Sep 122016

Gerald Quain  Chair of ICMSA Dairy Committee on his farm at Colmanswell County Limerick

Following letters received by Co-op members in the post in the last week, Mr. Gerald Quain, Chairperson of the ICMSA Dairy Committee said that a level of confusion has arisen in relation to the Voluntary Supply Reduction Scheme that needs to be cleared up.   Firstly, Mr. Quain said that the 14.4 cpl is set in stone and will not change even if the scheme is oversubscribed.   To suggest otherwise is totally misleading and incorrect.   In the event that the scheme is oversubscribed, the farmer will receive a reduced volume.   For example, Mr. Quain said, that if a farmer applies for 10,000 litres and the scheme is oversubscribed by 10%, the farmer will receive an allocation of 9,000 litres.   This means that the farmer will receive a payment of 14.4cpl on 9,000 litres instead of the 10,000 litres he/she applied for and the farmer can supply the extra 1,000 litres if he/she so wishes.   Secondly, there is wriggle room if the farmer does not meet the target volume reduction.   The scheme regulations has a built in volume reduction element if farmers do not hit their reduction target.   If a farmer comes within 80% of his/her target, he/she will get paid 14.4cpl on every litre he/she has not produced.   Even if the farmer is below 80%, a co-efficient applies and there is still no reduction in the 14.4cpl per litre full stop.   Thirdly, a farmer can apply for the voluntary reduction scheme and will also be eligible for the €11m scheme when put in place.  Indeed, Mr. Quain said, that one of the qualifying criteria for the €11m scheme is participation in the Voluntary Reduction Scheme and it is disappointing that the Department has failed to clarify the position on this matter.   Finally, payment under the scheme must at the latest be the end of March but the Department can pay earlier and there is absolutely no reason why this payment cannot be made by the end of January.

Mr. Quain said each farmer must look at the scheme on its own merits as it could be an attractive alternative if cows were to be dried off earlier.   Each supplier must remember that not only the cash costs saved are important but the economic costs must also be looked at in determining if the scheme suits the individual.   Giving cows an extra couple of week’s dry period can help aid condition for the spring, also the opportunity cost to the farmer him/herself, including the other jobs that can be done if he/she is not milk every day as well as getting ready for a hectic spring.   A value must be put to all these costs to get the real cost associated with milking in winter months.

Concluding, Mr. Quain reiterated his firm belief that this scheme is sending a clear signal to the milk market that Europe is slowing down production and in turn aiding the on-going recovery in the market which benefits every farmer even if they do not enter the scheme.

Ends    12 September 2016

Gerald Quain, 086-3623041

Chairperson ICMSA Dairy Committee