‘Co-ops must give farmers full benefit of 0.2% Vat increase on milk price from January 2014’

IFA National Dairy Committee Chairman Sean O’Leary today said the agricultural rate of VAT refund had increased from 4.8% to 5% with effect from January, and he urged all co-ops to ensure that their milk price reflected this in a way which is fair to farmers.

“The VAT inclusive milk price paid to farmers from January should be slightly up on that paid in December, because of the contribution from increased VAT.  Where a co-op paid a December milk price of 37c/l + VAT = 38.77c/l including VAT for milk at 3.3% protein and 3.6% fat, it should now pay 38.85c/l VAT inclusive.  This may not sound like a lot, but it would add up to €240 over an entire year for a producer supplying 300,000 litres,” Mr O’Leary said.

“We have received reports from some farmers who have found that while the VAT is shown at 5% on their January and February milk statements, the VAT inclusive price is unchanged, which suggests that the net price, before VAT, has been slightly reduced,” he said.

“I am very clear that there is no justification for such a reduction in the base price of milk as markets have remained strong, as evidenced by the IDB index staying almost unchanged at close to its historically highest level of 133.5 points into February,” he added.

“I am urging all co-ops to be fair and honest with farmers, and to ensure that their VAT inclusive price is up by the equivalent of the additional 0.2% VAT now being paid by the Exchequer,” he concluded.

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