3 April 1998

Dispersals planned as farmers quit in response to Budget

By Tim Relf

MORE farmers are deciding to leave the dairy industry, just weeks after chancellor Gordon Browns budget.

Changes to the capital gains tax regime will mean farmers could be hit heavily on the value of milk quota if they delay quitting until after April next year (See Business, Mar 27, 1998).

"People were waiting for the Budget with baited breath," says Keith Flemington of Bruton Knowles. "This will have made their minds up." And for farmers in their mid- to late 50s, with no successor, its a case of now or never, he says.

This autumn may see large numbers of dairystock coming on to the market – but prices will be held up on the back of demand from farmers shopping for cohort replacements. "Theyll be looking for the better cattle – they wont want the also-rans." Key criteria, therefore, will be milk yield, hygiene, plus butterfat and protein levels.

Derek Biss, auctioneer with Greenslade Taylor Hunt, says while the main pressure on smaller farmers will be the decline in incomes from milk, the recent tax changes will prompt some of the larger farmers to sell up. "The Budget has focused peoples minds."

October looks like being a busy month, says Mr Biss. While the present demand for cows and heifers is being helped by the drive for increased spring milk production, demand in the autumn will be geared to quota. So expensive quota and cheap cows could be a possibility, says Mr Biss.

But Barry Colton of Kittows reckons this autumn will see the usual number of dispersals. "There wont be a mad rush."

Trade has firmed in recent weeks, he says, with the best commercial heifers between £800 and £1000. Demand for third- and fourth-calvers has also rallied, as farmers seek to boost output. "Farmers who are staying in milk have, after all, to go on."

And farmers keen to source cows converged from far and wide on Withial Farm, East Pennard, Somerset last Thursday for the sale of 165 dairy cows and heifers for J Osborne. With a herd average of 6444 litres at 4.27% butterfat and 3.53% protein (margin over concentrates, £1210), prices topped at £940 for a first-calved heifer.

More dairy dispersals are being planned following the Budget. Whether the number of buyers attending will be as high as has traditionally been the case is another matter.