Milk Quota price & Drilling: Jan 10 2001


Don’t get lagged: milk price will rise within 6-18 months to 21-22pl, therefore the market for quota is at unrealistic lows and clients are advised to invest now. For those who cannot extend long-term credit further - forward lease at 3.5ppl - for as long as possible.
5-day dry spell forecast, if slurry spreading is getting in the way of drilling, set priorities and attempt to collar the contractor or rope in neighbours. Check Varieties

Supermarkets and processors are expected to increase the milk price for farmers within days, according to industry experts.

"The current negotiating Milk Price Negotiating system is a for Poltroons and Knaves - we need a Dairy Compact - whose tenets are established in stone whilst quota's exist" - SBC


But, in a random IFBN survey today, retailers appeared to be scared to be seen to be making the first move. However, one said: “The price has to go up. It is only a matter of time now.”

Kevin Hawkins, of Safeway, told IFBN today that his company was “very aware” of the problems within the dairy industry at the moment and suggested that the retail price might have to be raised to increase prices for farmers.

“We are scratching our heads over finding a way to move forward. We realise that dairy farmers need more money for their milk, but we cannot afford another increase to farmers through our margins.

“If the dairies cannot afford to pay producers any more, one of the bigger retailers have to take the plunge and increase the retail price. Others will then follow suit.

“If we have more flexibility in the retail price, there will be more room to consider increases for farmers in the short term. Over the long term, I would like to see some form of index which links farm prices to the retail price, so that producers get automatic adjustments and we don’t have this annual public bargaining.”

ASDA spokeswoman Rachel Fellows told IFBN that the company was “staying close to farmers and meeting them to see what is happening in the market”.

Although she said that ASDA was not planning to pay farmers more today, she refused to confirm or deny that it would increase the price tomorrow, or next week.

“We only announce prices as and when we make them,” she said.

A spokesman for Sainsbury’s said: “We increased the price for farmers by 2p a litre in September, but we don’t have any plans for further increases now.”

Meanwhile, Tesco spokeswoman Leonie Smith said: “We are monitoring prices on a weekly basis. There are no plans to move at present, but we are ready to move in line with the market.” She added: “The processors have not asked us for any more money yet.”

"Never underestimate any Market's capacity to over-react to price signals - and for the flock to wait until bitten"- SBC.