Little carry over in milk reduction scheme

The €150m voluntary milk reduction production scheme will not be over-subscribed.

As revealed on farmersjournal.ie on Monday, 52,101 dairy farmers from across the EU applied for the first tranche of the scheme by the closing date of 21 September. Those farmers applied for a collective 1.07m tonnes, or just over 1bn litres.

This means that should all farmers take up the allocation they applied for, there will be 11,407t or 11.4m litres available for the second tranche.

IFA dairy chair Seán O’Leary is urging Minister for Agriculture Michael Creed to ensure farmers who did not apply for the first tranche of the scheme to do so for the second round. “While the leftover fund is very small, especially bearing in mind that the scheme is EU-wide, and first-come first-served, we believe the minister must ensure those Irish farmers who had not applied for the first round are given every opportunity to apply for this one.”

The €150m (£127m) scheme pays farmers the equivalent of 14c/litre (12.2p/l) to reduce milk supply between October and December this year. While milk production has been naturally reducing in Europe, the European Commission hopes the scheme will further take milk out of production.

European Commissioner for Agriculture Phil Hogan said he is pleased with the level of participation.

“I am confident that this measure, allied to others included in the July and earlier packages, will contribute further to an already stabilising market.”

In total, 4,447 farmers from the Republic of Ireland applied for the dairy aid scheme. In the UK, 1,849 applied for the scheme; 611 came from Northern Ireland. Ireland had the third-highest volume of applications after France on 12,957 farmers and 9,947 from Germany.

Farmers in the Republic applied to reduce 74,225t of milk. Germany applied for 286,049t, France applied for 181,398t while the UK applied 112,028t.

The average Irish farmer applied to reduce supply in their herd by 17,000 litres. On a 70-cow herd, 17,000 litres equates to approximately 10 days’ supply. In the UK, the average volume per herd is 61,000 litres. It is becoming increasingly likely that many of the 4,447 dairy farmers will not draw down all of what they have applied for.

ICOS chief executive TJ Flanagan said some farmers took a calculated approach to apply for the scheme.

“Given that there is no punishment for applying and not reducing, many farmers would have put in an application to hedge their bets … an Irish supplier is absolutely free to apply, and ICOS and the co-ops put in a massive effort to make it workable. However, given that cashflow is the challenge on most farms, the vast majority of suppliers would be better off milking their cows for as long as possible this autumn,” he said.

The €150m voluntary reduction scheme is one aspect of the total €500m aid package for European farmers announced last month. Of the remaining €350m package, Ireland is receiving €11.1m, which the Government can match with Exchequer funds.