Farming News Review - April 2005

<< back

Policy issues CAP (etc.) support details/payments Grants Farm finance Product prices

Other crop news Other livestock news Inputs Marketing Miscellaneous

Policy issues

All applications to claim the single farm payments must have been received by 16th May. Otherwise all support payments for the lifetime of the scheme will be forfeited.
Defra has agreed to broaden the timeframe and range of non-agricultural activities on farmland during the 10-month qualifying period for the Single Payment Scheme. The original proposal allowed only five days of non-agricultural use.
The deadline for applications to the national reserve in Scotland has been extended until 16th May. Just over 1,000 farmers had applied by 14th March, the original deadline for most of the categories.
As Lord Whitty had said at the Oxford Farming Conference was Defra’s intention, details of subsidies paid to every farmer in England have been made public, inevitably attracting massive media coverage with regard to the wealthiest recipients.
The government has given the terms of reference for the already-announced independent review of the five levy bodies: the British Potato Council, the Horticultural Development Council, the Home Grown Cereals Authority, the Meat & Livestock Commission and the Milk Development Council, as recommended by both the Curry and Haskins reports. Their rationale, rules, organisation, funding and functions will all be considered. The review could lead to some of their functions being dropped or merged. It will be led by economist Rosemary Radcliffe, who has been asked to start work on 4th April and report to ministers by the end of October this year.
In this year’s Budget speech Chancellor Gordon Brown made a commitment to reduce the number of agricultural inspection bodies from 22 to five over the next four years. This follows the Hampton Review, which considered ways of reducing the administrative burden on businesses.
Defra has been accused of interpreting too zealously EU laws which prevent member states from promoting home-grown foods.
Defra now says farm incomes fell by 8.1% in real terms in 2004 compared with the previous year, to a level 50% below their 1995 peak.
Thanks, largely at least, to the highly publicised campaign of TV chef Jamie Oliver, the government has announced that an extra £250 million is to be spent on improving school meals.
Rob Portman is the new US Trade representative, replacing Robert Zoellick.

CAP (etc.) support details/payments

The Scottish “voluntary” modulation rates are to be 3.5% in 2005 and 4.5% in 2006, giving total rates of 6.5% and 8.5% respectively, as compared with 5% and 10% in England.
Beef Special Premium Scheme payments for 2004 will be subject to a 29.74% scaleback reduction, which is above expectations. The national ceiling has been well exceeded because of people seeking to maximise their claims in the last year of the scheme. Producers who claimed on 30 animals or less will be exempt from the reduction. The revised levels are £71.36 for steers and £99.91 for bulls, after deducting modulation.

Grants/regulations/legislation/environment

The Entry Level Scheme, launched in England on 3rd May, has received detailed coverage in the farming press. The first agreements will start on 1st August rather than 1st May, as previously planned. Applicants are experiencing frustrating delays in putting land on the Rural Land Register, as presently required, because of delays in getting maps returned by the Rural Payments Agency. Defra has promised to do its best to help.
In Scotland the Land Management Centre Menu Scheme has been launched. It has three tiers, the first being the cross-compliance measures linked to the Single Farm Payments. Tier two is similar to England’s Entry Level Scheme: farmers can select from a “menu” of 17 options as suited to their own circumstances. The deadline for applications is 16th May. Payments start in April 2006. Tier 3 (top-up payments like England’s Higher-Level Scheme) will be added in 2007.
Tir Cynnal, the Welsh entry level scheme, will not begin until later this year. The Northern Ireland scheme will probably start even later: the proposals are still awaiting approval by the EC, which remains to be satisfied that the 1992 Nitrates Directive is being met in that province.
Defra has announced that the new integrated agency to bring together English Nature, parts of the Countryside Agency and most of the Rural Development Service will be called “Natural England”. Subject to parliamentary approval it should be formally established by January 2007.
Defra minister Alun Michael told the Commons’ Environment, Food and Rural Affairs sub-committee investigating the progress of the Voluntary Initiative that a pesticides tax “is not under active consideration” – but is not completely ruled out for the future.
The draft Crofting Reform Bill (over 200 pages) has been published for consultation. It sets out in detail how the Scottish Executive intends to simplify and update crofting law.
The Agricultural Development Scheme in England is to be given an extra £3 million over the next three years. Since 2000 nearly £14 million has been awarded under this scheme. From September only projects designed to have national impact will be eligible. They are to help farmers be more competitive and co-operate to improve marketing. £1 million has just been allocated under this scheme to help the livestock and dairy sector.
The NFU has launched a new campaign (“Making Green Ground”) aimed at showing the public how farmers are protecting the countryside and the environment. This follows independent research on the subject commissioned by the union.
Access land in south-west England is to be opened up to walkers on 28th August.
Nearly 400 organisations have been contacted by Defra as part of its consultation on the Gangmaster (Exclusions) Regulations; the deadline for comments is 27th May. The Gangmaster (Licensing) Act 2004 received Royal Assent last July.

Other matters of farm finance and tenure

There was very little in this year’s Budget that will specifically affect the farming industry, except for a further 23% (1.22p/litre) increase in the duty on red diesel, from 1st September.
Savills Research reports that the average value of all types of farmland (excluding houses) across Great Britain rose by 16% during 2004: 13.4% in England, 22% in Scotland, 36% in Wales. This followed a 3% increase during the second half of 2003, which followed three years of relatively stable values. The average value of prime arable land rose to £2,615/acre (£6,400/ha). The upward trend is expected to continue, albeit at a reduced rate.
English Farming and Food Partnerships and the Scottish Agricultural Organisation Society (SAOS) have launched a new guide entitled “The Governance Standards for Co-ops and Farmer Controlled Businesses”. It is based on a handbook already produced by SAOS.
BDF Commodities, the last specialist potato futures broker in the UK, has ceased trading owing to lack of business. However, some non-specialist brokers say they will continue to trade potato futures.
The sterling value of the euro ranged between 68.7 and 69.9p during March.

Product prices

A. Crops

The average prices of cereals remained fairly steady overall during March, despite further hikes in EU export refunds. Prices of oilseed rape, peas and beans rose somewhat; hot dry weather in Brazil caused its record soyameal crop estimates to be cut, leading to a substantial rise in futures prices; however, the underlying situation remains one of abundant supply. Ex-farm feed wheat prices for this year’s harvest are close to £65/tonne at harvest time, £70 for December delivery.
Average prices in late March (£/tonne, ex-farm): feed wheat 66, milling 86; feed barley 65; oilseed rape 128 (reached 130 in mid-month); feed peas 89.50, feed beans 90.50. Potatoes rose from an average £83 to £89/tonne during March, but fell to £86 by the end of the month.

B. Livestock

Finished steer prices continued steady at close to 103p/kg lw.
Finished lamb prices fell a little at first during March but rallied to 114p/kg lw towards the end of the month, still 14% or so below the same time last year.
Average pig prices rose further, to end March just above 105p/kg dw. Cull sow values have risen substantially.
The big supermarket chains have increased their liquid milk prices by 2p/pint (3.5p/litre), but it remains to be seen how much of this will percolate through to producers. However, a start has been made by Dairy Farmers of Britain and First Milk, both of which increased their prices by 0.3ppl for March deliveries. Dairy Crest later announced the same price increase for its liquid milk direct contract holders.

Other crop news

It has been the third driest winter since records began. Rainfall has been less than half the average in southern England over the past five months, only a quarter in some parts; restrictions in use look to be inevitable, unless there is plentiful and prolonged rainfall soon.
Defra’s December Survey of UK autumn crop plantings predicts a drop of 2.5% in the 2005 harvest wheat area, a drop of 10.1% in winter barley, 29.2% less oats and a rise of 8.6% in oilseed rape to 534,000 ha (1.3 million acres) – a UK record. The percentage changes for England alone are similar, but in Scotland all crops are down: wheat by 10.3%, barley by 5%, oats 16% and oilseed rape 4.2%.
Defra has announced that the British Potato Council will continue to operate (subject to the results of the recently-announced overall levy body review referred to above (I.5)), following a poll of levy payers. This is despite the fact that 56% of British producers (64% in England, 75% in Wales, 47% in Scotland) voted against its continuation. However, on a weighted planted area basis 54% were in favour of its continuation (52% in England, 60% in Scotland) and on a weighted tonnage basis 61% were in support.
The last phase of the Farm Scale Evaluations of GM crop management in the UK has been completed, with the publication of the final results of 65 GM winter oilseed rape trials. It was found that GM crops leave fewer broad-leaved weeds (important to many insects and birds) than conventional crops. These results are broadly consistent with those previously reported for spring rape and sugar beet; they were not due to the GM technology but to the different herbicide regimes; they will be passed to the Advisory Committee on Releases to the Environment to advise on the environmental implications for commercial growing of GM crops. Industry supporters of GM argue that the trials have shown clear farming advantages for the GM crops, including higher yields, fewer cultivations and more flexible weed control.
In a new book, “The March of Unreason”, the Liberal Democrat peer Dick Taverne argues vehemently the case for GM crops and attacks anti-GM environmental groups for ignoring scientific evidence in favour of “blind faith and deep bias” and misleading the general public.
The EC is to set up a wide-ranging group to examine biofuel production in the Community. A shortfall has been identified in the EU’s R & D expenditure on renewable energies, which has actually fallen from the 110 million euros spent a decade ago.
Renewable Fuels, the Yorkshire-based biomass fuel supply company, has begun processing harvested short rotation coppice (SRC) willow from local growers at its newly established plant at Pollington, near Goole.
Greenergy has announced that it is almost ready to start constructing a £10 million biodiesel processing plant in Humberside; shareholder Tesco and cereals traders Louis Dreyfus and Grainfarmers are backing the scheme. Global Commodities plans to open a newly acquired plant in Hull this summer to produce biodiesel from used vegetable oil.
The Doncaster-based Higgins Group, one of Europe’s biggest potato supply companies, has announced a joint venture with the farming company J & M Burnett Limited, which grows nearly 2,400 ha (6,000 acres) of arable crops around Newark, Notts.
A consortium headed by the Scottish Agricultural Science Agency is to take responsibility for the latest round of independent potato variety trials; the contract (funded by the British Potato Council) has previously gone to NIAB.
A new UK-grown salad potato variety, Vivaldi (produced through Hoche International) is proving so popular that demand is outstripping supply.
The first UK-grown strawberries (from Faversham in Kent) went on sale in supermarkets on the 23rd March, 11 days earlier than last year.
Masstock Arable has taken over Reading-based agricultural merchant and agronomy adviser Hall Plank Robinson, which had temporarily entered administration.
Prof. John Hillman has retired after 19 years as director of the Scottish Crop Research Institute.

Other livestock news

UK milk production rose during February, but less so than expected. At the end of that month, with only one month of the milk year left, the cumulative shortfall compared with quota was 219 million litres, nearly six days’ production. English farmers have been busy buying used quota for 2005/06. Near the end of March clean quota was at 13.5ppl, 6.2ppl for leased; 2005-06 quota was close to 9ppl; (all for 4% BF).
As expected, Defra has published a series of measures aimed at halting the spread of bovine TB, to form the basis for policy over the next decade: a “Strategic Framework”. The strategy focuses on tighter cattle controls to stop the disease spreading further. It has been heavily criticised as being inadequate, including by peers in the House of Lords, in that it fails to tackle the problem of controlling TB in wild animals, notably badgers. Animal Health Minister Ben Bradshaw has asked the NFU to provide a proposal to tackle this problem.
Defra has launched a 12-week consultation on possible measures to replace the Over-30-Month Scheme (OTMS). It proposes a robust testing regime and has begun trials in six abattoirs to evaluate the testing programme.
According to the Meat and Livestock Commission certain beef-on-the bone cuts will still be available following the lifting of the OTMS, which was initially thought to be unlikely.
Serious concerns continue to be expressed regarding inadequacies of the National Fallen Stock Scheme, namely long waits before collection and high charges. Difficulties are particularly reported in north Wales, where one farmer is reported to have waited more than five weeks for collection and felt forced to break the law by burying decaying carcasses on the farm. Nevertheless, the scheme now has 25,000 members.
BSE has been diagnosed in a cow born in 2001; it is the most recently born case in the UK. Three cases so far have been confirmed of animals born in 2000. The ban on including meat and bonemeal in ruminant feed was reinforced in 1996.
New (EU) rules on drivers’ maximum hours came into effect on 4th April. They will make it vital for farmers to gather livestock loads on schedule and are virtually certain to increase haulage costs.
The State Veterinary Service became an Executive Agency of Defra at the beginning of April.
SAC’s new Livestock Disease Surveillance Centre in Perth has been opened. It is one of eight such SAC centres in Scotland.
A National Audit Office reports that 98% of illegal meat imports evade UK controls.
The EC has launched an internet consultation on the consumers’ perception of veal, which varies between member states. Systems of production differ widely. The aim is to arrive at a harmonised definition.
The campaign for compensation by the government for the 62 former pig swill feeders who lost their livelihoods during the 2001 foot-and-mouth crisis is gaining momentum and support. A group of cross-party MPs has launched an Early Day Motion in Parliament supporting the claim.

Inputs/Supply businesses

Banks Cargill’s merger with Allied Grain has been cleared by the Office of Fair Trading to form Frontier, the country’s largest arable supply business. It will have annual sales close to £700 million and employ some 700 staff. It began trading on 4th April.
Brent crude oil prices rose to 56 dollars a barrel on 22nd March; red diesel prices rapidly rose to 34p/litre. Brent crude has risen 30% since 1st January and is now about 70% higher than the same time last year.
Domestic 34.5% AN currently averages over £150/tonne delivered. Defra fertiliser indices in January were 54% for straight N and 27% for compounds above the 2000 base year.

Marketing

The launch of the EBLEX advertising campaign on the new Quality Standard Marks for beef and lamb (see March MFU, IX.8) has triggered a rush to join the scheme. However, Tesco has declined to carry the new mark, unlike Sainsbury’s, Asda, Somerfield and the Co-op.
Sainsbury’s has changed the payment terms it offers to its small producer suppliers, from 21 to 45 days. However, the firm is now reconsidering, following considerable objections and appeals to the Office of Fair Trading.
The Office of Fair Trading has unexpectedly referred the Somerfield deal to buy 114 formerly Safeway compact stores from Morrisons to the Competition Commission. There now appear to be three companies bidding, or preparing to bid, for Somerfield.
The Office of Fair Trading, in a new report, has concluded that “by and large” retailers are complying with the supermarket code of practice, with little evidence of its being breached. The response of supermarket critics, including many suppliers and farming leaders, has been highly predictable.
Officials have been investigating some recent milk quota transfers that allegedly involve large amounts of quota moving from England to certain holdings in Scotland, Wales and Northern Ireland (where its SFP future value is substantially higher). “Artificial” transactions are disallowed under EU legislation. However, no action is to be taken, as EU officials subsequently sanctioned these transactions.
The Milk Development Council has launched a £3 million campaign to convince teenage girls to eat cheese and yoghurt and drink more milk.
Branston is to manage the Tesco potato supply account with QV Foods as well as itself; these two firms now supply Tesco with two-thirds of its fresh potatoes. The termination of its contract with the Romney Marsh Potato Company (reported in March MFU, IX.9) was part of Tesco’s rationalisation of its potato supply base. Tesco will continue to source potatoes from Kent, Sussex and Essex but packing operations have moved to Branton’s plant in Lincolnshire. Another Kent firm, St. Nicholas Court Farms, will have its packing contract with Morrison’s cut in July but will continue to pack for Tesco, along with Greenvale AP.
Centaur Grain is to streamline its business. Chief executive Peter Lanorio is to step down at the end of July, but will remain as a non-executive director. Operations director Liz Thomas is also leaving, to set up her own business.
Ridgeway Grain, the farmer-owned grain store and marketing business based at Membury in Berkshire, is to spend £500,000 on expanding it storage and drying capacity.
Devon-based meat producer Lloyd Maunder has acquired the Dewhurst butchery chain, which has some 150 shops. Sainsbury’s is ceasing its fresh lamb supplies from Lloyd Maunder from 1st October.
Plans have been unveiled to open the new dairy processing factory in West Cumbria first mooted nearly a year ago; it will be at Workington and cost £37 million; one of its main products will be cheddar cheese.

Miscellaneous

NFU Scotland president John Kinnaird and vice-presidents David Mitchell and Bob Howat have all been re-elected unopposed for a further term of office.