Ireland on course for €80m fine for exceeding milk quota

Ireland could be hit with a record €80 million fine for exceeding its milk quota this year if the current level of supply is not curtailed.

With the EU’s milk quota regime ending in March, it appears many farmers have ramped up production ahead of time. Figures from the Department of Agriculture suggest the State’s milk supply is currently 6.93 per cent over-quota.

With “super-levies” of 28.65 cent imposed on every litre of over-quota milk, this level of production, if maintained for the rest of the year, would incur a fine of about €80 million.

Spread across the State’s 17,500 dairy farmers, this works out at about €4,600 per head.

In the 30-year history of the quota system, Ireland has paid €170 million in fines for breaching its annual quotas, which suggests 2014 is already way out of kilter with previous years.

Teagasc senior research officer Laurence Shalloo said good weather and rising cow numbers could account for some of the increased milk production this year.

However, he warned that farmers needed to take a “balanced approach” to the removal of the quota system.

“All of what they do should be driven by a business plan to ensure they are maximising their profitability.”

He said recent milk price volatility linked to Russia's food ban and a fall-off in demand in China should temper any rush to expand supply too quickly.

With five months to go until the end of the milk production year, Mr Shalloo said there was still adequate time to curtail supply.

IFA national dairy committee chairman Sean O’Leary said strong production would lead to a record superlevy situation for the last year of the quota regime. The fine would impose a high cost on farmers which they needed to plan for with assistance from advisers, co-ops and banks.

The EU’s long-standing milk quota regime will come to an end next March, allowing dairy farmers to produce and export more milk. Irish dairy farmers have increased cow numbers by roughly 150,000 over the past three years as they gear up for the removal of the quota.