December milk production slips further away from quota

The gulf between national milk production and quota has widened again. New figures from the Rural Payments Agency show dairy farmers delivered 1.066bn litres to processors in December.

Adjusted for butterfat at an average content of 4.2%, this rises to 1.09bn litres, nearly 50m litres short of the Charles Holt/ Farmers Weekly quota profile, compared with a shortfall of 33m litres in November.

Charles Holt of the Farm Consultancy Group said there was no obvious reason for the sudden drop in output but butterfat was unusually high. “I can’t find it this high in any records.”

Purchased milk quota is trading at 1.2-1.3p/litre, with little leasing activity.

But broker Ian Potter reckoned the market could see some significant activity if values reached 1p/litre.

“That’s the figure buyers have in mind, and they’re likely to come out in some force of it gets to that.”

Should the 1p/litre mark be reached, there were buyers looking for millions of litres of quota, Mr Potter said. But this would depend on the outcome of the EU’s proposal to increase Britain’s quota by 2%, he added.