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MILK QUOTA SYSTEM NOTICE TO PURCHASERS AND SUPPLIERS OF MILK MILK QUOTA TEMPORARY LEASING SCHEME 2011/2012 - FIRST STAGE DETAILED RULES A. GENERAL PROVISIONS 1. AMOUNT OF QUOTA WHICH MAY BE TEMPORARY LEASED TO MILK PURCHASERS Under this scheme, producers can, subject to the restriction outlined in paragraph A.4 of these rules, offer to their own Milk Purchaser, on a temporary basis, all or part of their quota which they consider they will not use during the 2011/2012 milk quota year. The quota thus offered will, in turn, be leased on a temporary basis to other producers, within the same Milk Purchaser, who require additional quota for that year, in accordance with these detailed rules determined by the Minister for Agriculture, Fisheries and Food. The period of lease will expire in each case on 31 March, 2012. 2. PRICE The price payable for the leased quota is fixed at €0.02 (2 cent) per litre. It is NOT open to Milk Purchasers to set a different price. 3. CLOSING DATE The closing date for receipt of applications to participate in the scheme with Milk Purchasers is 24th June 2011. 4. ELIGIBILITY TO TEMPORARY LEASE QUOTA Producers who wish to offer unused quota into this scheme must have first delivered a minimum of 20% of their quota for the year in question. However, a producer who does not deliver the minimum amount or, who makes no deliveries at all, may offer the full amount of unused quota into the Scheme only if he/she holds a Ministerial Declaration approving the offer of that amount of quota into the Scheme. Approvals can be granted only in force majeure or other duly justified cases, where production capacity has been temporarily affected. The Application Form for such approvals (TL/MD/11) is now available from Milk Purchasers and must be submitted to the Department by 3rd June 2011. 2 Quota Holders who have made no deliveries in 2011/2012 and who do not intend to resume deliveries in 2012/2013 are not eligible for such approval. Quota holders who have ceased milk production and failed to sell some or all of their quota in the 2011/2012 Trading Scheme shall be exempt from the requirement to obtain a Ministerial Declaration and should apply directly to their Co-op. Quota holders who would have been made dormant on 1st April 2011 as a result of a termination of a lease after 1st February 2011 shall be exempt from the requirement to obtain a Ministerial Declaration and may apply directly to their Co-op. B. ALLOCATION OF TEMPORARY LEASED QUOTA The quota leased to the temporary leasing pool should be reallocated to producers within the same Milk Purchaser subject to the following conditions: 1. PRIORITY ALLOCATION OF QUOTA Producers with entitlements in the Successor and Lost Lease Categories of the 2011/2012 Milk Quota Trading Scheme have priority to lease quota in this Temporary Leasing Scheme. (i) SUCCESSORS For those in the Successor Category, the entitlement in the Temporary Leasing Scheme is the producer’s entitlement under the 2011/2012 Trading Scheme minus the quantity of quota purchased from the Priority Pool under that scheme. (ii) LOST LAND AND QUOTA LEASE Producers whose land and quota leases expired on 31 March 2009, 31 March 2010 and/or expired on 31 March 2011 on the following basis: (a) 2/3rd of the milk quota leased with land where the lease expired on 31 March 2011, and/or (b) 2/3rd of the milk quota leased with land where the lease expired on 31 March 2010, less the allocation from the priority pool of the 2011/2012 Trading Scheme, and/or (c) 1/3rd of the milk quota leased with land where the lease expired on 31 March 2009 and where permanent allocations from previous schemes have not satisfied the full entitlement arising from the lease; 3 Less (i) the additional quota granted to such lessees under the Agenda 2000 Schemes, excluding the 32 Million Litre Scheme; (ii) allocations (other than temporary) granted to such lessees from the Milk Quota Appeals Tribunal’s Reserve with effect from the 2001/2002 and subsequent milk quota years; (iii) quantity purchased from the priority pool of the 2011/2012 Milk Quota Trading Schemes. If the quantity of temporary leased quota applied for by an individual producer is less than the entitlement of that producer, then the quantity applied for should be used in the calculation of entitlements for the purposes of the reallocation procedures. ENTITLEMENT TO RETAIN TEMPORARY LEASED QUOTA Producers who temporary lease quota based on an entitlement established in accordance with sub-paragraph B.1(ii) above shall surrender the temporary leased quota to the Milk Purchaser if they subsequently renew the lease or leases of land and quota in question or purchase the quota with or without the leased land. 2. ALLOCATION OF THE REMAINDER OF THE TEMPORARY LEASING POOL Any quota remaining unallocated from the temporary leasing quota pool after the entitlements of the special priority producers, as defined in Section 1 of Part B above, have been satisfied should be allocated to all producers who applied for quota under the 2011/2012 Temporary Leasing Scheme on the following basis: Each Category II producer should receive an allocation which is equal to half of the quota allocated to Category I producers. 4 PRODUCER CATEGORIES CATEGORY I PRODUCER (≤ 350,000 LITRES) Producers whose available quota is less than or equal to 350,000 litres and who are operating an independent enterprise incorporating separate milking facilities, a separate herd number in which the dairy herd is registered and are operating their dairying enterprise on land which they either own or lease. These conditions do not apply in the case of the following persons, who may apply for quota in their own right: 1. Non-dairy farmer in partnership with a milk producer. 2. Son/Daughter participating in a partnership in which a parent, who is a milk producer, is also a participant. 3. Farm manager in partnership with a milk producer. Producers who reduce their total permanent quota below 350,000 litres by way of a: family transfer; sale of part of their quota in a restructuring/trading scheme; sale of quota with land on the open market; lease of land and quota; purchase of milk quota by lessee; will only be entitled to an allocation of quota as a Category II producer. CATEGORY II PRODUCER (> 350,000 LITRES) Producers whose available quota is more than 350,000 litres and who are operating an independent enterprise incorporating separate milking facilities, a separate herd number in which the dairy herd is registered and are operating their dairying enterprise on land which they either own or lease. These conditions do not apply in the case of the following persons, who may apply for quota in their own right: 1. Non-dairy farmer in partnership with a milk producer. 2. Son/Daughter participating in a partnership in which a parent, who is a milk producer, is also a participant. 3. Farm manager in partnership with a milk producer. The onus rests with the applicant for additional quota and the Milk Purchaser to which the application is made to ensure that the producer's entire quota entitlement, whether held with one or more than one Milk Purchaser, is taken into account when assessing eligibility under these categories. 5 The following example illustrates the methodology used for allocating this portion of the temporary leasing pool:- Quantity of the remaining Temporary Leasing pool 1,200,000 = (A) Number of eligible producers applying to temporary lease quota Category I producers 325 Category II producers 250 Method for establishing the allocation to individual producers: CATEGORY I PRODUCERS 325 x 2 = 650 CATEGORY II PRODUCERS 250 x 1 = 250 TOTAL = 900 = (B) Allocation Unit = A ÷ B = 1,333 In this example Category 1 producer allocation is Allocation Unit (1,333) X 2 = 2,666 Category 2 producer allocation is Allocation Unit (1,333) X 1 = 1,333 Account should be taken of producers whose application is in respect of a quantity lower than the proposed allocation established using this method. Furthermore, the allocation method for this portion of the temporary leased pool should provide for producers whose quotas, as defined at C.1.(c) of these rules, are close to the ceiling of 350,000 litres for Category I producers. The method of allocation should provide that where the flat rate allocation brings a producer’s quota over the ceiling of his/her Category, i.e., 350,000 litres, then the following provisions should apply: - the allocation to the producer should be restricted to the difference between his/her quota and the ceiling for his/her original Category; and - the producer in question should then be entitled to the flat rate allocation of his/her new Category but the combined allocation should not exceed the flat rate allocation granted to producers in his/her original Category. 6 The following example illustrates how these provisions operate in practice: Example: Producer A has a quota of 342,000 litres and is, therefore, a Category I producer at a milk purchaser where the flat allocations to Category I and II producers are as follows: Category I - 10,000 litres Category II - 5,000 litres Producer A obtains 8,000 litres (i.e., 350,000 litres less 342,000 litres) in his/her existing Category and then becomes entitled to quota as a Category II producer. In Category II, producer A obtains 2,000 litres, (rather than the full flat rate allocation of 5,000 litres) as it brings the total allocation to 10,000 litres. Producer B has a quota of 348,500 litres and is, therefore, a Category I producer. Producer B obtains 1,500 litres (i.e. 350,000 litres less 348,500 litres) in his/her existing Category and then becomes entitled to quota as a Category II producer. In Category II, producer B obtains 5,000 litres, (the full Category II allocation) and this brings the total allocation to 6,500. Where a producer is allocated quota under this scheme on the basis of his/her entitlement, as defined at B 1 above, that quantity should be added to his/her existing quota, as defined in C.1.(c) of these rules, to establish his/her category for the purposes of the allocation of the unused portion of the pool, if any. In other words, a producer with a permanent quota entitlement of 345,000 litres, who received an 8,000 litres allocation due to a non-renewed lease, should be placed in Category II (over 350,000 litres) for the purposes of the allocation of the remainder of the pool. 7 C. OTHER REQUIREMENTS 1. ELIGIBILITY TO LEASE QUOTA (a) Definition of “Producer in the Milk Purchaser’s Area” To be deemed a producer in the Milk Purchaser’s Area, an applicant must hold quota at the Milk Purchaser before the submission of his/her application and must be a producer in the 2011/2012 quota year, except where an exemption to temporary lease the entire quota has been granted under Regulation 21, or where the producer was unsuccessful with the sale of some or all of his/her quota in the 2011/2012 Trading Scheme. (b) Multiple Quota Holders Those who qualify as producers in more than one milk purchaser area as defined at (a) can only receive an allocation of quota from one Purchaser. A producer may apply to lease quota from the milk purchaser where the smaller part of their quota is held at 1 April 2011, but will only qualify for an allocation there if there is surplus quota remaining in that Milk Purchaser’s pool after the demands of those eligible producers who hold all or the majority of their quota at that Purchaser are fully satisfied. In this regard, Purchasers must put in place procedures to ensure that their suppliers who also supply other purchasers are not allocated quota in more than one Purchaser’s scheme. (c) Assessment of quota size for categorisation A producer’s total quota, whether it is held entirely with one purchaser or held with more than one purchaser, must be taken into account when establishing a producer’s entitlement to temporary leased quota. The producer’s available quota on the date of application for the Temporary Leasing Scheme shall determine that producer’s category for the purposes of allocation of the available quota. Milk quota purchased by a producer in the 2011/2012 Trading Scheme must be taken into account in establishing an applicant’s available quota for the purposes of this temporary leasing scheme. (d) Milking Facilities Milk producers must have had their registrations under the European Communities (Food and Feed Hygiene) Regulations, 2009, S.I. No. 432 of 2009, confirmed following an inspection by the Milk Purchaser or the Department of Agriculture, Fisheries and Food. (e) Disposal of Quota into Restructuring/Milk Quota Trading Schemes A producer is entitled to lease milk quota under this Temporary Leasing Scheme if he or she has not sold any milk quota in the three milk quota years preceding the current milk quota year. 8 2. ALTERATION TO THE BUTTERFAT REPRESENTATIVE LEVELS It will be necessary to amend the butterfat representative level of each producer who leases quota from the temporary leasing pool. The amended butterfat representative level should be calculated as follows: (A X R) + (B X S) A = Producer’s butterfat representative level R+S B = Representative level of the temporary Leasing pool* R = Producer’s existing quota S = Quantity of quota leased under the Temporary Leasing Scheme *The fat representative level of the temporary leasing pool should be established on the basis of the cumulative fat representative level of all the producers who surrendered all or part of their quota under the Temporary Leasing Scheme. 3. FALSE OR MISLEADING INFORMATION The application form to be drawn up by the Milk Purchaser must include a provision whereby the applicant accepts that any quota allocation made to him/her under this scheme, on the basis of false or misleading information, may be declared null and void. In these circumstances the allocation would be rescinded and the quota returned to the Milk Purchaser. 4. QUOTA INELIGIBLE FOR TEMPORARY LEASING – NATIONAL RESERVE ALLOCATIONS Any of the producer’s quota which has been allocated under any of the following measures will not be eligible for temporary leasing: - Clawback Reserve: allocations to certain small-scale producers and young farmers on 1 April 1989; - 1% (11 million gallons) Reserve: allocations to small-scale producers and New Entrants on 1 April 1989 and all allocations from the Hardship Reserve (Milk Quota Appeals Tribunal) since 1990; - Allocations from the 1993/94 (0.6%) Reserve; - Miscellaneous allocations from the National Reserve granted from 1st April, 1989; - Allocations from the Agenda 2000 Reserve, excluding the 32 Million Litre Scheme - Scheme For The Allocation Of Milk Quota To New Entrants 5. LOSS OF NATIONAL RESERVE ALLOCATIONS Producers who lease out their entire permanent saleable quota under the Temporary Leasing Scheme will lose entitlement to any quota allocated for their benefit from the National Reserve under measures listed at C.4 above with effect from the 2011/2012 quota year. Such producers may apply to the Department for the restoration of these allocations on resumption of production in a subsequent year. 9 6. LOSS OF PRIORITY STATUS IN THE DISTRIBUTION OF UNUSED QUOTA Category 1 producers who lease quota into the Temporary Leasing Scheme will be treated as Category 2 producers for the purposes of the Scheme for the Distribution of Unused Quota (“Flexi-milk”) for the 2011/2012 milk quota year. Category 2 producers who lease quota into the Temporary Leasing Scheme will only qualify for the distribution of unused quota (“Flexi-milk”) for 2011/2012 after all other producers have been satisfied. 7. DIRECT SALES QUOTA Direct sales quota may not be temporary leased to Milk Purchasers. A separate Temporary Leasing Scheme for Direct Sales quota will be operated directly by the Department of Agriculture, Fisheries & Food. 8. APPLICATIONS Eligible producers who are interested in leasing all or part of their quota or in taking a lease of quota under the 2011/2012 Temporary Leasing Scheme should submit a completed application form to their Milk Purchaser. In order to be eligible for consideration under the Temporary Leasing Scheme, each applicant must sign and date his/her application form. Furthermore, each Milk Purchaser is required to put in place procedures to ensure that all applications are stamped to show date of receipt. The closing date for applications is 24th June 2011. Milk Purchasers who require clarification of any of the procedures provided for in these rules, or where the operation of the scheme is causing a particular difficulty, should contact the Milk Policy Division of this Department. DEPARTMENT OF AGRICULTURE, FISHERIES and FOOD, May 2011.
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