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Do we need to worry about milk quota?

Insights

Recent increases in milk output have made some farmers question whether they need to be worried about quota levels.

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Tim Harper, senior Consultant with Promar International, says: “Quota has ceased to be a real issue in the UK since around 2004.

 

Between then and 2009/10, production fell steadily away from quota. Although production has increased since 2009/10, we have remained well below quota nationally.

 

“In the last few months, milk production has been at high levels, meaning farmers are understandably looking over their shoulders and wondering if quota will be a problem this year. This is especially so as, over time, the amount of quota held by individual farmers has borne less relation to the actual milk produced as farms have expanded.”

 

Mr Harper says milk output for 2013/14 finished at 13,670 million litres before butterfat adjustment. This was still more than 10 per cent under quota, so there was still a long way to go before the UK gets near the quota limit.

 

He says April production was nearly 15 per cent higher than the same month last year, which will have contributed to increased concerns.

 

However, the surplus in May is likely to be less. This is because milk volumes in May last year had started to recover from the difficult winter and early spring.

 

Mr Harper says: “The quota limit remains at 15,292 million litres in 2014/15. While we have had a flying start to the year, there are a number of factors which will influence how the year pans out.

 

“The increased production last winter and in the early part of 2014 was fuelled by record milk prices and by high quality silage, but the increase was exaggerated by the poor winter experienced in 2012/13, making the year-on-year differences look greater.

Price reductions

“We have seen a recent spate of milk price reductions, while feed prices have remained higher than many farmers would have expected. This has reduced the milk to feed price ratio and many farmers will need to review feed rates and yield expectations.

 

Mr Harper stresses two factors will ultimately determine whether we will reach quota - cow numbers and yield per cow.

 

The last census data show a 1.6 per cent annual reduction in cow numbers to 1.782m cows, continuing a long-term trend in declining national herd size.

 

“An increase in cow numbers, certainly of the scale required to meet quota, is very unlikely. Assuming extra production was achieved solely from more cows, the national herd would have to increase by about 200,000 cows, and each would have to complete a full lactation, which is not going to happen. So this leaves the option of increased yield per cow.

 

“To produce the additional litres needed to hit quota from the last census figure of 1.782m cows would mean every cow in the country would have to produce about 900 litres more.

 

“Realistically, it will be impossible to achieve this level of increase and maintain it throughout the year, which suggests quotas, which are to be abolished this year anyway, will fizzle into history rather than having a final impact on the UK dairy industry.

 

“This will give farmers here one less thing to worry about. However, quotas could still have an impact in other EU countries, including Ireland.”

 

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