14 April 1995

Milk producers set to receive record super-levy bill

By Philip Clarke

WHOLESALE milk producers are facing a record super-levy bill of more than £60m – lower than some recent forecasts, but still three times more than last year.

But it will be another two months at least before all the numbers are finally crunched and individuals will be notified of their own liabilities.

Figures released this week by the Intervention Board put butterfat-adjusted March deliveries at 1.1bn litres, or 3.9% below quota. On a cumulative basis, the UK ended the milk year 200m litres, or 1.45% over quota, after applying an 11-point butterfat overshoot.

At a rate of 30.45p/litre, this would give a national super-levy bill of almost £61m. "But there is a long way to go before we know the final figure," says IB quota expert, Ruth Tompkins.

A few milk buyers have still to confirm their March deliveries. And although last Tuesday (Apr 11) was the last day for submitting quota transfer forms to the IB, these are unlikely to all be processed until mid-May. Only once this is done can the 0.5% of quota sitting in the national reserve be allocated.

There are also about 20m litres of quota permanently converted from direct sale to wholesale, which should bring the levy bill down slightly. The big unknown, however, is the volume of temporary conversions of direct sale to wholesale quota. These do not have to be notified until Apr 28.

Any direct sellers super-levy will not be estimated until after May 15, when annual declarations must be in. Mrs Tompkins believes this will be significantly higher than last years 8.3p/litre.

Less spare

Apart from the fact direct sales levy is now charged at 115% of the target price (instead of the 75% which applied two seasons ago) there will be much less "spare" quota to dilute individual liabilities. This is because more people have chosen to convert their direct sale quota rather than lease in wholesale at the high prices prevailing for much of last milk year.

Actual super-levy bills to over-quota wholesale producers will also depend on the level of threshold available from their milk buyer.

MD Foods believes it will be "on or just under quota", so may escape super-levy altogether. Unigate says it will be over, but will have a threshold equivalent to 2% to 2.5% for the whole milk year.