Viewpoint: Shackles are off but there is a costly sting in the quota tail

Farmers are now free to compete on a global stage
Farmers are now free to compete on a global stage
Declan O'Brien

Declan O'Brien

So much for the quota regime simply fading away!

Quotas might pass into history at midnight tonight but they have certainly left a sting in the tail for the Irish dairy industry.

Farmers will be free to produce as much milk as they like from tomorrow but there will be a sizeable hangover from the old regime left in the form of superlevy fines.

Forcing the country's dairy farmers to stump up between €60m and €80m in penalties for rules from the past appears to be punitive in the extreme - and particularly so when you consider that the EU is under quota overall.

EU Agriculture Commissioner, Phil Hogan, has insisted that these fines can be spread over a three-year period - an announcement that some in the industry feel added fuel to the quota fire over the last month - and this has to be seen as a positive development.

There was further good news yesterday when the Minister for Agriculture, Simon Coveney, expressed confidence that the Department of Public Expenditure and Reform would agree to the State picking up the tab for the interest bill on the loan to allow farmers to defer the superlevy payments.

"The State is going to bank it. It's not going to cost that much - it'll be in the hundreds of thousands rather than the millions [of euro]. But we haven't signed off on it yet with [the Department of] Public Expenditure and Reform. But the State needs to pay it," he said.

With a superlevy of at least €60m spread over three years, at least €20m will need to be borrowed for one year, with the final instalment of €20m to be paid pack after two years.

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While farmers have welcomed the efforts by Minister Coveney and Commissioner Hogan to in some way soften the superlevy blow, they still point out that these sizeable fines will have to be paid.

They also insist that paying these penalties will prove a major draw on cashflow at a time when the sector is struggling with falling milk prices and farmers have to finance up to €1.5bn in on-farm investments to reach expansion targets set out in Food Harvest 2020.

Still, it's always easier to be negative. Instead of complaining about the manner of milk quotas passing, maybe we should simply rejoice in the fact that they are gone.

A number of farmers are certainly doing the latter, with more than a few parties planned tonight for milking parlours up and down the country.

These farmyard festivities reflect the giddy sense of release and expectation that pervades the whole dairy sector at the moment.

The shackles are finally off and farmers are now free to farm and compete on a global stage.

A worthy reason for celebration.

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