On 25^th August, national experts from each Member State met in Brussels to finalise the details of the €150 million Milk Reduction Scheme agreed at the July Agricultural Council. Explained below are the main elements of the Scheme, with an example outlining a possible scenario:

• Financial aid is available to dairy farmers who voluntarily reduce milk production over a 3 month period. The aid is fixed at 14c/100kg, with no more than €150 million allocated to the Scheme. This equates to a reduction in production of 1.1 million tonnes if fully utilised. This is an EU wide volume, with no national allocations.

• There are 4 reduction periods foreseen in the regulation (Oct-Dec, Nov-Jan, Dec-Feb and Jan-Mar). However, the Scheme will close once the demand in terms of planned reductions exceeds 1.1 million tonnes.

• If the Scheme is oversubscribed, an allocation co-efficient will be established. This may mean that a farmer will be paid for a reduced percentage of his initial application. For example, if the Scheme is oversubscribed by 10%, a farmer will receive approximately 14c/l for 90% of his planned reduction. The Commission will communicate the value of the coefficient within a number of days after the closing date, if applications are greater than 1.1 million tonnes.

• A farmer must have supplied milk in July 2016. Furthermore, applicants can offer to reduce up to a maximum of 50% of their milk production during the reference period, and at a minimum apply to reduce by the equivalent of 1,500kgs of milk.

• Application forms are available through milk processors/co-ops, and must be returned to the co-op by 15^th September. Applicants can only apply for one reduction period. However, if the Scheme is still in operation by the fourth period, those who applied for the first period, can also apply for the last one.

• Following the submission of an application outlining a planned reduction, a similar application outlining the actual reduction must be submitted within 45 days of the close of the period (.i.e. mid February). Payment to the farmer shall be made no later than the 90^th day after the end of the reduction period (.i.e. End of March).

• The applicant may be penalised in terms of payment if their actual reduction is less than their planned reduction submitted on the application form. The full amount will be paid if the actual reduction Is not more than 20% below the authorised reduction. Aid will be paid on 80% of the reduction, if the actual reduction is between 50-80% of the authorised reduction. Aid will be paid on 50% of the reduction, if the actual reduction is between 20-50% of the authorised reduction. No aid will be paid if the actual reduction is less than 20% of the authorised reduction. If a farmer reduces his production above and beyond his planned reduction, he will only be paid as per his application.

• Dual suppliers will have to submit a duplicated version of the application form, verified and dispatched to the Department by each processor/co-op.

By Eamonn Farrell

Agri-Food Policy Executive