Icos, the umbrella group for dairy co-ops, has devised a new scheme to shield farmers from commodity price volatility.

The group’s “555” income stability tool would permit farmers to declare an average income over five years for tax purposes.

It would also allow farmers to defer up to 5 per cent of their milk receipts in any one year, with the deferred funds to be drawn down at any time within a maximum of 5 years.

This would allow participants defer a modest portion of earnings during a period of high prices, which they could then draw down at a later date when prices were less buoyant.

Since the ending of the milk quotas last year, global milk prices have crashed on the back of falling Chinese demand and the Russian trade embargo.

The Irish Creamery Milk Suppliers Association (ICMSA) estimates about €1 billion was drained from the Irish economy last year as a result of the slump, with farmers facing income swings of up to €40,000.

"The range and frequency of income volatility affecting dairy farmers is unprecedented in recent years," Icos president Martin Keane said.

“Action is urgently needed from the next government and we need to think outside the box in order to put in place a suite of measures to help dairy farmers to manage volatility,” he added.

Mr Lane urged political parties consider the Icos proposal which he described as “straightforward, practical and workable.”