Over-quota production no reason to panic

By FW staff

OVER-QUOTA milk production in August and the prospect of higher milk prices following Milk Marques recent selling round could see quota prices edge up. Butterfat adjusted deliveries in August were just over 1.15 billion litres, almost 1.4% over quota. However, despite a slight upward revision of July figures, the cumulative figure is still 126 million litres behind 1997 and is just 0.3% over quota, according to latest intervention Board figures. That means lessees should not panic, says Andrew Ranson, quota consultant at Banbury-based Clayson Haselwood.

“Production has risen above last year for the first time. But that was to be expected – the difference has been closing with each month. But we are not on target to go way over.”

A small increase in the milk price is unlikely to have a huge effect either, he adds. He suspects producers will receive between 0.25p and 0.5ppl extra from October, following Milk Marques selling round success.

Provided exposed lessees do not panic, prices for 4% quota – which had eased back to about 7.6-7.7ppl, says Mr Ranson.

At Frank R Marshalls Chester auction on Tuesday , 800,000 litres of quota on offer ranged from 8ppl for 4.29% butterfat quota, 1p less for 3.59% supplies. 3.97% quota made 7.5ppl.

On the same day, Bruton Knowles saw 3.93% quota sell for 7.5ppl, and 4.02% for 7.7p. “Prices rose about 0.2ppl,” says broker Jonathan Smith. “But I dont see prices going crazy. If we were 1% over quota cumulatively, people might have started to worry.”

Dairy farmers who say cows are milking well are balanced by those who reckon they will struggle to make quota, he adds. “It could be touch and go. Were still a long way behind last year.”