Depressed sheep prices lead to rise in quota demand

By Tim Relf

SHEEP quota is making big money as farmers compete for limited supplies.

Depressed sheep prices have prompted people to delay selling stock, increasing demand for quota, say agents.

At the same time, says Duncan Clark of DCFM, those with surplus quota are not releasing it. Prices are now well above the levels some were used to getting in previous years, and could rise more. “People are hanging on, having taken a caning last year, hoping prices will go higher.”

But this may result in big supplies arriving on the market after Christmas, says Mr Clark. Prices could, therefore, ease then, contrary to 12 months ago when the market went “ballistic” and the rush for quota drove GB lowland prices from 1 to more than 5.

While lower lamb values suggest the payment on the 1999 quota now trading will rise from 1998, it is still a big unknown. Even the payment on 1998 quota is still a “best guesstimate” at 18, says Mr Clark.

Chris Windle, of Skipton, Yorkshire-based David Hill, says that quota could be in short supply in January and could get dearer.

He has also seen farmers hang on to livestock in the face of a depressed market. Plus, people have bought gimmer lambs and will “run them round” to sell as shearlings next year, among them farmers who “caught a cold” fattening store lambs last season and have focused on gimmers.

Interest in buying LFA quota has also picked up since MAFFs announcement that it will not amalgamate the lowland and LFA areas. People were wary of buying LFA samples because if the areas had been amalgamated that could have driven down values next year, says Mr Hindle.

Howkins and Harrisons Angela Cleveley says that while supplies available for leasing are tight, there is not the same shortage in the sale market. This, she says, reflects farmers who have leased it out for the past three years and, under MAFF rules, now have to either use it or sell it.

Mark Bray, of ADAS, agrees that people have been seeking quota earlier this season than last. “Lessees realise they are carrying extra sheep and that their neighbours are too. They think supplies of quota will run out, and they are probably right.”

Mr Bray has already traded about three-quarters as much as last year – and the trading period does not close until early February.

It is a similar situation, he says, to the suckler cow quota market, where low OTMS values are leading people to delay culling stock, increasing quota demand.