The taxpayer is facing a bill of up to £4 million in compensation to farmers who were not allocated the correct milk quotas in 1984. This is the implication of a High Court settlement this week, following a Supreme Court judgment in 1997.
On Thursday, Ms Justice Laffoy awarded £170,000 to a Cork farming couple whose dairying enterprise collapsed.
This followed a Supreme Court decision in March 1997 that the then Minister for Agriculture erred in law by not making proper provision for milk quota allocation to farmers who were developing their farms under the Farm Modernisation Scheme or the rescue packages available to farmers at the time.
This resulted in a number of farmers investing in the expansion of their dairy-farming capacity, but not receiving the milk quota allocation which would have enabled them to exploit the increased capacity.
Following the Supreme Court decision, Ms Justice Laffoy's judgment established a basis for deciding compensation. In the case of the O'Donovans, whose case was settled on Thursday, the compensation was for loss of income, capital losses on the sale of their farm, stock and machinery, superlevy liability, loss of co-op shares and damages. The damages came to £20,000.
In four other cases settled so far the compensation has been for £53,000, £55,000 and £48,000 respectively, according to the Department of Agriculture. A spokesman for the Department said it was impossible to predict what the settlement would be in the other 85 cases outstanding, but they were unlikely to be more than these. The O'Donovans' settlement was unusually high because the farm was sold.
Mr Frank Allen, president of the ICMSA, said the level of compensation was impossible to predict, but guessed it was likely to average out at about £30,000.
However, according to the ICMSA, a further 1,200 farmers who had farm modernisation schemes filed in 1984, but who were tied into their existing quota allocation that year, should be eligible for compensation. However, they failed to lodge their claims under a specified time limit.