Dairystock brisk spell to continue
DAIRYSTOCK seems set to hold its price after the new milk year starts next Thursday.
Thats the verdict of auctioneers, who say farmers expansion plans will keep the trade buoyant. It follows a brisk spell when, with the nation struggling to reach quota, farmers were out shopping for cows in a bid to fill the tank.
"Lots of people are expanding," says Gwilym Richards. And those that are buying wont be just taking one or two home from auctions – theyll be looking for bigger numbers. "Time is money – they dont want to be attending sales every day of the week."
Such expansion plans will soak up the supply of animals on to the market. And this offering may not be as big as some people predict. For many producers, the decision to leave the business is limited by the absence of an alternative, says Mr Richards. "The dairy sector is still the best of a bad lot."
John Pullin at Bruton Knowles reckons dispersals, while widespread, will not be as plentiful as last spring. Some mixed estates, though, are scrapping the dairy enterprise to expand arable acres. "This then becomes more efficient with the economies of scale."
For those people that do sell up, quota factors will remain one of the main factors determining timing. And this will encourage many to quit early in the new milk year when the maximum amount of quota is unused.
A farmer with a herd of commercial cows – worth about £450 each – could find on dispersing that the quota makes four to five times as much as the stock, says Mr Pullin.
The trade – which recently has been firm on the back of the shortage of milk – could hold or even go a bit higher, says Mr Pullin. "Plenty of people are looking to increase numbers."
David Millard at Frome, Somerset, has seen a "better than expected" quota-driven trade. Weekly market sales have seen the £700-mark regularly topped, with last Wednesdays dairy section reaching £775.
"The jurys still out on whether it will carry on into the new quota year," says Mr Millard. "Prices will stay up reasonably well – but could come back fractionally." *