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Coughlan announces 2nd Milk Quota Trading Scheme

The Minister for Agriculture and Food, Mary Coughlan T.D., has set Friday 9th March 2007 as the closing date for applications for the second Milk Quota Trading Scheme.

Speaking following a review of the first scheme, the results of which she announced last week, Minister Coughlan said that there was general satisfaction that the first scheme worked well. Farm organisations and ICOS members were anxious to maintain momentum and proceed quickly to completion of the second scheme. There was general agreement that the scheme should remain unchanged.

There will continue to be two elements to the scheme - a priority pool and a market pool, the latter to run as an Exchange. The Exchange will run in early April and results circulated to the Coops at that time for both priority and market pools.

The Minister said that "The Milk Quota Trading Scheme has created a transparent and open market system of transferring quota. Dairy farmers now have greater choice in deciding the volume and price at which they wish to sell or buy quota".

The Exchanges will continue to operate in each Coop area and the quota transacted through the Trading Scheme will be available to purchasers for the 2007/2008-milk quota year as was the case with the first scheme. The Minister said that for the 2008/09 Scheme, she would bring the Exchange dates forward so that farmers would have more time to consider their options.

As regards the priority pool, the Minister has decided to maintain unchanged at 30%, the proportion of quota sold for priority pool categories and to keep the same categories - successors, producers whose leases expired, young farmers/new entrants and category 1 producers. She has also held the maximum price for the priority pool at 12 cent/litre as before. The Minister said that the figure of 30% allows sellers to secure a maximum of 12 cent per litre for this proportion of sales volume while getting the price returned by the market for the remaining 70%.

The 'price corridor', which acts as a price cooling mechanism on the demand side, will be maintained at 40%, the effect of which is to remove from the Exchange, bids to purchase quota that exceed 40% of the initial equilibrium price. Once these bids are removed the market-clearing price will be re-calculated. The maximum limit of 60,000 litres on individual quantities that may be purchased from the Exchange will also be maintained.

The Minister reminded farmers that quota purchased in the next trading Scheme would be available for production in the 2007/08 milk quota year and would not solve any potential over production that dairy farmers may face in the current milk quota year. Other conditions of the Trading Scheme, including restrictions on the transfer of quota purchased from the exchange of one Coop into the exchange of another Coop for a period of three years, would be maintained.

Finally, the Minister urged potential buyers and sellers to read the scheme details fully before completing applications. These detailed rules, including application procedures, will be available from the Co-ops.

12 February, 2007

Date Released: 12 February 2007