Cross-border milk quota trading has taken its first tentative steps in the UK, according to quota broker Ian Potter.

Mr Potter said he had brokered a deal for a group of Italian farmers to purchase or lease several million litres of quota from 10 of his clients.

However, even though the farmers would be paid a substantial premium over UK quota values as soon as contracts were signed, there was no guarantee that the transfers would ever be approved by the Rural Payments Agency because cross-border trading is not allowed under EU rules.

“I hold very limited hope and am not looking for more quota,” said Mr Potter.

Despite this, he said the Italian farmers, who had already bought some Hungarian milk quota, were convinced they had a good chance of challenging the rule.

“They are not stupid and have a plan they will work away at once they get rejected.”

If the deals were eventually approved it could unleash a huge transfer of quota from disillusioned UK dairy farmers, said Mr Potter.

Dutch quota is worth about 1.30/litre and Italian quota 20p/litre, compared with about 4p/litre here.

“People wouldn’t be able to hand in their notice quick enough.”

John Allen of Kite Consulting said, even if the Italians did force a change to the EU regulations, it could take years.

“Producers shouldn’t panic and take silly measures to secure quota cover.”