DETAILS OF how Scotland’s £2.5 million share of the EU Dairy Fund will be allocated have been announced.

The emergency cash was agreed by EU finance ministers last November, in a bid to support dairy farmers severely affected by the fall in milk prices over 2008 and 2009.

In total, £273 million has been dedicated to the one-off fund,divided up into national envelopes allocated to each Member State, with Scotland to receive £2.548 million.

Now Rural Affairs Secretary Richard Lochhead has announced that, after consulting the industry – who overwhelmingly favoured a simple method of distribution – he has decided to allocate the money on a flat rate basis of 0.2 pence per litre.

This is to be based on production during the specified reference period of October 1, 2008, to September 30, 2009, and matches the formula which will be used in England, Wales and Northern Ireland.

“This approach should help ensure that all of Scotland’s dairy farmers receive a fair share of the fund,” said Mr Lochhead. “It will also enable payments to reach those severely affected as soon as possible, which I’m sure our farmers will welcome.

“The Rural Payments Agency, who will administer the scheme on behalf of the Scottish Government, are aiming to begin issuing payments from mid April onwards, two months in advance of the EU deadline.

“Many of Scotland’s dairy farmers have suffered significantly over the past year and this payment will be a small but nonetheless welcome boost to those who have experienced difficulties. We will continue to do everything possible to ensure a sustainable future for the industry during a challenging economic climate.”

The exact amount payable to each farmer will not be known until the production data during the specified period has been processed to identify eligible cases. Member States must make the payments by the end of June 2010 and are required to notify the Commission on the method of allocation by the end of March.

Commenting, NFU Scotland milk committee chairman, Jimmy Mitchell said: “We are delighted that the Scottish Government has taken the simplest route to paying this European-wide fund out to Scottish producers. While, at 0.2p per litre, the sums of money involved are relatively small, every little bit helps as the majority of Scottish dairy farmers continue to struggle to achieve an acceptable and fair price for their milk.

“The fund, while most welcome, is a bit of a sticking plaster. Our wider agenda remains focussed on securing a better milk price from the marketplace for our members. Wholesale prices for cheese, butter, cream and milk powder remain significantly higher than a year ago and demand for fresh liquid milk is buoyant,” said Mr Mitchell.

“Despite these positive signs, very few milk producers in Scotland have seen any significant improvement to their milk price for months now and we continue to meet and discuss this situation with Scotland’s milk purchasers, highlighting the urgent need for farmgate prices to improve.”