Paul McGrath (Westmeath, Fine Gael)
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Question 119: To ask the Minister for Agriculture and Food her plans for the distribution and transfer of milk quota; and if she will make a statement on the matter. [32716/06]

Mary Coughlan (Donegal South West, Fianna Fail)
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I recently announced the establishment of a new Milk Quota Trading System to supersede the current Milk Quota Restructuring Scheme. The new system was agreed following extensive consultation with the farm organisations and ICOS and will release larger quantities of quota to active and committed dairy farmers through the combined operation of a market Exchange and a maximum price Priority Pool.

The arrangements for the new scheme were published last week and the detailed rules will be available shortly. Milk producers will be invited to submit applications to sell or purchase quota by 24th November 2006, with the first Exchange being run as soon as possible thereafter. The operation of the system will be reviewed after the first Exchange, and a second Exchange will follow in spring of 2007.

These new arrangements will allow milk producers the opportunity to bid for the amount of quota required to meet the development needs of their farm enterprise at a price that will generate a commercial rate of return. In essence farmers may now decide on the amount of quota they wish to buy or sell and the price at which they are willing to trade quota. Some 70% of the total amount of quota offered for sale will be transacted on the market Exchange and will be sold at the market-clearing price.

In order to cater for certain categories of producers, I have established a Priority Pool, which will allocate quota to farmers whose leases have expired and were not renewed, to successors and to young farmers. The surplus available in the Priority Pool will be allocated to producers with less than 350,000 litres. Some 30% of the total quota offered for sale will be allocated through the Priority Pool at a maximum price of 12 cent per litre. Producers may purchase up to a combined maximum of 60,000 litres from both pools. The new system will continue to operate in each Co-op area, thus maintaining the principle of regional preference or ring fencing within current pools.

I am satisfied that the new Milk Quota Trading system will create a more open market system of transferring milk quota and will allow farmers much greater freedom to make choices about how milk quota should be transferred, affording them far greater scope to decide the volume and price of quota they wish to buy.