Farm Ireland

Tuesday 12 December 2017

Dairy expansion reliant on industry

Martin Ryan

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.

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The issue of the farmers who were 'locked out' of the FWM scheme at the closure of applications remains unresolved.

There is no indication that any funding will be available for the restoration of Installation Aid for young farmers as the annual allocation drops from €274m this year to €40 for the period 2012-2016.

"Installation Aid was a key measure for young farmers taking over farms," Mr Turley said.

"There has been massive investment on farms. In 2008 farmers invested €2.8bn in upgrading infrastructure on their farms.

"Last year that had dropped to around €600m, but a lot of work will be required if the targets of Food Harvest 2020 are to be achieved."

Food Harvest 2020 had set targets for a 50pc increase in dairy output, a 20pc increase in beef and sheep production and a 50pc increase in pigmeat output.

Irish Independent