be facing a €140m superlevy fine next spring.
However, a major pull back in milk output is expected in the remaining months of 2014 and into 2015.
Milk deliveries have increased by 240m litres over the last four months and processors have warned that dairy farmers will face a massive quota fine if current supply trends continue.
This has been a record year for milk production, with supplies driven on by excellent grass growth. Consequently, milk intake at the co-ops to the end of May was almost 14pc up on 2013, and 9pc over quota, before easing back to 7pc over quota at the end of June, with the supply up 10pc on last year's intake.
The situation at the end of July will be announced by the Department of Agriculture within the next 10 days.
Glanbia has confirmed that, when combined with Premier, the company is currently 41m litres over quota.
Week-on-week supply is currently running 4-8pc higher than in 2013 at the individual processors around the country, with the over quota situations varying between 1pc and 8pc. The exception is Lee Strand Dairy at 8pc under quota on a small intake.
Most processors conceded that a serious superlevy fine was inevitable and have issued updates and warnings on the over-supply situation to their suppliers. They are urging producers to take account of their individual situations to reduce the risk of a "massive" superlevy liability.
IFA dairy chairman, Sean O'Leary has called on the processors and banks to assist farmers in meeting the superlevy bill and urged early planning to avoid cashflow problems.
It has been confirmed that a number of producers in the Munster region have already moved to once-a-day milking and more are planning to cut back milking frequency within the next week. Thousands of producers are now considering their options including, reducing numbers and drying off cows.
A spokesperson for Kerry Group said the company was 15m litres or 3pc over quota and weekly intake was running at 8pc over 2013 levels.
He said that some farmers appeared to have increased herd size as the first phase of building herd size for the post-quota era.
"We are facing a superlevy of up to €140m if the present trend continues," admitted Pat McCormack, ICMSA dairy chairman.
"I believe there will be very little relief from the butterfat adjustment or flexi milk this year and temporary leasing will be very scarce," he maintained.
"Some farmers have probably increased numbers this year and that is impacting on production. A lot of producers are planning extra cows for next year," he explained.
"The extra cows calving down in the herd in February-March 2015 will add to the problem and the final months of the superlevy could be extremely serious for many farmers," he added.