Farmers can expand their output without any great quota acquisition costs FMD is still taking its toll on the UK cattle population, although at a lower rate than in March and April. The total number of cattle slaughtered topped the half a million level early this week. This represents just under 5% of the total UK cattle population as recorded in the national cattle census in December. If this cull has fallen proportionately on dairy cattle, this would represent the loss of production potential in the national dairy herd of around 660 million litres a year or about 30,000t of butter and 60,000t of SMP. The likely loss of milk production this year may well, however, turn out to be somewhat lower. Many of the unaffected dairy farmers now have the opportunity to realise the full production potential of their herds. The EU milk quota system has often inhibited farmers from realising this potential because of fears of exceeding the quota and paying a costly levy. Because few now expect the UK to reach its national quota in the year to next March, quota leasing and purchase costs are now at their lowest ever level and individual farmers can expand their output without any great quota acquisition costs. This factor may already be having some effect because national milk production appears to have fallen recently by less than the cattle cull would suggest. Revised figures from the Intervention Board now put the reduction in national milk deliveries in April at 0.8% compared with their first estimate of 2.2%. Preliminary figures for May show an even smaller reduction of 0.2%. These two months are not necessarily a reliable guide to what will happen in the coming months but the FMD effect is clearly modest to date. {{M/E CANNED GOODS }}