16 April 1999

Rise in deliveries brings fears of milk super-levy

By Robert Harris

OVER-QUOTA dairy farmers face a worrying few weeks after an unexpected surge in milk deliveries during March which could trigger costly super-levy bills.

Sluggish output in the past few months, which saw UK output 53m litres under quota at the end of February, meant more farmers than usual put extra milk into the tank without taking cover, say agents. Output rose, and little or no milk was thrown away or fed to calves.

As a result, provisional figures from the Intervention Board show butterfat-adjusted deliveries hit almost 1.25bn litres last month, a massive 64m litres or 5.44% over quota.

That, coupled with a 3m litre upward revision of the February figures, lifted overall UK production for the milk year to 13.95bn litres, 13.5m or 0.1% over quota.

But the wholesale pool has grown during the year. IB provisional figures show producer/ processors converted 19.1m litres of direct sale quota to wholesale, taking the UK back under quota by 5.6m litres.

One further, now crucial, process remains – temporary transfers. If producer/processors convert more than 5.6m litres of wholesale back to direct, that will trigger super-levy payments. Unfortunately, the outcome is unlikely to be known before July.

It is the closest call since quotas were introduced. "The position is very finely balanced," says the IBs Teresa Broad. "But by the law of averages, the chances are there will be a larger conversion from wholesale to direct than in previous years," she adds. Anyone who is heavily exposed could be in trouble, says Charles Holt of the Farm Consultancy Group. "Two years ago a net figure of 16m litres was transferred from wholesale to direct. And direct sellers were caned last year with a 17p/litre levy. They will probably take no risks.

"Using broad-brush figures, for anyone producing up to 10% over quota the chances of paying super-levy are slim. But there are plenty who are 20% and more over."

Buyers are more cautious. Milk Marque describes producers up to 2.5% over quota as low risk.

Jonathan Smith of Bruton Knowles knows several producers who are more than 100,000 litres over quota who could face bills of £20,000 plus, given this years 24.36p/litre super-levy penalty. He has heard of others at five times that level. "But the UK could still end up slightly under quota," he stresses.

Even if super-levy payments are triggered, not all dairies will be over quota, he notes. For those that are, payment will depend on the threshold set by each dairy or purchaser group, which will only be known once final national calculations are made.

Somerset producer Peter Trump, Holly Farm, Peasmarsh, near Ilminster, reckons he could face a large bill despite being told by Express that there was "no way" the UK would hit quota.

Mr Trump produced 50,000 litres over his 264,000-litre quota. Assuming a 5% threshold, he will have to pay super-levy on 36,800 litres, a total of £8964. "And being over quota, we have not been paid for our milk since the first week of February," he adds. &#42

Sentry loses £1m+

SENTRY Farming made a trading loss of more than £1m in 1998, bearing out the firms pre-Christmas warning, which blamed continued price pressure on crops and livestock, the strong £ and bad weather.

Actual pre-tax loss was £426,000, after allowing for the sale of Friarsthorne Farm, Norfolk. That compares with a pre-tax profit of £94,000 in 1997, and £1.74m in 1996.

About half of the firms contracts, many of which were agreed in more lucrative times, are up for renewal. The company hopes to continue revising agreements to allow it a more equal share of profits. &#42

Potato planting boost

BETTER weather has allowed potato growers to crack on with planting, but there is a lot of ground still to cover.

The area sown by the start of this week was 47,469ha (117,248 acres), nearly 38% higher than at the same point in 1998.

As GB farmers were putting spuds in, Jersey and Cornish farmers were pulling them out. While liftings are still small they will build rapidly as April progresses, says the BPC. And total movement of Jersey stocks to GB looks set to be slightly higher than last year at 40,000t. First Majorcan potatoes arrived on supermarket shelves recently, delayed by February frosts. But a ban has been put on imports from Egypt after brown rot was discovered. According to the BPC, that is unlikely to have much impact on deliveries, with imports from that country already approaching 40,000t.

GB ex-farm prices for new potatoes were at £1430/t on Wednesday, according to BPCs field manager, John Harris. Sales of old crop averaged £170/t in the week to Apr 9, double the level of 12 months ago. &#42

Milk output sparks super-levy concern

A surprise surge in milk deliveries during March has caught many producers by surprise, especially as it follows reduced output over the past few months; whether over-quota farmers will be hit by super-levy payments now hangs in the balance……………….page 21

Organic awakening

US farmers are ahead of the game when it comes to supplying organic produce, and they are taking advantage of rising consumption on the Continent which European growers are unable to meet…………..page 22

Dairy dither

Milk quotas could last until 2008, according to documents designed to rubber stamp Agenda 2000 proposals. This, and other contentious points, could make for heated debate when the texts are discussed in Brussels next week……..page 23

It pays to talk

Mobile phone base stations can produce useful extra income, but farmers must study the fine print to ensure they get the fairest deal, warns a north country solicitor………..page 26

Scottish smiles

Lambing percentage at Kings Arms looks like being the best for some years, due to careful planning and a lot of hard work. Attention is now being switched to suckled calf sales………………………..page 28

Pig price rise

Live pig prices bounced back after Easter, providing some cheer for hard-pressed producers, and deadweight prospects also look good; the hope now is that buyers will stick to high welfare UK supplies……page 35