14 January 2000

Expected cut in SAP pulls quota prices down

By Simon Wragg

SHEEP quota prices are down on last year with the expectation that better lamb prices across the EU will cut the sheep annual premium payment to about £13 a ewe.

MLCs Lesley Green has revised downwards the expected payments after the £s strong performance against the k through December. The average exchange rate for the month is used to set the basic payment.

"Also, the recovery in lamb across the EU – especially Spain and France – will have the effect of reducing potential payments," she adds.

This, and an acceleration in cull ewe slaughterings (up 400,000 including rams in 1999 compared with the previous year) has tempered producers activities. As a result, many brokers report a low level of enquires this week in what is normally the busiest trading period ahead of the Feb 4 deadline for quota deals to be lodged with MAFF.

"It is exceedingly quiet," says Richard Hyde of Sunderlands, Hereford. "We have 19,000 units on the books so I am just a little concerned." But the lack of producer action was predictable after a chaotic close to trading last year which left little margin between quota and ewe premium payments of £16 a head, he admits.

Like many areas, England lowland lease deals have been put at £4 (£10 for purchase), but that is unlikely to be sustained, predicts Mr Hyde. Early reports from transfers signed across the border in Wales add weight to his comments.

In North Yorks, availability of quota is affecting the market. "We have had 4400 units for this weeks auction, double last years total," says Paul Jones of Craven Cattle Marts, Skipton. "Some lowland has been leased at £4 a unit, but the buyer reports he has been offered other lots at about £2."

These levels have already been neared in the south-west, says KVN Stockdales Patrick Dennis.

As ever, Less Favoured Area quota is firmer, with Scottish units trading at £9 for lease and £20 for purchase, says Tom Taylor of Hayes McCubbin Macfarlane. "We are seeing those producers looking for lots of quota entering private deals, with smaller amounts going in the auction."

The likelihood is that producers could get a better return on quota at this years prices, says National Sheep Associations John Thorley. If MLC predictions hold true, the margin between England lowland lease deals and subsidy could be as much as £9 a ewe. &#42