The rules governing the imposition of a super levy fine are set by regulations agreed at EU level. Under these regulations each Member State is allocated a volume quota of milk, above which a super levy fine (of 28.6 cents/litre) has to be paid to the EU Commission by producers who contribute to the over production. It is not possible for me on a unilateral basis to adjust super levy rules.
Notwithstanding the foregoing, I have, on numerous occasions, called on the Commission to take action to mitigate the impact of super levy fines, primarily via utilisation of an adjustment to the butterfat coefficient, as this would not have required an amendment to existing regulations. Other options previously discussed included the front-loading of the remaining quota increases, a reduction in the super levy, or a type of EU flexi-milk arrangement which would have operated providing EU production overall was within quota. However, given the reaction of the Commission, and the opposition of a blocking minority of Member states, some of which have gone so far as to seek to link the issue to possible measures to regulate supply after quotas are gone, there is no realistic prospect of any movement on the super-levy. This is also true of a butterfat adjustment, and coming into the final year of milk quotas, farmers should manage their milk supply with this in mind.
At national level I have impressed on the major banks the need to show flexibility in their dealings with farmers experiencing temporary cash flow difficulties in 2015. Co-ops may have a role in mitigating the impact of the global price downturn on their suppliers, and have some flexibility in relation to the phasing of superlevy bills to farmers. Furthermore Teagasc has recently commenced a series of dairy seminars throughout the country to help dairy farmers manage through 2015, while also planning the efficient development of their dairy business in a non-quota environment.
There is evidence that milk suppliers are taking steps to manage their milk supply in the final months of the quota regime. The milk quota position for the period up to end-December 2014 leaves Ireland 5.93% over quota when account is taken of the butterfat content of the milk deliveries. This figure continues the downward trend in the over-quota figure, coming from a peak of 7.15% in October 2014.
This downward trend is welcome and I would encourage milk producers to continue to manage production, with the help of their advisors, into the important production months of February and March.
At EU level, the end of the 2013/14 milk quota year saw total milk deliveries come in at 4.6% below quota. It is difficult to project what the end of quota year position will be in the EU next April. Data taken from the EU Milk Market Observatory show that deliveries for the whole of the EU for the period from January to the end of October 2014 are 5.4% above the same period last year. For the same period it is worth noting that production has increased in 26 of the 27 countries reporting to the EU Milk Market Observatory, with half those countries experiencing increases above 5%. Notwithstanding the possibility of softening of milk prices impacting on the final outcome, these EU production trends would appear to suggest that overall EU deliveries may be nearer to quota than in previous years.
