Written Answers. - Milk Quota.

Dan Neville

Ceist:

68 Mr. Neville asked the Minister for Agriculture, Food and Rural Development the position with regard to the new milk quota regime to be introduced on 1 April 2000 with special emphasis on clarification of the uncertainty over the leasing or selling of going concerns, total farms with full facilities and either leased or owned quotas to match the facilities. [5036/00]

The regulatory framework arising from the Agenda 2000 agreement allows for greater flexibility in the operation of the milk quota regime. I have decided to take the opportunity to make changes to the system which operates in Ireland to ensure that active, committed producers have greater access to quota on a permanent basis at a reasonable cost over the coming years and that the Irish dairy sector is well prepared to face the competitive challenges that lie ahead.

On 13 October, I announced my intention to introduce by way of national regulations applicable from 1 April 2000 an arrangement for the transfer of milk quota other than the current system whereby such quota transfers with land. This is in accordance with the provisions that now exist under Article 8 (a)(b) of Council Regulation (EEC) No. 3950/92.

The objectives of the new arrangements are to provide for more flexibility and certainty for milk producers in the operation of the milk quota regime, greater priority access to additional permanent milk quota for small scale and medium size producers, the retention of as many dairying enterprises as possible, and greater competitiveness within the Irish milk production sector.

Under the existing system of quota transfer linked to land producers were often unable to expand their enterprises and realise their full potential because of the uncertainty within the quota system and the limited availability and cost of additional quota. Furthermore, in many cases producers were required to take on additional land which they did not need for their farming operation to acquire extra quota. This imposed an additional cost and made it difficult for small and medium scale producers to acquire quota. The option of temporary leasing quota existed, but this had the disadvantage that it operated only until the end of each quota year and did not give the certainty which active producers needed to expand their dairy enterprises.

The exceptions to the new arrangements will cover family transactions, renewals of existing leases between the original lessor and lessee, sale of a holding as a going concern and the transfer by way of lease or sale of land purchased with quota between 13 October 1999 and 31 March 2000. Detailed conditions in relation to these exceptions will be defined.

Apart from the exceptions outlined above I have decided that, under the provisions of Article 8(b) of Council Regulation (EEC) No. 3950/92, the transfer of milk quota will be through a scheme to be operated by way of a pooled system at co-operative/dairy level.

Under this scheme, quota holders may, at the end of each milk quota year, offer all or part of their milk quota for sale to their co-operative/dairy. The co-operative/dairy in turn may only sell milk quota to producers attached to that concern under detailed rules that I will determine. While all producers will be entitled to purchase milk quota under this scheme, priority will be accorded to small and medium-sized producers.

The maximum price for the sale of milk quota under this scheme will be fixed at national level.

With effect from 1 April 2000, it will no longer be possible for quota holders, not engaged in milk production to temporarily lease their milk quota under the provisions of Article 6 of Council Regulation (EEC) No. 3950/92 and Regulation 16 of the European Communities (Milk Quota) Regulations, 1995, where the milk quota has been temporarily leased for the preceding three milk quota years (1997-8, 1998-9 and 1999-2000) or for a longer period.
With effect from 1 April 2000 such quota holders may either resume milk production in their own right during the 2000-01 milk quota year, sell the milk quota into the 2000 milk quota restructuring scheme referred to above, or transfer the quota with the holding by way of a family transaction.
In certain exceptional circumstances, persons no longer involved in milk production may apply to my Department for an exemption from this provision. These exceptional circumstances will be detailed in the national implementing regulations.
The following options will be available to the quota holder when the lease expires after 1 April 2000: the quota may be sold to the restructuring scheme, the lease may be renewed, the quota may be sold to the lessee without the land by agreement between the lessor and lessee, or the quota may be transferred with the holding by way of a family transaction.
The arrangements I have outlined will be provided for initially by way of a statutory instrument and, if appropriate, subsequently by way of primary legislation.
The decision on the changes I have proposed was taken following wide consultation both within the milk quota review group and bilaterally with organisations involved in the sector. They have received widespread support from the industry and will prove very beneficial to the sector in the competitive environment that lies ahead.