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Peak supply penalty is touted by Jim Woulfe

Dairy farmers should be penalised on milk supplied during peak months in order to encourage production earlier in the year. The radical suggestion was made by Dairygold chief executive Jim Woulfe at last week's ICOS national conference.

Mr Woulfe insisted that he was speaking on a personal basis as he hadn't discussed the issue with his co-op board.

He said the dairy industry needed to become more mature about concepts such as flattening the supply curve because it was in the national interest.

While he didn't specify what form any penalties should take, he said they would not be introduced for the co-op's benefit but for the benefit of all.

ICOS dairy policy executive TJ Flanagan told the conference that the seasonal nature of Irish milk supplies was the "elephant in the room".

While Ireland's milk processing capacity is under severe pressure during peak supply months, Mr Flanagan pointed out that the industry was at 60pc capacity for the year as a whole. He said a strategy to level out the milk supply had to be considered.

Meanwhile, dairy farmers were warned that the milk quota regime will remain in place up to 2015 and that superlevy bills could be a factor over the next four years.

Suggestions that the quota regime would be relaxed in the run-up to the final removal of quotas were discounted by speakers at the ICOS conference.

"If we go over quota between now and 2015, the clear understanding following talks between the Department and EU Commission is that existing arrangement will apply," said Sean Brady, chairman of the Food Harvest 2020 implementation group.

This view was supported by Mr Woulfe, who urged farmers looking to expand milk production to exercise "extreme caution".

"We are operating in a quota regime until 2015," Mr Woulfe emphasised.

Irish Independent