Charles Holt (Lincoln)

Back in the days of milk quota I well remember calls to dairy farmers to limit milk production in order to try to keep national production below the quota threshold.  Inevitably such calls were not widely heeded, and we ended up paying super-levy (remember that?) on many occasions.  The alternative was to pay huge quota leasing or purchase prices, or even to throw milk away.  Most producers simply refused to cut production by much, or only by enough to get under their quota limit.

Recently, some agricultural journalists have compared recent months of higher milk production with times of high oil production and are – again – suggesting that milk producers should all voluntarily cut milk production, in order to try to keep milk price up, or prevent it falling more.

As it happens, milk production has recently fallen, so the urgency of potential production cuts has receded, but such calls could come again.  But this has had nothing to do with farmers voluntarily cutting production.  It is due in part to a wetter summer reducing grass silage quality and a wetter autumn reducing access to grazing, as well as a lower milk price leading to concentrate feed reduction.  Increased culling has also had its effect.

So, while I consider exhortations to producers to deliver less milk will never work, there is one similarity between oil and milk.  A small change in volume produced can lead to a large price change.  We saw that with the huge milk price peak last winter.  But predicting such a peak and riding the crest of that (far too short) wave is a much trickier matter.

For alternative strategies to reduce milk output with a depressed milk price, whilst increasing your profits, contact Charles at charlesholt@fcgagric.com or your local FCG Office.