Monthly milk production slips again but quota values fight back

Milk output fell again in August but quota values have more than doubled, as dairy farmers seek to protect themselves against a surge in production driven by better milk returns.

Dairy farmers delivered 1.064bn litres to processors in August, the lowest output so far this quota year. Adjusted for butterfat at an average of 3.97%, that rises to 1.08bn litres – nearly 100m litres below the Charles Holt/ Farmers Weekly quota profile for the month and 463m litres under quota for the year.

But after months of dormancy, quota values have jumped from about 1.5p/litre to nearly 5p/litre.

Charles Holt of the Farm Consultancy Group said the drop in production has been widely expected due to this summer’s persistent rain and widespread flooding, but described the rise in quota values as “quite phenomenal”. “Increased milk prices have taken quota values up in their wake.”

Mark Webb of broker Webb Paton said: “Dairy farmers anticipate that if these milk prices are sustained there will be more milk produced and quota will be important again in the future. It’s an insurance policy.

“The quota regime is in place until 2015 and to dismantle it earlier would require specific legislation.”

Although trading had been patchy, buyers were looking for significant quantities of quota. There was no leasing market, he added.

Farmers Weekly Awards 2021

Enter or nominate today