Farm Ireland

Tuesday 12 December 2017

Ten ways to access extra milk quota for your farm

Farmers interested in increasing the amount of quota they can fill need to know the rules

Aisling Meehan

It's not so long ago that dairy farmers were told that quota was a thing of the past. How times have changed. Almost every co-op in the country is over quota at present, and supplies still show no sign of letting up.

Dairy farmers are now wracking their brains to see if there is some loophole that they can exploit to maximise the volume of milk that they can supply.

The following are the 10 key ways to access additional quota and the rules that apply.

1 Transfers of quota with land -- This can be done by either the sale or lease of land and quota. In the case of the former, a producer may sell quota with land to the highest bidder. If the amount of milk quota that attaches to the land exceeds 12,500l/ha, ministerial consent is required prior to the sale. In relation to the latter, a producer may only lease land and quota to:

•A 'qualified relative', which is defined as 'a person's parent, grandparent, spouse, sibling, child, grandchild, aunt, uncle, nephew, or niece or a person related within the same degree to his or her spouse';

•A company in which he or she holds a majority shareholding;

•Or a company in which producers hold a majority shareholding.

Remember, a farmer can sell land used for milk production and retain the milk quota. There are no provisions governing how long the producer must have owned the land before he/she can transfer it while retaining the quota.

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Consequently, it should be possible for a producer to purchase land and quota, and dispose of the land almost immediately while retaining the quota for production on the producer's remaining milking platform.

2Purchase of milk quota by lessee -- A person who leases land with the quota which attaches to it for at least 12 months, or a person who has inherited the lessee's interest in such a lease, or who was assigned a lease of land and quota by the lessee before 1 April, 2000 can buy out the quota with or without the land on the expiry or earlier termination of the lease.

3Purchase of milk quota from a 'qualified relative' -- A producer may acquire milk quota without land from a 'qualified relative'.

4Purchase through the Milk Quota Trading Scheme (MQTS) -- The MQTS is operated by the Department in advance of the relevant milk quota year and is run on a co-op area basis. Each year, two exchanges take place with application closing dates under the 2011/2012 MQTS of November 5, 2010 (first stage) and January 28 this year (second stage).

Under the scheme, a maximum of 30pc of the quota offered for sale is made available to priority category producers at 5c/l. The remainder is traded on the market exchange at a Market Clearing Price, which under the last scheme ranged from 5-35c/l.

5Lease through the Milk Quota Temporary Leasing Scheme (MQTLS) -- The MQTLS is operated during the milk quota year and allows producers to offer for lease, through their milk purchaser on a temporary basis, all or part of their milk quota to other producers in the same milk purchaser area. To be eligible, the producer must first supply at least 20pc of his/her milk quota unless the minister consents to temporary lease of 100pc due to force majeure or other duly justified cases.

Successors and producers with Lost Lease Entitlements who have unfulfilled entitlements under the MQTS have priority to lease quota from the MQTS. In the 2011/2012 first stage, which closed on June 24, the price was set at 2c/l. The second stage of the scheme, which will close on January 13 next year will have a fixed price of 1c/l.

6Flexi-milk Scheme -- This scheme is administered after the end of the milk quota year and allows smaller producers to have a moderate level of over production covered by the milk purchaser and/or national unproduced milk quota. Ninety per cent of all unused milk quota within a milk purchaser is to be made available to producers with quotas less than 350,000l and the remaining 10pc is to be made available to producers with quotas greater than 350,000l.

7Allocations from the National Reserve -- Applications on the grounds of hardship and animal disease are assessed by the Milk Quota Appeals Tribunal, which makes recommendations to the Minister for Agriculture. Allocations of up to 45,000l may also be made to certain organic producers who hold an organic licence and are, at the date of application, delivering milk to a recognised organic milk purchaser or selling organic milk products directly.

8Milk Production Partnerships (MPPs) -- MPPs allow farmers to pool resources, most specifically quota which can be produced from a single herd and milking parlour while retaining individual access to milk quota through the MQTS and the MQTLS.

9Scheme for the Allocation of Milk Quota to New Entrants -- Under the terms of the 1pc milk quota increase over the period 2009 to 2013, 0.25pc is being allocated to new entrants to dairying. The scheme provides for a maximum allocation of 200,000l of quota to two New Entrant Categories namely:

•Category A -- Brand new entrant to dairying;

•Category B -- New entrant to dairying through the MQTS.

In order to be eligible for consideration for the scheme an application must be submitted with a closing date under this year's scheme of April 8.

Under this year's scheme, 84 new entrants were allocated milk quota, 53 of which were 'brand new' entrants who had not previously held quota.

10Cow or milk facility leasing -- Producers may make arrangements with other producers who are unable to produce milk up to the full amount of their milk quota due to insufficient cow numbers to lease some or all of their cows in order to produce their full quota entitlement be that north or south of the Border.

Disclaimer: While every care is taken to ensure accuracy of information contained in this article, solicitor and tax consultant Aisling Meehan does not accept responsibility for errors or omissions howsoever arising. Tel: 061 368 412

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