Thursday, 1 September 2016

Compensation for dairy farmers

The EU are proposing to compensate dairy farmers for cutting milk production in a bid to boost its price.
Indications are that payments of 12p/litre may be paid to farmers who commit to reducing milk production over a three-month period compared to the previous year. However funds will be limited and are likely to be paid on a first come first served basis, so farmers are advised to get prepared for the application period.

This could be a real opportunity for some farmers here because, as I reported a couple of weeks ago, milk production in the UK fell by around 10 per cent in July compared to a year ago. Some farmers will have already “pre-qualified” for this particular scheme without having to change anything.

Applications will be made to the Rural Payments Agency and will need to be accompanied by written proof of 2015 production levels which should be relatively easily achieved through the provision of last year’s milk cheques and estimated revised production levels.  

The total pot of money available across the whole of the EU will be £125m and I expect there will be four application periods until the money runs out. But with UK production having already fallen sharply, this money could be used very quickly and farmers are advised to apply at the first opportunity.

According to NFU chief dairy adviser Sian Davies: “When the application window is opens there will be a form made available on the RPA website which farmers can download ready to submit along with their milk cheques.”

It is believed the first application period will relate to reduced milk production from October 1 to December 31, 2016 and any potential applicants should consider what level of production they think they will have during that period in order to be ready to submit the form.

This EU initiative is clearly welcome but if the EU had not abolished its milk quota system in 2015, when world markets were falling in the face of rising milk supplies, perhaps the current level of overproduction in the EU would have been less severe and the latest dairy compensation scheme would be less necessary.

James Stephen MRICS FAAV
Rural Practice Chartered Surveyor, Wells

T: 01749 683381

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