Dairy farmers will need to weigh up whether the newly announced Milk Supply Reduction scheme will suit their business, according to IFA National Dairy Committee Chairman Sean O’Leary.
Speaking today, as the EU Management Committee finalised the €500m EU aid package first mooted on July 18, O’Leary said Minister for Agriculture Michael Creed and his officials must ensure that everything is ready promptly for farmers to be able to avail from both the incentivised milk production reduction scheme and the other aid scheme.
He added that, just because milk prices have started to improve, this had not changed the fact that they remain well below production costs. Cash flow shortages remain the top problem for dairy farmers, and the Minister must deliver urgently on the state backed low cost cash flow loans proposed by IFA.
The €150m fund to incentivise production reduction by EU dairy farmers to the tune of 14.4c/l (14c/kg) over the last quarter of the year is a first-come-first-served, EU-wide scheme.
The IFA says the Minister and his officials must therefore ensure that aapplication forms are made available urgently before the first application deadline of September 20.
“Farmers who are considering participating in the scheme should bear in mind that the aid will likely be paid as late as March 2017 for those who have verifiably reduced production in the last quarter of 2016, and that there may not be any funding left for the following three 3-month periods if the scheme is fully subscribed in the first period.
“They will need to weigh up the value of higher constituents in late lactation milk versus this delayed payment,” O’Leary said.
The second part of the EU aid package, Ireland’s share of which amounts to €11.1m, cannot be paid unconditionally as was done last year.
O’Leary said minister Creed can, and must, match the EU funds and utilise the potential €22.2m to provide farmers with low cost short term loans, or otherwise help them with their cash flow difficulties.
“Despite the market recovery and the start of milk price increases this month, farmers continue to be paid below the cost of production.
“The Minister must not lose sight of the need to allow farmers in all sectors to convert their accumulated merchant credit, utility, superlevy and other bills into low cost, short term loans they will start repaying in a year or more when incomes recover.
This type of loan package, based on the €15,000 state aid concession agreed in Brussels earlier this year, has been proposed by IFA earlier this summer, and while the response from the Minister has been positive, but the time for delivery is now,” he said.