21 July 1995

No speculation in milk quotas

THERE is no evidence that the milk quota market was manipulated by speculators and quota agents to any significant degree, the Commons Agriculture Select Committee has found.

In its report into the trading of milk quota, published yesterday (Thur), the committee also said that scrutiny of the Intervention Boards national quota register had failed to reveal the names of sports personalities or football clubs that had allegedly been speculating in quota.

In a brief investigation into milk quota trading in the UK, the committee heard that during the 1994-95 quota year, leased quota prices had increased from about 6p/litre to more than 20p/litre, while quota sale prices rose from about 45p/litre to 70p/litre. But the report concluded that these increased prices were the result of a combination of "unusual market circumstances".

The strong demand for quota, and the price rise, was due to the combination of increased milk production; higher milk prices; currency fluctuations; farmer confidence that quotas would remain until at least 2000; and anticipation of large super-levy fines, the report said.

With the price of milk now having risen the committee added that it seemed unlikely that quota prices would return to pre-1994-95 levels.

The report said that from the evidence submitted to the committee, it was apparent that there was no single solution to the questions surrounding non-producing quota holders and new entrants that would please one group of farmers without disadvantaging another.

These issues, along with the effects of national quota limits will be taken up again by the committee in the autumn when the UK milk industry will be the subject of the committees major inquiry.