Cautious welcome for dairy ‘compensation’ package

Europe: Farmers handed incentive to cut back on production

New European aid for the beleaguered milk industry will allow dairy farmers to apply for compensation for cutting back production.

The fine detail of the €500 million package announced by European farm commissioner Phil Hogan is still emerging but it looks as though farmers who are accepted for the scheme will receive around 12p for every litre they cut back compared to the previous year.

The package would see €150m allocated as an incentive to dairy producers across the European Union to reduce milk production and €350m in national envelopes to member states.

The UK’s share is expected to be just over €30m and the UK Government will be able to top-up this money by up to 100% using treasury funding, if it chooses to do so.

Individual producers will be able to apply for the scheme rather than have to go through their milk processor.

And any farmer can apply even if they are retiring or processing milk on their own holding.

Following a meeting with European officials to discuss the package, the farmer’s union understands there will be four application windows for the supply management scheme, with only one application permitted per farmer.

It is anticipated that all payments will be received by September next year.

NFU Scotland (NFUS) dairy committee chairman Graeme Kilpatrick said it was “significant” that individual producers could decide to apply for the supply management money.

“Dairy farmers will be able to make a choice, based on their own circumstances, as to whether the compensation paid from the package to produce less milk than in a period of three months in 2015 is a better option than to produce at the processors’ price,” he said.

“On the national envelope the clarification we have received is that it will not be feasible to simply pay the money directly to farmers as was done the last time. This is disappointing.

“We are exploring with Government the best way to spend this money to benefit the dairy industry.”

The union’s chief executive, Scott