Quota market strong as production busts profile

By FWi staff

THE milk quota market remains strong as provisional Intervention Board figures show April production was 3.52% above profile.

Output hit 1230.8 million litres, 43.3 million litres over quota. However, this is 65 million litres above April 1998 levels.

Whether last years production breaches quota remains very much in the balance.

March production was confirmed at 4.1 million litres over the provisional figures, leaving total production 17.6 million above quota.

But with 19.1 million litres of wholesale conversion to subtract, this brings production just under quota at 1.5 million litres, and the remaining unknown temporary transfers are still to be included. Whether UK farmers will pay super-levy is unknown.

“This is worse news for the many producers, who risked going over-quota and who are already having sleepless nights, said Jonathan Smith of Bruton Knowles.

But Swindon-based quota agents George Paton believes that the temporary transfers will put the nation under quota as in the past. “Unless direct sellers have not swapped as much as last year,” he said.

Mr Paton does not think that the high April figures are an indication of what will happen over the coming year. “We dont know what the fodder will be like yet, and the milk cheque this month will be the poorest for years.”

If farmers are open to buying quota, then now is the time to start considering it, he said.

Jim Leamon of Hamiltons quota agents, said that Aprils high production figures were expected.

“Last year the spring was so awful and producers were cutting back. This year everyone was milking their socks off,” he said.

But he suspects not everyone will escape a super-levy – it all depends on what the temporary conversions do, he said.

“There should be a reasonable threshold to protect most people, but its inevitable that some will get the super-levy.”

Mr Leamon believes that the expectation of quotas until at least 2006 under the Agenda 2000 reforms will have more impact on quota prices than milk production.

“The ability to buy capital now looks more attractive than before,” he added.