15 questions answered on the new EU milk reduction scheme

Details of how Irish dairy farmers can apply for the EU voluntary milk supply management scheme were recently agreed in Brussels.

The scheme has an overall budget of €150m to cover all applicants across the EU and there are no individual allocations for Member States.

Farmers wishing to reduce production in a 3 month period starting in October will be able to do so and receive EU aid to the value of approximately 14cents/litre.

The Department has prepared a detailed the following FAQ note which should help to answer any queries from interested applicants:

1. What is the voluntary supply management scheme?

The EU has introduced a package of measures for the dairy sector agreed at the July Council of Agriculture Ministers. One of these measures is an aid scheme to fund milk producers who voluntarily engage in milk production reduction over a 3 month period.

There is a total budget of €150 million allocated for the EU as a whole for the scheme. This would equate to a reduction in production of 1.1 million tonnes if fully utilised.

2. What happens if the scheme is over subscribed?

If milk producers across the EU apply to reduce an amount in excess of what is covered by the aid budget, the EU commission will apply a “co-efficient”. What this means is that you will still receive 14c/kg approx on your reduction, but on a reduced percentage of your overall application volume.

For example: If the total amount of aid applied for across all EU member states amounts to 10% over the allocated budget of €150million, you will receive a maximum of 14c/kg on 90% approx of your proposed reduction (on the basis that you fully meet the proposed reduction).

It is important to note that if the budget ceiling is reached and a coefficient is applied in an application period, there will be no further application periods.

How soon will I know if the EU Commission will apply a co-efficient?

The EU Commission will communicate the use and value of a coefficient within a number of days after the closing date for applications. Details will be made publically available and published on the DAFM website as soon as they are relayed.

3. How do I apply

Application forms are available and will be processed through your milk cooperative/purchaser.

4. If interested, how soon should I apply?

Farmers interested in the scheme should apply via their cooperative/purchaser not later than close of business on Thursday, September 15.

5. What are my eligibility requirements?

Applicants are required to:

  • Have been supplying milk in the reference period (first reference period is October – December 2015-see below).
  • Have been delivering milk to purchasers in July 2016

6. What is the reference period?

Aid shall be available to applicants reducing milk deliveries for a three month period compared with
the same period in the previous year, referred to as ‘the reference period’.

The first reference period will be from October to December 2015 inclusive. Your milk
cooperative/purchaser will assist in verification of these details.

7. Is there a minimum and maximum milk reduction?

Minimum: Applicants will have to cover a reduction of at least 1,500 kilograms in a three month
period, which equates to approximately 1,450 litres of milk.

Maximum: Applicants may offer to reduce a maximum of 50% reduction of total deliveries
compared to the reference period.

NOTE: Whilst aid is payable on the basis of kilograms of reduction, ALL applications can be
made on the basis of litres. The Department will subsequently apply a standard conversion rate as
per the Commission Regulation of 1 litre of milk being equivalent to 1.03 kilograms of milk.

8. What will happen if my actual reduction is less than the proposed reduction on my application form?

A number of scenarios are possible depending on the level of ACTUAL reduction versus the initial
PROPOSED reduction.

  • The full amount of aid will be paid on the actual reduction if it is not more than 20% below the
    proposed reduction.
  • Aid will be paid on 80% of the actual reduction if this actual reduction is between 50% and 80%
    of the proposed reduction.
  • Aid will be paid on 50% of the actual reduction if this actual reduction is between 20% and 50%
    of the proposed reduction.
  • NO AID will be paid if the gap between the proposed and actual reduction is more than 80%

9. What if my actual reduction is higher than proposed?

The proposed amount at application stage is the maximum amount upon which aid will be payable.

Reductions beyond this initial proposed reduction will not receive aid.

Application periods:

To facilitate flexible usage of the scheme, it has been designed to accommodate a number of
application periods, per below.

  • October – December 2016
  • November 2016 – January 2017
  • December 2016 – February 2017
  • January – March 2017

Please note previous point regarding scope for the scheme to be discontinued, conceivably at any
point after the first reference period, once the relevant financial and volume thresholds have been
reached.

10. Can I apply for more than one application period?

Applicants for aid shall not submit more than one application covering overlapping reduction periods. Where an applicant submits more than one concurrent application, none of his/her applications shall be admissible.

However, applicants who submit an application for the first reduction period (October – December 2016) may also submit an application for the fourth reduction period (January – March 2017), if the scheme is still running at that stage, as there is no overlap in these two periods.

Payment Process

11. What happens at the end of the reduction process?

Applicants have 45 days after the end of the reduction period to apply to the Department for payment.

This application will be via a form that will be made available towards the end of the first production period (December 2016) and will again be done through their cooperative/purchaser.

12. How soon will I be paid?

Application for payment will be on the basis of ACTUAL reduction subject to the terms outlined above in respect to thresholds. The Department will process your application and payment will be made within 90 days of the close of the reduction period.

13. I am part of a farm partnership can I apply?

Farm Partnerships are entitled to apply for this scheme. It should be noted for the purposes of this scheme, both Farm Partnerships and Dual Suppliers (see below) will be considered as ‘single production entities’.

14. Can I apply if I am a dual supplier?

A specific form is available for dual suppliers. This is a duplicated version of the single supplier form.

The two elements (one for each cooperative/purchaser) should be completed, verified and
dispatched to the Department separately via each cooperative/purchaser.

15. I supply to a Northern Ireland Cooperative/Purchaser – Can I apply?

Producers from the Republic of Ireland who supply to Northern Ireland cooperatives/purchasers are entitled to avail of the scheme. In such situations the process will vary versus that outlined above, with key requirements outlined below:

  • Such producers should apply directly to the Department of Agriculture, where forms will be made available electronically and in hard copy as requested.
  • The onus in such situations will be on the farmer/producer to source relevant proof regarding milk supply from his or her cooperative/purchaser.
  • This is in respect of production per the requirements of the scheme. See sections re applications and payment process, with particular reference to eligibility, reference periods, and application for payment where proof will be required.