Sluggish milk production leaves quota market idling

Another slow month for milk production saw UK dairy farmers deliver milk volumes well below quota profile in October.

Butterfat adjusted deliveries came in at 1.08bn litres over the month, 15.2m litres short of the Charles Holt/Farmers Weekly profile.

It pushes the cumulative shortfall to 240m litres overall, with only five months of the milk year left to come.

Chris Flint of Kite Consulting blamed bad weather this month for lower production, but said the trend was already there from earlier in the year.

“Quota is looking very difficult this year, and it’s only going to get worse with the UK getting an extra 0.5% a year from 2006.”

Charles Holt of the Farm Consultancy Group agreed that the quota market was barely moving at present.

“There’s a big stand-off between buyers who want to pay around 4.5p/litre and vendors who are holding out for at least 5p/litre.

“It’s bread and dripping for us quota traders, but we may well find more people looking into buying quota in the next few months. It won’t be a roaring trade, but I think it will pick up.

“There are a number of dairy farmers feeling expansive who want to take the chance to put on a million litres of cover for between £40,000 and £50,000.”

Mr Holt said his most recent transaction had seen 4.05% quota sold for 4.6p/litre.

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