AUCTIONEERS

21 April 2000




AUCTIONEERS

COMMENT

MARKET

Taunton

AUCTIONEER

Derek Biss

(Greenslade Taylor Hunt)

IT has been said for months that there will be a shortage of heifer calves suitable as dairy replacements and that is now proving the case. Heifer calves born last autumn with good dam records supporting a high PIN are starting to make similar money to bulling heifers. At pedigree level that has been around £220-£250 each, but realistic values across a range of outlets would put the figure nearer £100-£200.

It appears producers are at last waking up to the reality that there could be the predicted shortfall in the near future, as are the many farm advisers who are encouraging clients to go for the progeny of these high PIN cows before the market goes too far.

By my estimate, better heifer calves have seen their value almost double since the lull in the dairy market just before the end of last year. Producers with foresight and capital have already acted.

A shortage was and still is inevitable. No farmer wanted to see Holstein calves put down because their value was low, but perhaps it is time to see a swing in AI policies away from blanket use of beef sires to selective use of Holstein genetics. Certainly, AI suppliers are bemoaning the lack of trade if attitudes at the recent Holstein Show at Stoneleigh was any indication.

Few producers may be able to justify the likely cost of rearing replacements in todays milk market – costed at between £600-£1000 – but where will replacement prices be in two years time? Too many producers are looking no further than short-term survival, but I admit there is little encouragement to do anything else.

It is interesting to note that those herds temporarily getting out of dairying are selling up the older milking stock but retaining female calves. They must be expecting the replacement heifer price to increase. Indeed, others are speculating on that to happen and to an extent that is fuelling the current trade.

And what of supply and demand? Certainly there are a number of dispersals at the moment, but these will tail off in May and the market should hold steady. What cannot be legislated for is the change in milk and, in particular, quota prices. If leasing stays at 4p/litre and purchase at under 25p then vendors could see a willing company of buyers at their sale. But who would put money on that happening?

However, it is worth noting the unwillingness of bulling heifer values to rise. Perhaps dairymen see a period of stability for the next 12 months in stock values.

But what can you do if you are strapped for cash? I feel many cows could be switched on to increase yield from those feeds which, in relative terms, have become cheaper – a move that will surely be encouraged as the cost of replacements rises. More production, but not more cows.

That scenario is not good from an auctioneers point of view. I want to sell as much stock as possible, but I cant help but note that there are a few lower cost options to help producers achieve this goal. The trade in dairy cows is a good example – those with attractive breeding have been snapped up for little more than a few £100s above the burner price.

And trade continues to provide a very efficient way to improve a commercial dairy herd. Out on spring/summer grazing they could soon be putting profit back into the bulk tank. &#42


Upcoming webinar

What does the future of farming look like post Covid-19 and Brexit?

Register now
See more