27 September 1996

Genus – buying is a better bet than leasing

BUY it if you can afford it. That was the advice of Tom Kelly, director Genus Management, to dairy producers seeking extra quota.

He compared buying at 60p/litre with leasing at 12p/litre. When written off over five years the annual cost was 15p/litre for the bought quota; 7.2p/litre for the leased quota – taking account of tax relief.

Another reason for buying was the fact that leasing was a UK speciality. Changes to the current quota regime, if not in the year 2000, then certainly in the next 10 years, could bring discrimination against leasing.

Furthermore the clout of the 600,000 dairy producers in France, Germany and Italy was good reason to believe that there could be compensation for loss of quota. If that compensation were to be based on "quota you own" as against total output it made sense to buy.