25 September 1998

Area should dictate sheep quota tactics

SHEEP farmers in less favoured areas should wait before buying quota this season, since big premiums could evaporate if the ministrys proposed ring fence regulation changes are confirmed.

Last season, GB non-LFA quota sale prices averaged £6.84, says Mark Bray of ADASs National Quota Transfer Service. But England LFA quota was worth almost £27 on average, and Welsh LFA about £16.50.

Prices have jumped sharply this season. Initial sale prices for non-LFA quota more than doubled to £15, says Mr Bray. Welsh LFA, in short supply, could also rise by £10 or more to match English LFA values.

"At about £18, the sheep annual premium is around £7 more then we first thought. And there are more eligible sheep about, since a lot more ewe lambs were retained when the hogg trade fell apart last winter."

However, the market is almost certain to assume a single ring fence, which removes the distinction between LFA and non-LFA areas. This will see sales values move much closer together, he adds.

That means this seasons prices could change sharply if the ministry confirms its proposal during the trading period. It could tempt some LFA quota holders to try to sell quota early in anticipation of the lower merged value, which might only be worth the non-LFA base price (£12-14) plus the LFA lease price (£7-10).

However, lowland producers may want to buy now before prices rise next year, he adds. &#42