TRADING in the 2002 suckler cow quota began in July and continues until December 6.

In 2002, up to 40pc of a total suckler cow claim can be heifers aged eight months or over (compared with 20pc in 2001). This change, coupled with many dairy farmers ceasing milk production and going into sucklers, has led to a strong demand for quota of all types.

July trading was brisk with many producers keen to submit their claims early. Prices began at £70 for leasing and £260 for sale and rose steadily to peak at £90 and £300 respectively. Demand in August fell slightly and sale prices dipped back to £280, but leasing continued to rise as supply decreased. September and October saw sale prices stabilise and leasing prices rise further to about £110 a unit.

In recent weeks, quota has become extremely scarce and supplies have virtually dried up.

An auction last week produced the highest prices yet, with English LFA averaging £135 for leasing and £314 for sale and GB lowland at £113 for leasing and £318 for sale.

Prices will continue to remain strong until the closing date and many producers will not manage to obtain quota to support their 2002 SCPS claim. With prices so high, it is considered only economical for those farmers who are eligible to receive extensification premium to lease in quota.

Estimated rates are : suckler cow premium £120; beef national envelope £22; basic extensification £24; super extensification £48. The maximum subsidy available is therefore £190 a cow.

2003 sheep quota trading will start on December 3 until February 4, 2003. The delay in the start of trading is due to the sheep quota purchase pcheme scheme and the roll-up of quota affecting partnerships.

Applications to the SQPS had to be in by October 31 and asked producers to tender a price for between 50 units and 75pc of their total quota (LFA only) to be bought via a one-off payment by Defra.

In exchange, successful applicants will agree to reduce their stocking rate on at least ten hectares of land with environmental benefit. In 2002, £2m is available, with subsequent bidding rounds possible in future years.

Initial take-up was poor, but it is understood that more than 300 applications were eventually received. Decisions will be made in early December by a panel representing Defra, the Rural Development Service and English Nature.

Demand for sheep quota has fallen in recent years owing to a general reduction in UK sheep numbers through environmental schemes, retirements and foot-and-mouth.

The sheep annual premium rate is estimated to be about £13 a head for GB Lowland and £18 for English LFA. Quota trading prices are estimated to be about £5 for leasing and £15-20 for sale (LFA) and £2 for leasing and £10 for sale (GBL).

The roll-up exercise has meant that producers no longer hold their quota individually and each producer group will have all their quota units registered under the business name. This will mean less paperwork for traders.

The leasing rules will start from the 2003 scheme year for new producer groups.

Regardless of whether quota has been leased out previously by individual partners, a clean slate has been given, so all new producer groups will be able to lease out surplus quota for the next three years. This may well result in more quota on the market to lease and less available for sale.

The future of livestock quotas is uncertain, and changes are likely within the next five years, with more emphasis being placed upon environmental schemes and extensification rather than headage payments.