A 10 PER CENT clawback of milk quota on all new land leasing and sales transactions entered into from today has been announced by the Minister for Agriculture.
Mr Yates also warned dairy farmers that they would face a superlevy liability of £40 million if milk deliveries during the remaining six months of the quota year were at the same level as last year.
The Minister said in a statement that he was "seriously concerned" about the present inflated price of milk quotas being transferred in private land and quota transactions. This was detrimental to the long term interests of the dairy industry.
The quantity of quota available to the temporary leasing scheme was being eroded, with adverse consequences for small scale producers who were given priority under this scheme. Small producers in need of additional quota could no longer compete in the land and quota leasing market.
In view of the increased demand for quota by small scale producers, and also the high prices being charged for quota being leased with land, he had decided to tilt the balance firmly in favour of active milk producers, Mr Yates said.
"A clawback will ensure not only that the volume of quota being channelled through the temporary leasing scheme will be maximised, but that the price charged for quota offered both for sale and lease can be reduced to a level more in keeping with the competitive needs of today's dairy sector."
Mr Yates pointed out that any quota which was surrendered to the National Reserve under this clawback mechanism would be available for redistribution to new entrants and other priority categories.
Some transactions would be exempt from the clawback renewals of land leases between the same parties; sale of land to which milk quota attached where the purchaser of that land was either the existing lessee or his/ her inheritor; and transactions involving land approved under the Farm Retirement Scheme.
The ICMSA president, Mr Frank Allen, described the clawback decision as a major blunder. "The Minister," he said, "has set a dangerous precedent by clawing back, without compensation, 10 per cent of quotas transferred by sale or lease. A person selling a farm with a 20,000 gallon quota will now be forced to hand up part of his assets worth about £5,000.
"The Minister can't justify this and there may be a constitutional challenge to this rule."
The IFA dairy committee chairman, Mr Liam Foley, accepted that changes were needed as excessive prices had reduced the affordable milk quota available to small producers dependent on temporary leasing. However, he stressed that the Minister's decision had been taken without consultation with either the Milk Quota Review Group or the IFA.
"The Minister's measures must not be allowed interfere with existing lease arrangements: many small, medium size and larger producers rely on long standing private quota leases to cover large parts of their production," Mr Foley said.
The Munster MEP Mr Pat Cox said that the Minister's decision was welcome but extremely timid in the context of the milk leasing problem. The distribution of available milk quota this year was disgracefully inequitable, with small producers being totally outbid by cheque book power.