27 September 1996

Lessors hold on to LFA sheep quota

By Tim Relf

GB LOWLAND sheep quota will currently cost you about £6 and £20 a unit for lease and purchase, respectively.

English LFA lots, meanwhile, are leasing for about £13.50, with permanent transfer samples changing hands at, or above, the £40-mark.

Agents report an abundant supply of lowland quota. Potential lessors have been keen to wrap up deals and avoid a repeat of last year when, in the face of over-supply, prices fell rapidly, says Tommy Taylor of Hayes McCubbin and Macfarlane.

MAFFs change to a single retention period (running for 100 days, ending on May 14) has taken some of the "speculators" out of the market and limited demand, says Caroline Carr of Ian Potter Associates.

Meanwhile with the premium based on lamb values, the current buoyant trade has prompted many to reduce their estimate of future payments.

The 1997 premium could be between £15 and £19, compared with an expected figure for this year of £19 or £20 (with a £5 plus LFA supplement), suggests Mrs Carr.

Selling option

Such sentiments may prompt some farmers to do without quota and forsake the premium payment in favour of selling sheep on the open market before the end of the retention period.

Most agents report a short supply of LFA quota. Lack of confidence in the beef trade, and strong lamb and mutton prices, have focused many producers attention on sheep enterprises.

"Like gold dust," is how Chris Jones of McCartneys describes it. Farmers are holding on to it, hoping prices will rise like last year, he says.

And while agents generally suggest current asking prices for lowland samples are economically justifiable, some feel LFA prices are unrealistically high.

&#8226 A recent auction at Aberdeen saw Scottish LFA quota average £38 for permanent transfer and £13 for lease (up £10 and £3, respectively on the corresponding event last year). Average sale and leasing values of Highlands and Islands LFA quota were £41.80 and £11.68, respectively. GB non-LFA samples typically sold for £15.55, and leased for £5.49.n