Quota a buyers market for now
Quota a buyers market for now
By Marianne Curtis
PRODUCERS committed to milk production for the long term should consider swapping leased for purchased quota where finances permit, as future trading conditions are likely to be volatile.
ADAS business development manager Nick Holt-Martyn says it is currently a buyers market. "Most assume the UKwill be under quota again this year, but this could prove to be self defeating when it comes to buying quota. Although meeting quota is unlikely, it is not impossible."
Good grass growth means cows have milked better than expected this spring and a higher milk price is providing the incentive producers need to gear up production. This means it may be unwise to gamble on the UK failing to meet quota for a second year, he adds.
He accepts that producers with accumulated debt may not be in a position to buy quota, but for those able to do so, it could be a worthwhile investment. "Logic says that if the UK stays close to quota, its purchase price will increase. As restocking occurs, there will be much market turmoil. It would be foolish to restock and ignore quota needs."
But uncertainty in the wake of foot-and-mouth may mean producers are reluctant to commit, believes Mr Holt-Martyn. "This years production pattern is abnormal. There are more cows on farm because OTMS has been suspended and big unknowns about how many cows will calve in the final quarter of the quota year due to AI service suspensions this spring."
Data on how many dairy cows have been slaughtered due to F&M is also confusing, adding to the uncertainty, he adds.
But one thing that can be counted on is the need to maximise milk production this winter, he says. "With a likely milk price of 20p/litre, the economic argument for feeding concentrates is strong."
Now is a good time to assess forage stocks and work out a feeding strategy, he says. "First cut silage is of excellent quality, so cows will eat more of it, but limited in quantity. Most second cut silage is now clamped, so it is time to work out how much silage you have and how many cows will be milking over winter.
"Although cereal areas are down, with less stock in the country the feed cereal market should remain balanced. However, protein prices are rising, but this should not dissuade producers from feeding the necessary quantities to ensure high yields." *
BUYING QUOTA
• Buyers market.
• Insurance against future volatility.
• Unwise to gamble.
BUYING QUOTA
• Buyers market.
• Insurance against future volatility.
• Unwise to gamble.