29 November 1996

Milk quota value fall on the cards

WITH only three full milk years left to run under the current support regime, quota values are expected to fall next season.

Assuming a lease value of 12p/litre, that would give a theoretical sale price of 36p/litre based on a simple multiplier, Tony Carver of the National Quota Exchange told farmers at a recent Bruton Knowles Dairy Day.

But the more likely rate would be between 45p and 50p, he suggested, reflecting a certain amount of "hope" value, from producers who felt quotas could continue after Mar 31, 2000.

Prices could also be inflated by a strong demand from producers looking to expand their businesses in anticipation of a free market.

But this demand pressure could be offset by an increased supply of quota next year as more people retire. Despite the current lenient capital gains tax arrangements, with retirement relief for the over 50s, many dairy farmers have delayed selling up this year because of the depressing effect of BSE on their herd values.

said Mr Carver.