Ireland 1.63% over quota as €40m superlevy fine on the cards

The total volume of milk supplies up to the end of December 2013, taking into account the relevant butterfat adjustment, leaves Ireland 1.63 per cent over quota at end December. This is according to an update from the Department of Agriculture this morning.

This compares to 3.73 per cent under quota this time last year, and is up from being 1.38 per cent over quota at end of last month.

“With the continued monthly increases in production it is almost certain that Ireland will now exceed its milk quota allocation at the end of the milk quota year and that some suppliers will incur a superlevy fine,” noted Minister for Agriculture Simon Coveney in its update.

“I would again remind farmers to have regard to their quota position in planning their production over the remaining 13 months of the quota system.”

While Ireland avoided a superlevy fine last year, largely due to the challenging weather conditions, the country did finish the 2011/12 milk quota year at 1.05 per cent over quota which resulted in a €16m fine.

The minister reiterated that the decision has been taken at EU level that quotas will continue until the end of March 2015.  He again urged farmers to immediately take stock of their milk supply situation and discuss any potential over production with their co-op and their dairy advisor.  He also reminded suppliers who are in, or approaching an over-quota position, that they should only sell their milk through their usual purchaser in compliance with the Milk Quota Regulations and that to sell through any other channels is an offence.

Commenting on the latest official superlevy figures, Pat McCormack, ICMSA deputy president, said they coincided with sector estimates and if the quota year ended on the 31 December 2013 the state would be liable for a superlevy bill of €25.6m.

On the basis of all the figures and barring any major unforeseen development, he said that the State was still “very unfortunately” headed towards a superlevy of between €30m and €40m. McCormack, who also chairs the dairy committee, said that industry observers had noted carefully the most up-to-date statistics from Kerry and Aurivo.

“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, and while certain factors remain to be confirmed – spring production, for instance – we are proceeding on the basis that the superlevy will be somewhere between €30m and €40m.

“The ICMSA remains convinced that some degree of ‘soft landing’ or ‘tapering off’ should have been possible in the countdown to next year’s quota abolition. It doesn’t make any sense to us that you have this situation where farmers are going to be fined very considerable sums for exceeding a quota when we’re already in the countdown to a situation where – literally overnight – they’ll be able to produce as much as they want. That has always seemed illogical and we still think that Minister Coveney should be making the case for drastically reduced superlevy liability.”

Turning to the latest Irish Dairy Board index, which showed a return value of 133.6 that indicates a 33.6 per cent increase in market returns when compared to 2010, McCormack added the case for a price rise to farmer-suppliers that would bring their milk price to in excess of 40 cents per litre was now unanswerable.

He said farmers had been due a price that would have given them in excess of 40 c/L in the latter half of Q3 in July and August and had been turned down then because the processors and co-ops argued that the market trend was downwards.

“At the time we rejected that argument and the complete recovery of the market over a matter of some three months has vindicated our position which was that farmers should have been receiving a milk price in excess of 40 cents per litre at that stage. We are looking at the very same set of circumstances and market trends now and this time we expect the processors and co-ops to deliver the prices for January milk that all the evidence supports,” he added.

Pictured Pat McCormack, ICMSA deputy president

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