Irish farm organisations have given a lukewarm response to government plans for a freer market in milk quota, fearing it will lead to higher costs and fewer dairy farmers.

The plans were announced by Irish agriculture minister Mary Coughlan who said the current restructuring system, which imposes tight controls on who can get quota, would not meet the future needs of the industry.

Less than 4% changed hands each year, which was holding back the process of consolidation and efficiency improvement.

“I intend to move in the direction of a more open-market system of transferring quotas,” said Mrs Coughlan.

There would be a wide-ranging consultation with stakeholders to determine the actual mechanism, though it could be organised through an exchange system, through direct sales between individuals, through agents or via the marts.

The new system would start on 1 April, 2007, once the current restructuring scheme has ended, and quota could be sold with or without land, or leased with land.

It would still operate at co-op level, with ring-fencing to stop quota leaving more vulnerable regions.

But the Irish Creamery Milk Suppliers’ Association – which typically represents smaller family farms – has criticised the plans, describing them as “inherently flawed”.

“The minister is proceeding down a road that will place a millstone around the necks of dairy farmers through paying an increased cost for milk quota at a time when margins are already slipping,” said ICMSA president Jackie Cahill.

“The only people who will benefit are the quota brokers, who will have nice cost-free income off the backs of farmers.”

He also predicted that ring-fencing would not last, leading to an exodus of quota from the north and west.

Irish Farmers’ Association dairy chairman Richard Kennedy admitted that the existing restructuring scheme needed improving.

But he was concerned that the minister’s announcement would slash the amount of quota coming into this year’s restructuring scheme, as retiring dairy farmers would hold out for better quota prices in 2007.

“A new milk quota regime aiming to improve scale at farm level will not, of itself, be sufficient to secure viable dairy farmers’ incomes in the absence of strong milk prices,” he added.

Dairy farmers wishing to surrender quota to the 2006 restructuring scheme in Ireland will receive 12c/litre (8.3p/litre), compared with 17.5c/litre (12.1p/litre) last year, the department of agriculture in Dublin has confirmed.

Young farmers will have priority access to the first 25% available in each co-op’s restructuring pool.

philip.clarke@rbi.co.uk