Simon Coveney (Cork South Central, Fine Gael) | Oireachtas source

I thank the Deputy for raising this issue and thereby giving me an opportunity to provide the House with an update on this important issue and clarify a number of aspects of it. The milk quota regime ended on 31 March 2015. The overriding sentiment throughout the country from farmers to processors and along the value chain is that the abolition of the milk quota presents a massive opportunity for the Irish dairy sector. While it is obviously unwelcome that producers will face a superlevy bill in respect of the final year of the milk quota system, it is unavoidable at this stage. The first thing I would like to clarify in terms of the Deputy's issue as it has been outlined is that revisiting this issue is not possible. The rules governing the imposition of a superlevy were set by regulations agreed at EU level. It is not possible for me to adjust the superlevy rules on a unilateral basis.

In the years leading up to quota abolition, I proposed action at EU level on numerous occasions to mitigate the impact of a superlevy. The mechanisms I proposed included an adjustment to the butterfat coefficient, a front-loading of quota increases, a reduction in the superlevy or a type of EU flexi-milk arrangement which would have operated as long as overall EU production was within quota. The last of those proposals involves the kind of thing the Deputy has just outlined. In light of the opposition of a significant number of member states, it became clear as we approached the end of the quota era earlier this year that there was no realistic prospect of any agreement on these proposals. I assure the Deputy that we pushed this in an aggressive way at Council of Ministers level to try to achieve what we were seeking. We had a majority of countries supporting us but there was a blocking minority of countries insisting on no change.

In the absence of any agreement among member states on my proposals, my focus switched to mitigating the effects of the superlevy by facilitating staged payments by farmers in a year in which cashflow would be of utmost importance due to expansion costs coupled with current market pressures. In this context, I welcomed the agreement of arrangements with the Commission, following consistent requests from Ireland and other member states, to allow member states on a voluntary basis to permit the payment by milk producers of the superlevy liability in three annual instalments without interest. The first instalment must be collected by the milk purchaser in the normal way and paid to my Department before 1 October 2015. The two subsequent payments must be paid by the same date in 2016 and 2017 respectively. I recognise the burden that is being placed on milk suppliers because of the high superlevy levels. For that reason, I have decided to avail of these new voluntary arrangements here in Ireland. Officials in my Department are finalising procedures for the collection of the first instalment before the end of September 2015 and the introduction of a scheme to collect the remaining instalments at the end of September in 2016 and 2017. I expect to announce the details of the scheme in the near future.

The Deputy can read for himself the remainder of the answer, which comprises a broad assessment of where the dairy industry is currently at. Of course I recognise that many farmers are under pressure on this issue. It is also true to say that many farmers have already paid a significant portion of the superlevy fine that will apply to them. It has been collected by their co-ops as they have delivered milk over the last 12 months in anticipation of the development of a superlevy problem. Many farmers have paid a significant amount of the superlevy fine already. Others will now be able to plan on the basis of three interest-free instalments over the next three years. They are working with their co-ops to do that in a way that makes sense from a cashflow point of view. Having spoken to those involved in the industry at processor and farming levels, I believe we have made the best of a difficult situation in terms of superlevy pressure.

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