Skip to main content
Normal View

Dáil Éireann debate -
Wednesday, 26 Jan 2000

Vol. 513 No. 1

Adjournment Debate. - Milk Quota.

The proposed changes in the milk quota-super levy regime in Ireland relative to the transfer of milk quota and the clarification in relation to transactions due to be introduced on 1 April 2000 and the effects it will have on the livelihoods of the huge number of farmers concerned is a serious matter.

The farmers concerned are compliant and tolerant people. However, they cannot stand idly by and watch their future being destroyed. They are very dependent on milk production for their livelihoods, whether as active or dormant producers. In 1983, producers with milk quota did not find themselves in this position by accident. It came about through years of hard work and dedication. Since 1983, milk quota has acquired asset status. It is both legally and morally wrong for this Government to force people to sell this asset, especially at a capped price.

I will now outline the main points of contention. Private leasing should be allowed for the new farm retirement scheme, otherwise the scheme will prove futile. Those who are already participating in the scheme and who entered it in good faith now find themselves in a catch-22 situation when their lease expires. The rules have now changed so much to their disadvantage that they do not have any option other than to go the legal route. The restriction on land and quota sales, where it has to be operated as an independent going concern, should be removed. There should not be any enforced sale of quota which has been recognised as an asset by the Revenue Commissioners in the past and has been treated as such for capital taxation purposes. This view has been reinforced recently by the Minister for Finance.

It is the view of quota holders that temporary leasing where milk is available at a realistic price is an important lifeline for both the small and medium producer and the lessor. People with a vested interest in the winding down of temporary leasing, for example, large producer groups, have recently stated that the scheme is illegal. This allegation does not stand up, nor does it comply with the view of independent experts who state that if the scheme is properly defended at EU level, it will be allowed to continue as long as the quota scheme lasts, provided we would otherwise manage our national quota properly. It would be in the national interest to defend temporary leasing at EU level and it would directly benefit more than 75% of our quota holders.

In recent years, the scheme has served both the lessor and the lessee well. It allows for flexibility on the part of the lessor and the use of his or her own land, together with revenue generated from the quota, has proved attractive. The advantages of flexibility are that temporary leased quota can be financed from cash flow and does not involve borrowings, as would happen with the purchase of reallocation quota. As the users of temporary leasing, namely small producers, do not have a taxable income, a tax concession for the purchase of reallocation quota is not an advantage. The scheme created opportunities for the lessor to participate in off-farm employment, together with rent received and the use of his or her own land amounts to an attractive package. The result is that farmers have a sustainable income and, by implication, maintain rural populations.

If temporary leasing is wound down and replaced by the sale and purchase of reallocation quota, this quota will end up with large producers because small producers lack the capacity to finance its purchase. As the quota system is unlikely to continue beyond 2006, many producers would be reluctant to purchase even if financially able to do so. It is a grave injustice and may be unconstitutional to force dormant quota holders to sell their quota, given that it is a capital asset which was created by them prior to 1983 and, as such, contributed to the national quota. The demand for such changes has not come from the current scheme participants who are dormant, small or medium producers. Rather, it has come from the large producer sector which raises obvious questions about its possible motives.

The participants in a temporary leasing scheme want the scheme to remain in its current form. Collectively, these producers comprise 75% of all quota holders. Temporary leasing in its present form is ideally suited to dormant quota holders in cases of sickness or death as it allows farmers to continue to educate their children while at the same time providing an opportunity for a family member to return to milk production. If tempor ary leasing were to be wound down, as is proposed, it would rapidly hasten the depopulation of rural Ireland. I cannot see the logic in outlining 31 clauses in the new changes in the milk quota-super levy regime in Ireland. They will only baffle the farmers further. Common sense should prevail and the new regime should be reorganised before being put into operation.

If Deputy Sheehan has a worthwhile suggestion in this, I will be happy to examine it. The changes being made to the operation of the milk quota regime with effect from 1 April reflect concerns on the part of the Government for the livelihoods of Ireland's dairy farmers and the long-term future of the dairy sector. In the past, producers were often unable to expand their enterprises and realise the full potential they have to offer because of the uncertainty within the quota system and the unavailability and cost of additional quota.

The changes being proposed for the management of the milk quota regime in Ireland are necessary if the dairy industry is to successfully position itself to face the competitive challenges which will emerge from the enlargement of the EU and the WTO negotiations. These have been decided after wide consultation.

The measures to break the rigid link between land and quota in the transfer of quota are designed to give more flexibility and certainty to milk producers; greater priority access to quota for small and medium scale producers; and more opportunity for competition in the milk production sector. These new arrangements will give active, committed producers greater access to quota over the coming years at a reasonable cost. The existing system of quota transfer linked to land meant, in many cases, that producers were required to take on additional land which they did not need for their farming operation in order to acquire extra quota. This imposed an additional cost and made it particularly difficult for small and medium scale producers to acquire quota.

The option of temporary leasing quota was even more precarious in that it operated only until the end of each quota year and active producers could not rely on it to expand their dairy enterprises. I am aware that there is some concern among people who are no longer involved in milk production and whose quota has been leased into the temporary leasing pool on a continuous basis. I would like to clarify the position in relation to these people. It will no longer be possible for such quota holders to temporarily lease their milk quota where the quota has been temporarily leased for the preceding three milk quota years, 1997 to 1999, or for a longer period.

With effect from 1 April 2000 such quota holders will have the option to resume milk production in their own right during the 2000-01 milk quota year or to sell the milk quota into the 2000 milk quota restructuring scheme. In certain exceptional circumstances, persons no longer involved in milk production may apply for an exemption from this provision. These exceptional circumstances will be detailed in the national implementing regulations.

The new milk restructuring scheme will allow for the sale of quota without land in a structured manner and in line with priority categories. This will help to reduce the cost of acquiring additional quota, with a consequent beneficial effect on production costs. My officials are now in the process of drawing up, together with the Office of the Attorney General, the necessary legislation to give effect to these changes and are consulting on an ongoing basis with the various players in the dairy industry to ensure the smooth introduction of the measures. I thank Deputy Sheehan for raising this very important issue, which is topical at present. The Government is caring in its approach and is prepared to listen to suggestions. The milk industry is vital to the economy and to rural communities.

Will the Minister redraw the conditions?

Top
Share