Milk overspill casts super-levy shadow
MILK production shot up in December, prompting fears of the biggest super-levy bill ever.
Butterfat adjusted deliveries were 3.84% above quota as farmers, helped by good forage crops, turned on the taps to combat lower milk prices.
The cumulative over-supply now stands at 124m litres (1.18%) over quota. This time last year, the country was 69m litres under profile – and a £13.6m super-levy bill still resulted.
The figures came as a surprise to many. "Stunned," says quota broker Ian Potter. He dubbed them "a bitter blow to hard-pressed, over-quota, milk producers."
The news sent quota values up. "The market is panicked," says Mark Boyle of Carver Knowles. Samples of clean quota were worth more than 55p/litre early this week – and rising, he says. Only as recently as November, it was changing hands for less than 40p/litre.
Agents, meanwhile, were advising farmers not to rely on the extended leasing period for those affected by the BSE cull to bring much on to the market. "Itll be peanuts," says Townsends Mark Dyson.
With a super-levy bill of about 25p/litre looming, farmers were this week planning how to cut back the amount going into the tank.
"If you cut back on feed, youre storing up problems," says North Yorks farmer Geoff Bean. "But paying super-levy or these quota prices is lunacy. The best bet is probably to dry spring calvers off early – at least that doesnt damage next years prospects." *