DAIRY FARMERS of Britain is the latest buyer to take the limits off milk production for its suppliers, as quota prices continue to slide.

Members of the co-op have been told that they will not be penalised for overproduction, and will have all withheld milk cheques returned to them.

The threshold for withholding payments at DFoB had already been lifted from the 4% over quota to 8%, but now the limit has been done away with altogether.

The move comes in response to December‘s milk delivery figures, which showed that the UK had fallen even further below quota.

The Charles Holt/FARMERS WEEKLY butterfat adjusted profile estimated the shortfall to be some 215m litres of milk up to December.

DFoB joins co-ops First Milk and Milk Link in abolishing production limits, while Dairy Crest and Arla have lifted the threshold to 125% and 110% of quota respectively.

Increasing confidence that the UK will not produce more than its national milk allowance has led to a slump in quota values, with prices down to 5.8p to lease a litre of 4% quota.

This compares to 6.4p/litre one month ago and 11.8p/litre in the same week of 2004. Sale values are also down to 10.8p/litre, a fall of nearly half a penny on the week.

The price of quota now stems entirely from its investment value with regard to the single farm payment, and brokers‘ estimates are in the 5.5-6.0p/litre range.

Trading has seen the vast majority of quota moving from England across regional borders into Scotland, Northern Ireland and Wales, said Jonathan Smith, a consultant with BK National Quota Exchange.

“English dairy farmers are thinking they may as well sell it and have 6p/litre now instead of 6-8p/litre over the next eight years.

“But prices around 5.5p/litre will put farmers off selling and even 6p/l is a real barrier in everyone‘s minds.”

sam.fortescue@rbi.co.uk