Early indications were that to reduce milk production as part of the new European Union dairy aid package farmers in the United Kingdom might be paid not to produce milk.
Brussels has unveiled a £415m support package for European Union farmers, of which £125m was earmarked to incentivise a reduction in milk production.
Another £290m would be split into so-called “national envelopes” for milk and other livestock producers.
The UK’s share of the pot would be about £25m.
Farm leaders have been seeking clarity about how UK farmers were likely to benefit from the cash and early discussions were around the market management part of the package.
Talks with the Department of Environment, Food and Rural Affairs (Defra) and the Scottish government suggested farmers would be allowed to opt into a voluntary scheme to reduce milk output.
There would be three or four opportunities to apply but farmers who did would commit to reducing production for a three-month period, compared to last year before. In return, they would be paid about 12p/litre.
Any farmer would be able to apply, even if they were retiring or processing milk on their own holding.
National Farmers Union Scotland dairy committee chairman Graeme Kilpatrick said “The fact that individual producers can decide to apply for the supply management money is significant.
“Dairy farmers will be able to make a choice based on their own circumstances as to whether the compensation paid from the package to produce less milk than in a period of three months in 2015 is a better option than to produce at the processors’ price.”
NFU dairy board chairman Michael Oakes said discussions were at very early stages and reflected the aspirations of the European Commission.
Brussels estimated the scheme could lead to a reduction of a billion tonnes of milk from the market across Europe.
But Oakes said the UK had already responded to very low milk prices by cutting production so it was a bit frustrating that other countries would be paid for doing what British farmers had already done.
“That said, if the market doesn’t improve I can see some UK farmers wanting to use it.”
Oakes said his understanding was the national envelope money could be directed at schemes to support small farms or those deemed to be the most environmentally friendly.
The NFU’s priority was that the money was used in a way that produced long-term benefits, he said.
Possibilities included a retirement scheme to help people exit milk production with dignity or the establishment of a margin management scheme.
“In the United States farmers can buy into an insurance scheme that gives them protection.
“We could perhaps look at using this pot of money to kick-start one here.
“Farmers could then buy into a certain margin to protect themselves from extreme volatility.”
Oakes said such a scheme would probably need a commercial partner to make it work but he was keen it was explored as an option.
“We want to talk to Defra about whether there is a possibility of doing that.”
