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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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