By Simon Wragg
STIFF competition for suckler cow quota, fuelled by dairy dispersals, is likely to see prices rise over last year with the opening of trading this week.
Even before junior farm minister Lord Donoughue signalled the start of proceedings on Tuesday and transactions could be signed or settled, brokers had begun talking up the market.
Many believe the number of dairy farms quitting production with ailing milk prices will have a major impact on demand as they look to swop dairy stock for beef cattle.
Coupled to this is the proposed rise in suckler cow premium under Agenda 2000, which will take effect next year.
According to Perthshire-based broker Tom Taylor, it could significantly improve the current payment of £112 plus £27 extensification bonus.
And with so many farm incomes under pressure, that extra subsidy counts. “Its especially the case when most were expecting the Euro to strengthen and push subsidies further still, not drop 10p in value.”
At the moment, many producers are still at a crossroads, he says. Under Agenda 2000 most enterprises look bad, but out of the bunch “beef looks possibly the better option”.
If that wasnt enough to excite speculators, unconfirmed reports that many looking to acquire quota from the national reserve missed the deadline for applications will have added pressure to the price push, explains Mr Taylor.
He also suggests competition from suckler men in Less Favoured Areas will build as many look to increase cow numbers and subsidy claimed to “tread water” on the income ladder.
With the EU looking to scale back quota next year by a suggested 40,000 units nationally, equivalent to 2-3%, they may have to stomach a hike in values to be “better safe than sorry”.
Prospects for LFA quota is £180-200/unit for purchase and leasing at £50-60/unit. That is at least £20/unit and £10/unit up on last year, respectively, he adds.
Gloucestershire-based David Pullen of Bruton Knowles agrees the market will be strong. His prediction for non-LFA quota is similar with a £20 premium on last years trade. “Others put it a lot higher, but I think its unlikely.”
One clear change is the volume of quota wanted by individual buyers; it has increased.
“Its not uncommon for producers to be looking at 50-70 units; quite an investment and much higher than before,” says Mr Pullen.
Again, subsidy is the driving force, he says. “If producers can claim suckler premium on cows and beef subsidy on the first 90 male calves, then theres money in it.
Also, if CAP proposals to allow a reduced claim on heifer calves comes into effect then that will add to demand.”
If this talk is mere speculation, the true test is currently reflected in stock values.
Evidence from the sale ring would confirm expectations for a busy trading period through to early December, says Cheshire-based Richard Baker of Wright-Manley.
“In Ruthin, my native area of Wales, sucklers with calves at foot have been trading at £800-£900 a couple. Thats almost back to pre-BSE values. Its going to be busy,” he says.