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Smith announces major initiative to encourage new entrants to Dairy Farming

Allocation of first quota increase under Health Check agreement

The Minister for Agriculture, Fisheries and Food, Brendan Smith TD, today announced his plans for the allocation of the first of five annual increases of one per cent in milk quotas agreed under the so-called 'health check' of the CAP reform. One quarter of the increase (approx. 13.5 million litres) will be set aside for a major new initiative aimed at attracting new entrants into milk production. The balance will be allocated as a 0.75% increase in quota on a permanent, saleable basis for every producer active on 1 April 2009.

The Minister said " I have listened carefully to the views expressed by farmers' representatives in recent months on how to achieve the maximum benefit from the first one per cent increase in quotas. I am also mindful of the context in which this increase takes place. It follows a 2 per cent increase in April 2008, and is accompanied by the butterfat calculation adjustment that I secured last November which will deliver the equivalent of a further 2 per cent increase in quotas in 2009."

The Minister continued "I have decided that now is the time to make a bold move in support of new entrants to dairying. All in the sector are agreed that new entrants have a pivotal role to play in ensuring the future of the sector, and I am keen to build on the measures I implemented in 2008, including the opening up of participation in Milk Production Partnerships. I therefore intend that 25 per cent of the quota now being made available will be distributed to new entrants in a manner that will ensure that they can attain meaningful scale in a relatively short period of time."

The details of the scheme will be finalised and published in the coming weeks, but the Minister indicated that he envisages potential new entrants applying to his Department for participation in the scheme and, subject to compliance with various conditions, receiving an allocation of 200,000 litres of milk quota per applicant. Any surplus quota remaining after all applications are approved will be placed in the National Reserve and distributed to small and medium sized producers by the Milk Quota Appeals Tribunal. The scheme will operate on a pilot basis initially and will be reviewed after one year.

Concluding, the Minister said: "The extent of the quota increases in 2009 presents a real opportunity to allow new entrants to get a start in dairying on a scale that is immediately viable. I don't think we should let that opportunity pass. At the same time, my decision means that most active producers will, in any event, receive the equivalent of 2.75% additional quota from 1 April 2009, which is just reward for the efforts they have made in developing their dairy enterprises."

14 April 2009

NOTE FOR EDITORS

The one per cent milk quota increase is accompanied by a butterfat calculation adjustment that will deliver the equivalent of a further two per cent increase in 2009/2010. Regulation (EC) 258/2009 has now been published by the Commission.

Example

Producer Delivers                   12,000 kg of milk

Reference Fat                          35.00 g/kg

Actual Fat                                37.50 g/kg

In this example the fat content is greater than the reference level by 2.50 g/kg
(37.50 - 35.00 = 2.50) so there will be an upward adjustment to deliveries.

Old Method

Under the old method, the deliveries would increase by 0.18% per 0.1 gram of additional fat per kilogram of milk. Using the example figures, this amounts to an upward adjustment of 540 kg, so adjusted delivery becomes 12,540 kg, as follows:

Milk intake X variance between average butter fat (g/kg) and rep fat (g/kg) X 0.18%
0.1

12,000 X 2.50 X 0.18%
0.1

= 540 kg

New Method

Under the new method, the deliveries will increase by 0.09% per 0.1gram of additional fat per kilogram of milk. Using the example figures, this amounts to an upward adjustment of 270 kg, so adjusted delivery becomes 12,270 kg, as follows:

Milk intake X variance between average butter fat (g/kg) and rep fat (g/kg) X 0.09%
0.1

12,000 X 2.50 X 0.09%
0.1

= 270 kg

There is no amendment to the coefficient applied to milk deliveries where the fat content is lower than the reference level, i.e., the coefficient will remain at 0.18% per 0.1 gram when reference fat is greater than actual fat

Date Released: 14 April 2009