Stay within milk quota limits or risk costly fine

26 February 1999

Stay within milk quota limits or risk costly fine

By Simon Wragg

MILK producers may be tempted to exceed individual quota limits following Intervention Board figures indicating a 61m litre shortfall, but consultants advise caution.

ADASs Ian Powell says thoughts of exceeding quota should be put into perspective. "A 61m litre shortfall sounds a lot, but its only a day-and-a-halfs production. Question whether or not you can afford to go over quota and face super levy fines of 25p a litre. Many cannot," he warns.

To assess the situation, on-farm milk production figures should be adjusted for any change in butter fat and balanced against quota held, advises SACs dairy services manager Jimmy Goldie.

Milk Marque is suggesting that thresholds of about 2% exist, which may encourage some producers to take a gamble and exceed quota, but consultants warn against taking unnecessary risks. Threshold figures may be used to ensure milk supplies dont dry up as the end of the quota year approaches, they caution.

"While milk buyers are talking of thresholds, I dont advise producers do anything drastic to increase output other than meet quota. UK production can recover from a shortfall," says Mr Goldie.

Andersons Mike Houghton supports this view, adding that historically UK production has recovered from a shortfall. He warns industry figures only indicate an approximate quota situation and could be misleading when not seen in that context.

"Butterfat is enormously sensitive. An increase of 0.01% equates to an increase in production of 25m litres, over half a days production. Producers must assess their own situation. As a guide, where super levy cannot afford to be paid, dont take risks. Super levy may be tied into the value of the q which is falling, but even at the current exchange rate of £1 to q0.679, super levy will be 24.92p a litre."

However, producers unlikely to fill their quota could increase output by switching to three times a day milking, says Mr Goldie. This can boost output by 15% in early lactation, but extra milking and labour must be costed to see whether a margin can be made.

With quota prices tumbling, filling quota by increasing milk from concentrate could provide more income than back-to-back quota deals, says Axients Ross Danby. Where concentrate costs £90/t a feed rate of 0.6-0.8kg/litre milk produced would cost 5.4-7.2ppl, he adds.

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