Super-levy threat despite milk output fall

Friday, 6 February, 1998

By FW reporters

MILK producers have started to turn the taps off with output showing its first weekly falls since cows came in full time in mid-October.

But it is doubtful whether production drops enough by the end of March to avoid a hefy super-levy bill.

As at the end of December, the UK stood at 124 million litres over quota, equivalent to almost four days supply. January figures are due out next week.

Based on the Intervention Boards weekly information, they are expected to show output very close to quota for the month. This will leave eight weeks to claw back about 120m litres of surplus.

“Not impossible”, is the verdict of some industry observers – especially since the Intervention Board has allocated an extra 54m litres of quota to February and March profile.

Butterfat-adjusted weekly output is now below quota. And there will also be some extra quota available, permanently converted from direct sale to wholesale.

But most brokers believe the UK will still end up with some levy to pay – costing 25.53p/litre – as producers who are currently below quota step up production and others, who are over, gamble on a threshold.

With all this uncertainty, trade was reportedly quieter this week, with clean and used quota valued at 56p/litre and 40p/litre respectively. Back-to-back deals and cohort quota traded at 12-14p/litre.