Farm Ireland

Saturday 24 February 2018

Superlevy fine to hit €30-40m

ICMSA's Pat McCormack.
ICMSA's Pat McCormack.
Declan O'Brien

Declan O'Brien

Dairy farmers are facing a superlevy fine of between €30m and €40m this year, the ICMSA has predicted.

This is more than double the €16m fine imposed in 2012 when the country was last over quota.

Milk supplies to processors are continuing to run well ahead of normal as dairy farmers look to take advantage of high prices.

With bonuses for milk solids pushing milk prices well over 40c/l, and the price outlook for the first half of this year looking very strong, many farmers are prepared to pay the 28c/l superlevy fine and continue to supply milk even though they are well over quota.

This has resulted in processors such as Kerry and Aurivo being well over quota this year.

"While certain factors remain to be confirmed we are proceeding on the basis that the superlevy will be somewhere between €30m and €40m," said Pat McCormack of ICMSA.

"The fact that Kerry and Aurivo have filled their quotas and drastically reduced the possibility of any fleximilk in a national context has, more or less, decided the final outcome," he added.

The ICMSA warned that a superlevy bill in excess of €30m would do serious damage to cashflow in the dairy sector through the first half of the year.

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Mr McCormack called on the Minister for Agriculture, Simon Coveney, to seek a "drastically reduced superlevy liability" from Brussels in the run up to the abolition of milk quotas in 2015.

The ICMSA deputy president also called on processors to deliver a base price for milk in excess of 40c/l in light of general markets trends which were reflected in the latest increase in the Irish Dairy Board (IDB) price index. It has now hit a near all-time high of 133.59. Mr McCormack said the latest shifts in the market meant a base price in excess of 40c/l was justified.

Dairy processors accept that the market outlook for the first half of 2014 is very positive, with prices for commodities expected to at least hold at the current high levels.

Irish Independent