Super-levy fear drives up milk quota

Tuesday, 13 January, 1998

By FWi staff

MILK quota prices have climbed after it was revealed last week that the UK dairy industry is producing too much milk.

Decembers output figures forecast a 124 million litre milk surplus when the milk year ends in April.

And farmers have scrambled to secure quota, pushing up prices by about 3p to 53p per litre for 4% butterfat. Used quota is now trading up 1p at 40ppl.

Some industry analysts warn that over-production could get worse unless farmers start reducing milk output immediately.

So far, that shows little sign of happening. The Intervention Boards latest figures show milk output rose by more than 12m litres to almost 256m litres in the week ended 3 January.

One agent predicts the UK could eventually be 200m litres over target. That would leave dairy farmers facing a £50m super-levy.

But buying quota at 53ppl is still a better option than paying a 26ppl penalty in April, according to John Elliott, senior business consultant with ADAS in Yorkshire.

“You can only cut back on milk output so much before doing so becomes unprofitable,” he says.

  • Click here for Milk Quota Trends and Prices

  • Click here for October-December 1997 reports

  • See more