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Manage milk quota carefully to avoid 'superlevy ruin'

Dairy farmers must carefully manage milk quota between now and 2015 to avoid potential financial ruin from a super- levy fine, a leading Teagasc researcher has warned.

"Without a plan, the effect of a superlevy fine may be catastrophic for the business and may result in bankruptcy," Laurence Shalloo warned delegates at the Positive Farmers' Conference in Limerick on Friday.

He pointed out that the period up to 2015 would be a challenge for farmers who had reacted to expansion signals by putting more animals in calf to dairy sires.

"Farmers must ensure that they do not expose their dairy business to financial ruin in the event of a superlevy while preparing the business for a no quota dairy industry," the Teagasc expert said.

Mr Shalloo said he was concerned that if the late 2010 milk supply trend continued, Ireland would finish the 2010/2011 quota year at or over quota.

Milk supplies were 4pc under quota on October 31, 3.1pc under on November 30 and 2.35pc under on December 31.

The dairy expert outlined strategies for expansion, while avoiding a costly superlevy.

"The first step for everyone is to take out concentrates," he said. "Taking out 600-700kg of concentrate will reduce yields by 7-8pc per cow."

Once-a-day milking could be used to great effect by expanding farmers, he claimed.


"A farmer who is on quota in 2011 could switch to once-a-day milking to reduce yields and still increase his cow numbers by 20-22pc by 2015," Mr Shalloo said. "By 2015 the cows would already be in place and the farmer would be in a very strong position."

Some farmers could rear or buy calves to soak up large amounts of milk, he suggested.

"The objective here is to get a return from the milk without directly selling the milk to the processing sector," he said.

The option of buying additional milk quota is dependent on the processor in question, the quantity and cost of milk quota available and factors such as milk price and cost of production on individual farms.

Drying cows off earlier would reduce milk yield but was a strategy for individual farmers to assess and would be dependant on milk price at the time, Mr Shalloo insisted.

The sale of cows should only be considered as the last resort, he said. However, it could be done if a superlevy threatened to make the business unviable.

In that event, older cows with higher yields, lower EBI values, high somatic cell counts and lameness issues should be the animals sold.

Other suggested strategies included becoming a dual supplier to a milk processor with excess and cheaper quota, forming a partnership with an under-quota farmer, or even investigating the possibility of selling or leasing heifers to other dairy farmers in Ireland or possibly Britain.

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