Archive - Wednesday, 15 January 2003


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Milk quota ruling

MILK producers in Yorkshire could benefit from changes to the rules governing the holding and leasing of milk quotas, according to the Agricultural Mortgage Corporation PLC (AMC) and milk quota agency Carter Jonas.

DEFRA has confirmed that it will begin to implement a ruling from the European Court of Justice following the Thomsen case in which a German farmer, who had been leasing quota from a farmer who subsequently died, challenged the transfer of the quota back to the lessor's heirs, who were non-producers.

The practical impact of this ruling is that it is likely that any quota holder who is classed as non-producing will be unable to hold and transfer quota from April 2004. It is estimated that there is around 1.5 billion litres of quota held by non-producers which could potentially come to market.

Adrian Cawood, AMC regional agricultural manager, said: "Farmers should not overlook the opportunity of borrowing money to acquire more quota. The annual cost of acquiring milk quota at 10p per litre over a seven-year period including interest and capital repayment will be between 1.5p and 2p per litre."

Andrew Fallows, AMC agent and head of Carter Jonas's national milk quota agency, said: "Those in the industry for the long term, who at present have a leasing requirement, need to look at how they will fulfil this requirement in the future. This is particularly applicable to those who have expanded their herds and invested in new equipment who should really now consider whether this is the right time to buy milk quota.

"Those non-producing quota holders who are considering their position should await the DEFRA consultation document to fully appreciate how the interpretation of the ruling will affect them."

It appears likely that any unutilised quota would be returned to a national reserve for redistribution.

The workings are to be put out to consultation but it is possible that a producer will have to produce 70pc of his quota to be a producer quota holder, allowing him to lease out the remaining 30pc.

Updated: 10:48 Wednesday, January 15, 2003