Milk quota tripled its value in 7 days

[12000 litre]

Milk quota is on the rise!!! And the eu continues to push hard to keep quotas!!! What's going to happen??? I know where my money is...

 

[lazy farmer]

what a disaster that would be continuing EU inefficiency.

 

[12000 litre]

Well I never been a fan of quota but I know how much as a farming company we own and if it gets a real value again I know what our strategy will be.

 

[bigw]

What is it currently trading at?

 

[Walterp]

Well I never been a fan of quota but I know how much as a farming company we own and if it gets a real value again I know what our strategy will be.

So what was your strategy when it was 82 ppl?

 

[12000 litre]

Well potter got it at .3 but non avalable a mate of ours could not get any bought at .4 on Friday evening every one wants to see what happens . A 20 % reduction in quota and it won't half be worth some penny's again!!! I ant saying its a good thing but if it happens and it looks like it will unless Russia open boarders it will give my farming company some serious asset value..

 

[12000 litre]

Was not dairy farming when 82 pence still at school our farming company has bought quota at an average of 1.8 pence me mother and father payed 43 pence tops for it..

 

[Walterp]

Was not dairy farming when 82 pence still at school our farming company has bought quota at an average of 1.8 pence me mother and father payed 43 pence tops for it..

It's interesting (using hindsight) that the farmers who sold their MQ at 60's, 70's and 80's and used the money to buy another farm (I know three, personally, who did this) did much better than the buyers, who sometimes ended up milking cows to pay off a bank loan for an asset that lost value quicker then they could pay down the loan.

Of the cases that I know, only one went back into milk and that was in another country (the UK) - even though they could've bought back or leased quota coverage for a fraction of what they had sold it for.

I'm still puzzling out what that means.

Maybe it's useful to look at one of the regions most successful dairy farmers - he spent a spell in Canada, but as soon as mq there jumped up, he sold the quota and the place, and moved on. From nothing, he is now one of the big dairy players, featured in FG recently.

But if you were still at school when mq reached the 80's, you might not realise that many dairy farmers held quota worth as much as their farms. The place I'm in now, back at the peak, held more mq than the place was worth - and it only held 250,000 litres. Plenty of places held 500,000 litres or more, making the mq worth much more than the farm.

That, back then, was 'normal' - whatever that is....

 

[Baling Hay]

It's interesting (using hindsight) that the farmers who sold their MQ at 60's, 70's and 80's and used the money to buy another farm (I know three, personally, who did this) did much better than the buyers, who sometimes ended up milking cows to pay off a bank loan for an asset that lost value quicker then they could pay down the loan.

Of the cases that I know, none went back into milk - even though they could've bought back or leased quota coverage for a fraction of what they had sold it for.

I'm still puzzling out what that means.

Milking cows being a mug's game, extremely capital intensive, extremely labour intensive and tied to the farm 365 days a year??

 

[12000 litre]

Well if (quota) gets a real value again mine will go cows will go parlour will go and I will put a 40% deposit down on two 300 acre arable beef farms fix a 40 year morgage on them with the home farm bought and payed for the cows will pay off borrowing on our other farm me cows have no borrowing against them so I can buy a big shiny combine or forager and play all day.. And maybe just maybe I could drive our fendt my self if we had no cows rather than paying staff to drive them!!!!

 

[bigw]

Well potter got it at .3 but non avalable a mate of ours could not get any bought at .4 on Friday evening every one wants to see what happens . A 20 % reduction in quota and it won't half be worth some penny's again!!! I ant saying its a good thing but if it happens and it looks like it will unless Russia open boarders it will give my farming company some serious asset value..

How much quota do you hold? I wonder what price it would need to be to see a exodus of farmers. I cant see them keeping it though and if they did they should really open up cross border trading.

 

[buffalo_soldier]

Interesting one this as I gave up buying quota a few years ago, seemed I was just spending money.
Starting to wonder now.

 

[Max-12]

Correct me if I'm wrong but we are as we speak still under quota restrictions and there for this milk price drop has nothing to do with the abolition of quotas. In fact the whole point of quotas is to artificially maintain a milk price not to high or low. And with the high milk price of the last 12 months and the low prices we are heading into, they have proved irrelevant so the sooner they are gone the better.

 

[Baling Hay]

Correct me if I'm wrong but we are as we speak still under quota restrictions and there for this milk price drop has nothing to do with the abolition of quotas. In fact the whole point of quotas is to artificially maintain a milk price not to high or low. And with the high milk price of the last 12 months and the low prices we are heading into, they have proved irrelevant so the sooner they are gone the better.

Mmm, maybe in this country but the likes of Ireland and other EU countries have maxed quota for years, when that is taken away wait till you see the floodgates! The Irish can produce a lot of cheap milk!

 

[12000 litre]

We hold a few litres ;-) every cloud silver lining...and all that.

I believe cross boarder trading will happen in the future as the reduction on quota held will be savage.. They ant going to let milk pile up in intervention the small eu farmer will always be protected by the eu... We all know that deep down no matter how inefficient they are[/QUOTE]

 

[Walterp]

Milking cows being a mug's game, extremely capital intensive, extremely labour intensive and tied to the farm 365 days a year??

I'd go the other way - the underlying reason Julie and I are on our own nowadays is that, back in the day, I thought the sensible direction for multi-holding farming families like ours was to sell up all the holdings, and buy one good dairying outfit.

Once it became clear that we were being led up the garden path by my family, we had no choice but to alter our plans. I should, perhaps, have realised my error much sooner because I was the only one who was against selling the dairy herd in the first place - I recall pointing out that, on a 160 acre dairy unit, it was like flogging off the engine but keeping the car.

On the OP, the likely position is that a modest MQ was obtained in 1984 (let's guess 500,000 litres) and that it has been added to over the years at varying costs between 46ppl and 2ppl, with a current holding of 3,000,000 litres. It's worth very little, and it's hard to see whether it will ever be worth any more. It may, even, stand at a paper loss to its acquisition cost.

Others may remember the talks given by the two Dutch brothers who bought 5 ex German State farms in the early 1990's - they acquired 33,000,000 litres of German mq, which jumped up in value so that they were, at one point, worth millions. I hope that they sold out then.....

 

[frederick]

if quota continues in some form and a big if. who says allocation will have anything to do with your current holding.

the eu has said quotas are going and there are people ready for the new world producing a lot of milk with no quota. I think their hardship case will stack up really well and I have 500 000 litres more than I have ever produced they are not going to create me an asset I can sell tomorrow.

if they are extended I think you would prob have a new base year

but lets pray common sense prevails and it never happens.

or perhaps 12000 litres bought a lot in the last few weeks and is talking the market up before selling.

 

[Max-12]

I am from Ireland ! It s the first oppertunity to grow the business properly since 1983

 

[rob1]

Best business decision I've ever made was selling my quota at 69p used, invested it in buying out my aunt and some property both of which have proved to be good moves. With milk prices in free fall cant see many wanting to buy

 

[Baling Hay]

Best business decision I've ever made was selling my quota at 69p used, invested it in buying out my aunt and some property both of which have proved to be good moves. With milk prices in free fall cant see many wanting to buy

Crikey you hit that lucky!!