Farm Ireland

Wednesday 13 December 2017

IFA backs changes to quota ring fencing rules

Caitriona Murphy

Caitriona Murphy

The partial removal of quota ring fencing should act as a spur to the dairy industry to plan collectively for future dairy expansion, the IFA has urged.

The new Milk Quota Trading Scheme (MQTS) will allow quota to move out of co-op areas, where there is not enough demand from buyers, and into co-op areas where there is not enough quota to supply the demand.

IFA dairy chairman Kevin Kiersey said the changes would help both buyers and sellers in co-ops with imbalanced quota supply and demand, at a time when it was becoming more obvious that a superlevy situation could arise between now and 2015.

He added that it must act as a further spur to industry to plan collectively how to deal with expansion.

"No farmer must be charged while spare processing capacity is not optimally used," he insisted.

Mr Kiersey said disastrously poor prices and bad weather conditions last year had made farmers forget that a superlevy fine remained possible.

"We may not fill our quota this year, but with the large numbers of replacements bred in the past 12 months, we will almost certainly reach or exceed our quota before 2015, and farmers need to plan accordingly," he warned.

"Our processing industry also needs to plan for expansion, and I am concerned to hear about some milk purchasers' intentions to charge farmers to provide additional processing capacity.

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"There was spare capacity in the industry at certain times of the year, and no farmer should be charged any fee by any co-op until such time as all industry capacity was used optimally, including in the shoulder months," he claimed.

"Co-op and plc profits must contribute to financing any expansion requirements beyond existing production, and producers must be dealt with fairly in any such plan," he added.

The dairy chairman said a price increase of at least 1c/l for September milk supplies was fully justified, with returns for most commodities on EU markets now almost back to their May/June levels.

Meanwhile, last week's EU Dairy Management meeting set the minimum selling price for skim milk powder (SMP) at €2,116/t and sold just 144t of the available 56,853t.

All offers for butter were rejected because the quantities left in stock are reserved for the most deprived persons scheme.

The next auction is on October 21. The quantity of SMP available for sale is 56,414t.

In other dairy news, the Fresh Milk Producers (FMP) and Glanbia have agrred a deal on the price to be paid for liquid milk this winter. Under the agreement, the 1,057 suppliers are to be paid 35c/l. Liquid milk suppliers pointed out that rising feed costs would cut as much as 3c/l from margins this winter.

IFA national liquid milk chairman Padraig Mulligan said a decent premium for liquid milk suppliers was vital.

Irish Independent