7 March 1997

Industry issplit over

spring sales

Head

By Tim Relf

OPINION is split over the outlook for dairy dispersals this spring.

Some say the BSE cohort cull will send dairymen out looking for replacements, boosting demand. Others say the effect will be less marked.

In the first category is Keith Flemington of Gloucester-based Bruton Knowles. He expects people to be shopping for replacements. And buyers, "facing the grass", will be bullish, he predicts.

"Theres no guarantee that prices will rise over the summer, so anyone postponing a sale until the autumn could find that trade has dipped. If they havent made any silage, they will then be left with neither food nor trade. Plus they will have used half their quota."

A recent sale of unrecorded commercial Holstein Friesians sold to a top of 1100gns and averaged £700, says Mr Flemington.

Similarly, market sales around the country have seen good dairy cows consistently average over £900/head recently, about £100 up on 12 months ago.

But John Thornton of Kivells at Holsworthy, Devon cautions against expecting sky-high prices as a result of the cull. "It will be a long, slow process," he says. And farmers may already have their own heifers in the pipeline or may choose not to buy any more and reduce quota requirements.

Mr Thornton reckons that good commercial herd dispersals could be averaging about £700. But with cohort compensation based on "replacement" value, dispersal prices for second quality animals are likely to be less than the compensation level.

For those quitting dairying, however, the value of the quota is a major factor, says Mr Thornton. This encourages sales early in the milk year when clean quota supplies are at a maximum.

Mark Lewis of Symonds and Sampson reckons the imminent election will also encourage spring, rather than autumn, sales.

Retirement relief provisions could be less favourable under a new government, he says. Looking further ahead, farmers are also keen to cash in their quota while it still has a value.

"Farmers, therefore, have one eye on the election and the other on the approach of the year 2000." Mr Lewis also suggests £700 as the likely herd dispersal average value.

Expected falls in milk prices are also prompting some farmers to sell quota, anticipating demand for it to be hit next year. And this, says Mr Lewis, is another factor contributing to the busy spring sale calendar.

David Giles of Halls at Shrewsbury, however, reckons that with people taking a "wait and see" approach to the cull, the autumn, rather than the spring, will see the bulk of the dairy offerings.

Although there could be certain "stings in the tail" regarding capital taxes, the election is a fringe issue as regards planning a dispersal, he says.

But the search for dairystock may be completed by the autumn, leaving May or June the best time to have a sale, suggests Mr Giles.

Smiling but sad to be leaving the industry…brothers Colin and Don Rouse disperse their 113-head Holstein Friesian herd tomorrow (Mar 8) at University Farm, Lew, Oxon. Now seems to be a good time to sell, says Don, with the election looming and any change of government possibly bringing tax changes. Latest figures show a herd yield of 6789 litres/cow and an MOPF of £1447. Details on 01993 850938.

Will the BSE cohort cull send dairymen out for new stock this spring… or will it be once-bitten, twice-shy?