Milk prices a-tumbling

5 February 1999

Milk prices a-tumbling

SADLY the inevitable has happened; milk prices are falling, writes Tim Green. Last year, a new price formula was agreed between producers and buyers. Half the milk price would be index-linked to export prices for butter, cheese and milk powder and half to supermarket and industrial prices. Things looked promising when the deal was struck and there was even a small price gain.

But problems with the Russian and Asian economies cut butter and milk powder prices, resulting in a price fall of nearly 0.4p. Although that may not seem much compared with the price carnage in the UK, in France we fight a rearguard action for less than 0.4p. If industrial and supermarket prices rise then the loss would be cancelled out.

Not surprisingly, they do not want to increase prices. During negotiations, it became clear that the export price bubble would burst so we shouldnt be too surprised.

Our December price for a butter fat of 4.27 and a protein of 24.5p (k0.337) missed the top premium.

Also the dairy has told us that we will not have more than a 3% extension on our quota for this year. Even the 3% cannot be guaranteed. Last year they allowed 8% extra production, as milk production increased this winter, which compensated for the 2% shortfall before October. So we have been warned not to over produce.

One modest solution for over-quota producers is to donate 1500 litres to charitable institutions to avoid the fine.

We are slightly under quota at Vimer and are trying to find some cheap cows to fill the last two months. During a conversation with the dairy liaison manager Mr Galot, he strove to convince us that we will produce enough milk. Of course any shortfall will make it easier for other over-producers.

Sheep prices down

Its not only milk prices that look rocky. Sheep prices are down which is perhaps inevitable bearing in mind the level and price of UK imports. Average 18kg, R3 lambs are worth £3/kg deadweight for new season and £2.77 (k3.82) for hoggets. Barren ewes were changing hands at between £30 and £35 (k41.22-48.85) at last weeks local market. Apparently there are few good lambs around and the forecast is for further reductions.

To complete the hat trick of financial woes, beef prices are also down. Barren cows are being talked about at £1.33 (k1.83) per kg/deadweight with little hope of an increase.

We will sell ours through a local co-operative. Luckily two of our beef animals were sold before the slump and they should make reasonable money.

As they were sold in confidence we dont know the price yet but it should be better than £2kg/deadweight (k2.75) or there will be ructions.

One lost his ear tag before or during loading and had to be retagged before slaughter. Fortunately they were sold locally and the delay lasted only one afternoon. No exceptions or allowances are made and we are even tagging animals that have been tattooed in case all the tattoo number cannot be read.

The French identification system has been modified again and animals now they have to be double tagged at birth and all have to be registered using Minitel, a cross between a national home computer system and teletext. Lost tags have to be notified immediately and if both tags are missing and the animal cannot be identified by the milk recorder or technician it is slaughtered with no financial compensation. We are considering reverting to drawing calves to avoid potential identification problems. Meanwhile there have been more outbreaks of BSE in the region. One was only a few kilometres away from Vimer.

Notwithstanding form filling, tagging, recording and accounting we are trying to farm. Fertiliser has been delivered from a local co-op with 33.5% N at £117.70 (k161.83) and a 17-14-15 blend at £150.55 (k206.87). We also took up a recent offer of imported N at £88.80 (k122.14) for a split load.

Despite wet weather we have cleaned out the cows bedding because it was heating. Waiting for dry weather, judging by recent forecasts, seemed a forlorn hope.

See more