LEASINGQUOTA MAKESSENSE…
LEASINGQUOTA MAKESSENSE…
By Jessica Buss
GAMBLING on the UK ending the year under quota seems a risky option when the insurance against it is so cheap.
Thats the opinion of Staffs-based dairy consultant Ian Browne, of the Farm Consultancy Group, who believes the price of leasing is low compared with super-levy.
Figures to the end of December show production cumulatively at 322m litres or 3% below the quota profile. This is equivalent to 8.5 days supply. But the amount of wholesale quota to convert to direct-sale quota is not yet known and this could change the amount the UK is under quota, he warns.
Many producers arent going to fill the quota available to them this year, especially where silage is poor and cow performance is suffering. "But there are producers 100,000 litres or more short of quota and to lease at about 1p a litre seems good insurance against super-levy," he says.
"Businesses cant stand a knock at the moment, so its worth spending £1000 on quota leasing because it is already in the budget."
It is also important not to assume there will be a large quota threshold. "The threshold game has changed." Now individual milk buyers have their own threshold, it will be different for each one and this is not worth gambling on, he believes.
Producers who need quota for this year may be wise to enter the market soon, rather than wait for the end of March, even though quota may almost be given away. "By then, the market could be volatile and it is possible that leasing price could be 10-14p a litre," warns Mr Browne.
In the last quarter of this year, milk output on many farms could compensate for lower output last summer and autumn, he adds. There are many cows calving and some cows are starting to milk better as diets are fine-tuned.
Spring calving herds on which he consults plan to feed fresh calvers their normal diet of silage and 6-8kg of concentrate from calving. "If cows are fed 8kg of concentrate for two months thats less than 0.5t and it will ensure they start milking well."
Feeding concentrate will be good value this year as the margin over feed is better than last year.
He believes that farms with good access to pasture will turn out cows in early March or for short grazing periods before then, helping production on some units. But when its wet and access is poor walking cows over the same ground three or four times will result in a quagmire.
Before cows go out, he advises ensuring enough grass will be available to keep cows grazing until growth meets demand using a grass budget.
However, forage stocks are beginning to cause concern on some units with the long winter. "Cows on many units have eaten vast amounts.
"Alternatives, such as brewers grains and pressed pulp, are expensive, but it makes sense to keep cows milking well with turnout just around the corner."
With all these factors taken into account, Mr Browne reckons we will end up closer to quota than many industry pundits believe. *
QUOTA GAMBLING
• High risk option.
• Leasing relatively cheap.
• Many unknown factors.
Quota thresholds will differ between milk buyers, says Ian Browne.