Replacement dairy stock at a premium

Filling potential is every business’ ultimate goal.

But for those in the dairy sector the odds can appear to be stacked against even the most determined operator.

As producers eagerly awaited the release of the latest milk production figures from the Rural Payments Agency this week auctioneers forewarn of other continuing constraints on production; namely the shortage of replacement stock.

As weekly markets and collective sales return to normal trading arrangements after the holidays operators suggest youngstock and replacement heifers – particularly fresh-calvers – remain hard to source.

Aptly named annual “Quota Filler” sales in the south-west (as seen in the Land, Farms & Business section of Marketplace) have been bolstered with the inclusion of herd dispersal stock to try to meet market demand.

Traders admit it’s a struggle.

With demand almost certainly outstripping supply nationwide, some producers have found it easier to complete private treaty and direct herd-to-herd sales to shift surplus stock outside of the auction ring.

Other factors are also limiting supply to regular sale venues.

Bovine TB – an on-going subject of divide between producers and politicians – continues to add to the mire.

The number of cases continues to rise and DEFRA’s proposals that could see more rigorous pre-sale testing (within a 60-day window of the sale date) will further exacerbate availability of stock, say traders.

Although further regulation in this area is unlikely to hinder producers used to selling stock in large batches – mainly the beef farms selling stores, although complete herd dispersals also qualify – dairy producers are still geared to selling stock in small numbers.

New rules are likely to add considerably to costs for both handling and testing, warn traders.

While the economics of supply and demand will factor in to the equation, replacement stock values are unlikely to increase significantly, predict auctioneers.

Producers are paying – relative to the ex-farm milk price – strongly for replacement stock and even the arrival of the single payment is unlikely to deepen producers’ pockets.

Anecdotal evidence from sale rings suggests producers are eager to maximise the potential to increase output to meet quota, but the achievement of this goal is unlikely to be at the expense of overloading fragile farm finances.