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Minister Smith announces major dairy initiatives

- Dairy Expansion Activation Group
- New Milk Quota Trading Scheme
- Extension of Demonstration Farm Model to be explored

The Minister for Agriculture, Fisheries and Food, Brendan Smith, T.D., today announced the establishment of the Dairy Expansion Activation Group as recommended in the Food Harvest 2020 Report. The Group, to be chaired by Dr. Sean Brady, will be a small action driven one comprised of farmers, processors and Teagasc. It will address specific actions to be taken to realise the targets for dairy expansion laid down in the 2020 report.

The Minister said "Food Harvest 2020 is an industry-led report that establishes ambitious targets for the expansion and development of the dairy sector. The constraints on the development of the sector are being phased out with the abolition of quotas and all of the stakeholders need to drive on and take the strategic decisions necessary to exploit the comparative advantage that we in Ireland have in milk production. Food business operators, from farm level to processors, need to critically examine their business models and take rational commercial decisions based on the realities of the market place. Dr. Brady has the confidence of the sector and did a tremendous job in chairing the Food Harvest Group.  I am confident that he can be equally successful in this implementation phase and that his group will address the critical issues on the road to the expanded output target".

Against the background of the implementation of the Food Harvest Report, the Minister announced the ninth Milk Quota Trading Scheme, which will be the first of two Trading Schemes to allocate quota in respect of the 2011/2012 milk quota year. The introduction of a national component in each phase of the scheme will involve a new mechanism to allow sellers who have been successful in selling some but not all of their quota on the market exchange to dispose of their remaining quota through a national pool. Where necessary, this redistribution will be carried out by the Department immediately after each of the two stages in order to ensure that sellers are not forced to retain some of the quota offered for sale because of insufficient demand in their areas.  Such a redistribution will not involve a separate application process.

In addition, the Minister has decided to reduce the maximum price at which quota is traded in the priority pool, from 6 cent/litre to 5 cent/litre. If the exchange price for a given Co-op area drops below 5 cent/litre, the priority pool price will be the same as the exchange price.

"The trading arrangements I am announcing today had been agreed by the Milk Quota Review Group. I have also taken on board the Group's recommendation that we should continue to accurately reflect the current value of quota by reducing the price of priority pool quota from 6 cent/litre to 5 cent/litre", said Minister Smith.

The Minister confirmed that the structure of the Scheme will otherwise remain unchanged. It will again be run in respect of each Co-op area, and will be comprised of a priority pool and a market exchange. Sellers will continue to contribute 30 per cent of the total quota offered for sale to the priority pool. The method for calculating the market clearing price, including the 40 per cent price corridor, will remain unchanged. The 3:2 ratio on the distribution of priority pool quota between young farmers and category 1 producers remains, as does the option for sellers in certain Co-op areas to sell at one or two cent per litre less than their original offer price.

The Minister announced that the closing date for receipt of applications will be Friday 5 November 2010. Details of the Scheme will be published in the farming press next week and application forms will also be available from Co-ops next week.

The Minister also referred to the critical importance of technology transfer and best practice at farm level, if the production increases targeted in Food Harvest 2020 are to be attained in a sustainable way. "Dairy farming is a technology intensive business", he said. "It is part of the SMART economy, and in this context it is critically important that farmers across the spectrum have access to the best possible scientific data, taking into account operational challenges based on geographical location and other variables".

In this context, and against the background of the emphasis placed on technology transfer in the Food Harvest 2020 report, the Minister said that he had asked Teagasc to consider how the demonstration farm model might be extended to address the specific operational challenges that exist in traditional dairy farming areas in northern and western parts of the country. The cooperatives operating in these areas will have a vital part to play in this initiative and I intend to pursue this with them in the coming days.  "I am an admirer of the work already carried out by Teagasc in the area of technology transfer and of course it is extremely important that we maintain a strong and regionally balanced dairy sector based on the sound scientific and commercial analysis backed up by practical operational advice and best practice", concluded the Minister.

Date Released: 06 October 2010