A decision by the Government to co-finance the EU’s €11m EU dairy aid package has been described as ‘not forgone conclusion’.
As yet there has been no clear signal as to whether the Government will stump up the money for dairy farmers and it is notable that Minister Creed has stayed quiet to date on such a move.
This is despite significant pressure from farm organisations for the Government to 100% co-finance the €11m allocation from the EU and increasing the fund to €22m.
The use of Irish Exchequer funds for a new dairy scheme will require sign off from the Departments of Finance and Public Expenditure which as been described by one source as ‘not a forgone conclusion at this point’.
While there have been a number of suggestions as to how Minister Creed should spend the money one which is understood to be off the table is a lump sum payment to farmers.
Last year, under the previous EU dairy aid package, Ireland’s allocation amounted to €13.7m, which was augmented with a further €13.7m in national funding.
Lump sum payments totalling €27.4 million were paid to dairy (€26.4m) and pig (€1m) farmers in December 2015 and later in 2016, respectively.
However, it is understood that under the terms of this new aid package a similar lump sum payment is not allowed.
Another key suggestion that has been put forward has been the provision for low-cost loans for farmers. This proposal is understood to be under consideration however, there is believed to be disagreement between farm organisations and the Department as to how such a measure would work.
Farmer representatives are looking for a state-backed low-cost loan scheme to be introduced and operated under by the Department of Agriculture.
However, the Department is not believed to be in favour of this option and would prefer if such a measure was operated by the pillar banks or the SBCI.
The Department is at present commissioning an ex ante appraisal to examine the merits of including a provision for financial instruments in its Rural Development Programme.
Key decisions on how the EU funds will be spent and whether the Government will provide additional monies are set to be made in the coming weeks. As ever much will depend on the political pressure farm organisations can impose on the Government and the Minister.