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The Minister for Agriculture, Food and the Marine, Michael Creed T.D. has announced that payments will start to issue today to Irish dairy farmers in respect of Phase I of the EU voluntary supply management scheme for dairy. The scheme was a short term market stabilisation mechanism introduced by the EU Commission last year as part of a range of tools to mitigate price volatility in the Dairy sector.

Minister Creed said, “I am pleased to announce that my Department has commenced payments under Phase 1 of this scheme which will see almost €6.5m paid out to 3,500 Irish dairy farmers who applied for aid to reduce their production in the last quarter of 2016. This will provide a significant cashflow boost to dairy farmers at an important time of year. I would like to acknowledge the initiative of Commissioner Hogan in coming forward with the scheme as part of their response to dairy market volatility last year.”

In reference to the wider suite of volatility mitigation support measures brought forward by the EU Commission, of which the Voluntary Supply Management Scheme was a part, Minister Creed stated, “The €11 million allocated to Ireland from the EU’s ‘exceptional adjustment aid for milk and other livestock farmers’ was used in an innovative way, together with €14 million in national funding, to contribute to the Agriculture Cashflow Support Loan Scheme. This scheme, developed by my Department in co-operation with the Strategic Banking Corporation of Ireland (SBCI), has made €150 million in loans available to farmers in all sectors, at interest rates of 2.95%. This scheme provides farmers with a low cost, flexible source of working capital, which will allow them to pay down more expensive forms of short-term debt.”

The Minister went on to say, “I am pleased at the very favourable reaction by farmers to the scheme, which has proved that significant demand exists for low cost flexible finance. I hope that the commercial banks will respond positively to this demand by reducing interest rates and providing more flexible terms for cash flow loans in the future. I plan to meet with the Chief Executives of the banks shortly to discuss this and other issues relating access to finance in the agri-food sector.”

Minister Creed concluded, “Thankfully the global dairy markets have improved considerably in recent months and returns to producers here are considerably improved from last year. There is no room for complacency of course and vigilance is required to ensure that the effects of market volatility are mitigated as soon as possible. There are other challenges for our dairy sector of course not least the potential impacts of Brexit. Broadening our reach to other markets is the best response to this issue and I look forward to leading a number of trade missions this year to further highlight the world class dairy products which Ireland offers the world”.


Notes for Editors

· The scheme offered aid payable at a rate of 14c/kg to farmers who reduced their output in the reduction period of Oct-December 2016 compared to the same period in the previous year.
· The Department received 4,500 applications in the initial stage of the scheme but 1,000 applicants opted not to proceed with their planned output reductions.
· Payments of around €6.5Million are being made to approximately 3,500 farmers.
· There was total budget of €150 million allocated for the EU as a whole for the scheme.
· This would have equated to a reduction in production of 1.1 million tonnes if fully utilised. Across the EU the actual reduction was just over 850,000 tonnes which is 20% less than that initially proposed.
· Phase II of the scheme required applicants to reduce production in the period November 2016 to January 2017. Phase II was heavily oversubscribed at EU level and a large coefficient was applied while means that applicants for this phase will receive aid on approximately 12.5% of their reduction.
· The closing date for applications for payment under phase II was March 3rd and payments for qualifying applicants will issue by the end of April.