30 June 2000

Union in quandry over withdrawal of underused quota

IN a bid to improve milk producers returns, the Scottish NFU is asking dairy farmers if quota should be withdrawn from so-called non-producing producers and reallocated to those still milking cows.

Jim Walker, Scottish NFU president, said figures showed that about 90m litres of wholesale quota was leased in Scotland last year, and over 1300m litres in the UK.

"At current leasing prices, thats a cost to Scottish dairy farmers of £3.26m," said Mr Walker at last weeks Royal Highland Show in Edinburgh. The bill for the UK neared £50m.

He said that under Agenda 2000 member states could introduce measures to confiscate underused quota. Farmers would have to produce 70% or more of their own quota within a 12-month period.

"It would be another important step to free up the market and allow dairy farmers to produce milk at a lower cost," he added.

Mr Walker also urged dairy companies to increase the prices they pay producers at the earliest opportunity. "The k has strengthened against the £ by over 8% in the past five weeks, making the intervention milk price equivalent worth 16.9p/litre, compared with 15.3p on May 3.

"The dairy trade has consistently attributed the strength of sterling against the k as the principle reason for the decline in milk prices. Therefore, the milk price should respond to any weakening in the £."

Our monthly milk price table shows that May prices came under further pressure because of seasonality penalties. Even when these are added back in, the underlying base prices paid by companies in the table averaged just 16.4p/litre, compared with 19.3p for May 1999. &#42