3 September 1999

Milk quota deadlines set to change?

MILK producers will soon have an extra three months to lease in quota if ministry proposals to change deadlines are agreed by the industry.

The proposals, which would take effect from the 2000/01 milk year, were included in a consultation document recently released by MAFF on the implementation of milk quota management under Agenda 2000.

MAFF wants to extend the quota leasing deadline from Dec 31 to Mar 31, the end of the milk year. This, says the document, would provide more flexibility for farmers to adjust quota to match end-of-year production.

But to avoid overloading Intervention Board staff with paperwork, the document proposes that the deadline for quota sales with land is brought forward from early April to Mar 1.

Although ministry officials are remaining tight-lipped over the response so far (closing date for comments is Sept 30), others believe the changes will be adopted. "It is almost a fait accompli," says Peter Weston-Davies of the Farm Consultancy Group. "That is the way they want it to go."

It should make for more accurate planning, he believes. "Farmers wont have to guesstimate their last three months of production in December." His only concern is that moving the deadline could exacerbate the usual rush of deals as the deadline approaches, forcing prices up at the end of the season.

Jonathan Smith of Bruton Knowles agrees, suspecting that little trade will be done before the January-March period. "But it could lead to a lot of gambling in the last three months, and very volatile prices."

Any change is also likely to reduce the number of back-to-back deals, which can be a legal minefield, he adds. "But they wont stop them completely, because of the tax advantages. Leasing out attracts income tax, whereas a back-to-back transfer is a capital transaction, which is usually too small to attract capital gains tax."