Following the abolition of quotas just over a year ago, February CSO figures showed a 37% increase in production by the sector compared to 12 months previously.
“However, milk prices have fallen by 20% since February 2015 due to a combination of global factors, and Irish farmers, many of whom have invested significantly, are struggling to cover the cost of production,” Deasy says.
The average February milk price was 24.68c/litre — down from 30.77c/l (also incl. VAT) in March 2015. And short-term indicators look to be static.
With the imminent phased payment of superlevy fines for 2015 set to further impact farmers’ cashflow, Deputy Deasy contacted the Department of Agriculture to see if there was any scope to postpone these instalments for another 12 months in the hope that market conditions can improve.
Secretary General Aidan O’Driscoll informed him that Irish officials “pushed strongly” for a possible deferral to 2017-18 during discussions in the run-up to the March Council of Agriculture Ministers.
However, Brussels had “rejected” this prospect on legal and regulatory grounds.
“While we suggested alternative arrangements it was clear that the proposal enjoyed very little support from other Member States and therefore was not likely to succeed,” the Sec-Gen added.
That means the “optimum repayment model” agreed with farming groups and at government level — 10 equal instalments from May to September in 2016 and 2017 — will proceed as planned.
Nationally some 3,672 farmers (of the 6,109 who incurred the levy) availed of this penalty repayment option; amounting to €35.6m out of a total national levy liability of €71.2m.
The exchequer has already forwarded the money to the EU. It will be repaid by farmers on an interest-free basis by way of deductions from monthly milk cheques covering the peak months of April to August. Co-ops will in turn send these monies on to the Department.
Last week the IFA called on co-ops to desist from any more milk price cuts given the challenges faced at farm level. The industry is heavily represented on the new national dairy forum — a partnership which Fine Gael TDs Deasy and Michael Creed proposed in order to address post-quota uncertainties.
The need for meaningful, confidence-building measures to support a sustainable milk price is sure to be on the agenda when the incoming agriculture minister chairs the forum’s next session.