Brakes must go on milk output to rein-in risk of super-levy
By Simon Wragg
MILK production continues apace as producers make the most of good summer grass to produce milk cheaply, but advisers warn its time to take stock.
Provisional figures released by the Intervention Board this week showed butterfat-adjusted deliveries for last month at 1.18bn litres, 42.5m litres or 3.74% over quota. Analysts suggest this level is almost unheard of in summer months.
The cumulative picture is starker. Output is 104m litres or 1.7% over profile, equivalent to almost three days production. Despite this, brokers report a stand-off in the quota market as 4% supplies firmed slightly to 6p/litre for leasing and 31p/litre for sales.
Uncertainty over proposed milk price cuts of at least 0.75p/litre being announced this week and the sinking in of super-levy bills has dampened demand. Producers are unwilling to pay over 6p/litre for leasing.
The advice is simple, says Lincs-based Charles Holt: "If you cant afford to lease at 5.5-6p/litre then do not produce the milk. Plan the changes now and do not leave it until the end of the quota year. Remember, lease quota deals have to be in by Dec 31, although back-to-back deals will continue for a while thereafter. For many, the brakes will have to go on and I will be saying that to my clients in very strong terms." *