Farming News Review - December 2008

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

Other crop news Other livestock news Inputs Marketing Miscellaneous

Policy issues

Euro-MPs have voted to reduce the number of pesticides available for use by farmers. Measures include pesticide use reduction targets of up to 50 per cent; a total ban on the use of some pesticides; tightening derogation measures which allow vital pesticides to remain on the market; the rejection of a proposal to conduct an EU-wide impact assessment on agricultural production. The measures will now be put to the full European Parliament but are not as bad as first feared.
A report from the Centre for Food Policy at London’s City University has identified the UK fruit and vegetable sector as being “at risk” in terms of food security and sustainable production. The report states “consumption of fruit and vegetables is lamentably low … as are measures of home production. In some cases, these are declining and, for some indigenous vegetables, production is declining even while imports are increasing.” The report calls upon the UK government to build a better definition of food security based upon sustainability and an audit of national food supply. It also calls for a renewed focus on labour and skills in the fresh produce and wider food sector.
European Union agriculture officials are to scrap market regulations governing the size and shape specifications of 26 fresh produce lines. The abolition will become effective on 1 July 2009.

CAP (etc.) support details/payments

CAP Health Check negotiations have concluded. Details include an increase in compulsory modulation from 5 to 10 per cent in 2012 (modulation for English farmers is already 17 per cent); abolition of set-aside; phasing out of milk quota by 2015 with 1 per cent annual increases between 2009-10 and 2014-15; the removal of the remaining coupled support payments; the ability of member states to shave 10 per cent from Single Payments to target support in specific areas; simplification of cross compliance rules; the use of unspent CAP money to support rural development and specific sectors.
Reports from the continent are suggesting that France, which currently holds the EU presidency, will demand that subsidies to French farmers are protected before it agrees to allow global free trade talks to take place this month. This follows news that France has revealed a plan to redirect unspent CAP monies into subsidies for its ailing sheep sector. In response to farmer protests, the French Agriculture Minister announced a package of assistance worth £210 millions with £40 millions given to the sheep sector. Of this £20 millions is EU money.
Defra has announced that all Entry Level Stewardship and Organic ELS points and Higher Level Stewardship arable and capital item rates are to be reviewed along with Countryside Stewardship Scheme and Environmentally Sensitive Areas capital payment rates. Changes will be implemented in 2010 and are to ensure payment and points rates offer “fair compensation” for the income farmers forego when signing up to the schemes.
Natural England has announced changes to environmental farm payments which will result in payments moving to a targeted approach to encourage farmers to carry out particular activities. Historically payments have been made to farmers who applied on the basis of work already carried out. Farmers in 110 areas covering over 4.8 million hectares will be encouraged to coordinate conservation work through Higher Level Stewardship Schemes.
The 2008 Single Payment Scheme rates for the three English regions are £112.17 per hectare for non-SDA, £91.84 for upland SDA other than moorland and £16.22 for upland SDA moorland.

Grants/regulations/legislation/environment

A new British Standard has been launched to help businesses work out the carbon footprint of their goods and services. PAS 2050 aims to help firms consistently calculate their greenhouse gas emissions.
A report “Wild Bird Populations 2007” has revealed that breeding bird numbers in England are 52 per cent lower than in 1966. Between 1970 and 2007 wild bird numbers have remained broadly stable but between 2005 and 2007 farmland bird numbers fell to their lowest recorded level. Woodland bird numbers are stable but water and wetland breeding bird numbers are 6 per cent lower than in 1975.
Defra has agreed to contribute £650,000 over the next 5 years to fund strawberry breeding research at East Malling Research. The Strawberry Breeding Club is also to contribute £900,000.
The Royal Highland Education Trust has been awarded a grant of £200,000 from Scottish Natural Heritage to assist with giving up to 10,000 schoolchildren first hand experience of nature and the countryside on farms and estates over three years starting in 2009.
Scotland is to receive £1,165,761 from the Climate Challenge Fund to invest in a series of community projects aimed at cutting the nation’s carbon footprint.
Diversification grant support totalling £60 millions is available across the East Midlands from the East Midlands Development Agency offering grant funding of between 25 and 50 per cent of project costs.
Yorkshire Forward has unveiled a budget of £8.8 millions for the Farexchange programme which aims to develop the Yorkshire and Humber food and drink industry. The project aims to link farmers and growers with food companies to improve supply chains and offers support in improving efficiency mechanically through the Centre for Food, Robotics and Automation.

Other matters of farm finance and tenure

Lending to the farming industry has reached an all-time high of £11.1 billions compared to £10.1 billions a year ago.
Braemar UK Agricultural Land, the investment vehicle, has acquired its first investment, two parcels of land totalling 310 acres at Eastville, near Boston.
A report commissioned by NoblesVenues.com shows that the average large farmhouse could command annual rental income in excess of £68,000.
Over 60 men and women from eastern Europe were removed from leek harvesting in Lincolnshire in what is thought to be the UK’s biggest-ever operation against human trafficking for labour exploitation.

Product prices

A. Crops

HGCA released their 2008 Cereal Quality Survey this month, quantifying the wet harvest and poor protein figures already seen in the market place. The UK wheat average moisture content was 16% (14.5% in 2007) and average protein was 11.3%, well below 2007’s 12.2%. The resulting underproduction of milling quality wheat remains an issue; largely indicated by premiums of £50/tonne being offered. There is still no sign of fertilizer prices dropping back in line with the fuel price but lower diesel prices are now feeding through. The wheat harvest in South America coming in below expectation and the reduced global maize stocks are both lifting the feed wheat market. LIFFE wheat futures were relatively volatile in November; initially weakening, then strengthening to above the opening position, only to drop back even further. Volatility has been accentuated by the weakened sterling and the low crude oil price. At the end of November futures for delivery in November 2008, 2009 and 2010 were £93, £110 and £121 respectively (up by £3, down by £1 and up by £1).
Average prices in late November (£/tonne ex-farm): feed wheat 86, milling wheat 133; feed barley 83; oilseed rape 247; feed peas and beans 98.
Average potato prices continued their downward trend in the early part of the month, dropping below £100/tonne. However, the market then steadied and strengthened over the remaining weeks. Poorer prices early on resulted from many growers having to market more crop early for cash flow purposes, with packers and processors holding off on purchases for the same reason. Growers are still retaining better samples so as to benefit from potential late-season market improvements. Opening the month at £103/tonne, the average price by late November was up to £109/tonne (£41/tonne lower than those in November 2007). The free market price at the end of the month sat £9 below the average price at £100/tonne, £56 below the price a year earlier. The poor financial climate is leading more consumers to seek out second grade product from the supermarket shelves and this too is affecting packer demand.
In late November, King Edward were selling for £120 - 140/tonne, with best samples achieving up to £165; Estima were achieving £70 to £90/tonne and up to £150 for bakergrade. Desiree prices ranged from £110 and £140/tonne and Maris Piper were selling at £110 - £120, £130/tonne for best quality.

B. Livestock

The average steer price, opening at 144p/kg lw, proved to be variable this month, initially dropping, then jumping back to touch 150p/kg mid month, dropping back again by the end of the month. In late November, prices were back to 144p/kg lw; 36p/kg higher than those a year earlier. The premium for heifers over steers remains, but by the end of the month this was down to just above 2p/kg.
UK average lamb prices started the month at 114p/kg lw and proceeded to gently improve over the course of the November. By the end of the month the average price was 117p/kg lw; 39p/kg above prices a year earlier.
The average pig price, having been relatively steady for a number of months, tailed off over the course of November. The average price in late November was 132p/kg dw; down 4p on October’s close and now sitting 24p/kg above November 2007 levels.
The average farmgate milk price for September (reported in November) showed a further uplift on August prices, gaining 0.74ppl to sit at 27.01ppl, but this is expected to have fallen in October and November as processors sell retained stocks to improve cash flow. The average milk price is 3.83ppl above those in September 2007. The European parliament has agreed to increase milk quota levels by 1% per annum for the next five years, resulting in further weakening of the quota price. Clean holdings (4% butterfat) in late November were achieving 0.20ppl; down by 0.05ppl.

Other crop news

The Arable Group is suggesting that growing costs for winter wheat are likely to increase by £250 per hectare between 2008 and 2009 crops. Total costs including field, storage, land and business costs for the 2009 crop will be between £1,000 and £1,220 per hectare depending upon soil type.
A report by Savills Rural Research suggests that wheat market prices will remain volatile and that a return to 2007 price levels is possible as a fall in global production is forecast for 2009 and consequently a reduction in world stocks.
The final results from the 2008 HGCA Cereals Quality Survey show a decrease in wheat quality with average hagberg falling number, protein content and specific weight all lower and moisture content significantly higher.
The provisional estimate of potato production published by the Potato Council is 5.8 million tonnes, up 7 per cent on 2007. The planted area was 2 per cent lower but average yields are 9 per cent higher and 1 per cent up on the 5 year average of 44.7 tonnes per hectare.
The Potato Council has reported that recently harvested potato crops are mainly unsuitable for storage and sugar levels in those destined for processing are unacceptable.
Seed potato exports have exceeded 90,000 tonnes in 2008.
Wet weather in August raised yields of seed-raised onions in National Institute of Agricultural Botany variety trials. Mean average yield of brown varieties was 66 tonnes per hectare on the Essex trial site and 58.8 tonnes per hectare on the Norfolk site.
A bumper sprout harvest is forecast this year with yields of 7 to 8 tonnes per acre although prices are reported to be down by up to 20 per cent on 2007.
Defra has lost a case in the High Court concerning its approach to the use of pesticides in crop spraying. The High Court ruled that public health was not being adequately protected and there are fears that rules on crop spraying will need to be tightened.
Austrian scientists claim to have discovered a link between GM maize and reduced fertility after conducting a series of tests on mice. The study was commissioned by the Austrian government.
Research at McGill University, Canada has found that Lycopene, the pigment responsible for the red colour in tomatoes, can help prevent damage to men’s sperm cells caused by oxidative chemicals in the body. It is also thought to help prevent adhesions in women where scar tissue causes internal organs to stick together after surgery.
The European Commission has approved The School Fruit Scheme. The Commission will provide funding of €90 millions which must be matched by participating countries.
Conference pear crops this year are thought to be 12.5 per cent down in volume on 2007, Comice is down by 13 per cent and Concord down by 48 per cent.
The first commercial supplies of UK Rubens apples have gone on sales in Tesco. The Gala-Elstar cross was propagated in Italy and the trees were brought to the UK by Kentish grower Nigel Bardsley.

Other livestock news

The BTV1 strain of the bluetongue virus has been found on a farm near Blackpool in 5 imported Bazadaise cattle imported from South West France. The animals had been imported in accordance with EU rules and had been vaccinated. The NFU has called for a ban on imports of animals from BTV1 areas as no BTV1 vaccine is available in the UK.
Bluetongue virus serotype 6 has been discovered in Holland. No vaccine for this strain would be available in the UK for at least a year.
Scientists have discovered a new strain of the bluetongue virus “Toggenburg Orbivirus” in two goat herds in Switzerland.
A bug known as E.coli 026 has been found on a British dairy farm. The bug has a type of resistance ESBL making it immune to a family of antibiotics including penicillins and cephalosporins. The bacteria is not known to have adverse effects on cattle but its presence in the food chain will cause concern as it can cause life-threatening cases of food poisoning in humans.
The 2008 Global Dairy Report published by Rabobank forecasts a favourable outlook for efficient milk producers in 2009 with higher milk prices but that margins will be under pressure from higher production costs.
Dairy Crest is proposing to cut its organic milk price by 4ppl in December because of oversupply.
First Milk is cutting 93 jobs at its cheese packing facility at Wrexham having lost 40 per cent of its throughput as a result of the decision of Dairy Crest to transfer its contracted cheese packing to its own new facility at Nuneaton.
Meadow Foods is to spend £400,000 modernising its creamery at Holme-Upon-Spalding Moor in Yorkshire.
Defra has launched a consultation process on the implementation of the EU School Milk Scheme in England. The scheme provides an EU subsidy worth nearly 4p per 250ml serving of plain and flavoured milk and plain yoghurt in schools. However, the Government is considering imposing a levy on dairy farmers to fund its own contribution.
The latest edition of Eblex Business Pointers reports that nearly all livestock enterprises improved their financial performance in the year to March 2008 but still produced negative net margins. For beef enterprises the daily liveweight gain for average lowland and LFA suckler producers improved from 1.06kg and 1.04 kg in 2005/06 to 1.08 kg and 1.07 kg respectively in 2007/08. In the same period LFA suckler herds improved their calving span from 22 weeks to 16.1 weeks. Lowland sheep flocks increased the number of lambs reared per 100 ewes from 135 in 2005/06 to 139 in 2007/08 while LFA flocks recorded an increase from 136 to 141 lambs.
Defra and seven organisations representing the English cattle industry have set up the TB Eradication Group at the same time as the European Commission has warned Defra it must introduce an eradication programme for bovine TB that includes wildlife controls in order to comply with EU legislation.
The latest Welsh Assembly agricultural returns show the number of sheep and lambs fell by 5 per cent to 8.5 millions in the year to June 2008 having declined from a peak of 11.8 millions in 1999; cattle and calf numbers fell by 2 per cent to 1,143,000; pig numbers fell by 13 per cent to 21,000; poultry numbers fell by 5 per cent; turkey numbers fell by 72 per cent. The area down to crops increased by 13 per cent to 74,000 hectares, wheat sowings up by 51 per cent, spring barley up by 16 per cent and oats up by 7 per cent. The maize area increased by 14 per cent but the potato area fell by 1 per cent.
Lamb exports from New Zealand are likely to be down by 6 millions on 2007, a fall of 23 per cent. A significant reason is the number of farmers who have switched to dairying. Dairy output has increased by 74 per cent since 1990 while sheep numbers have fallen by 42 per cent and beef cows by 7 per cent in the same period.
A strike of meat inspectors has been called off after the Meat Hygiene Service agreed an improved pay deal with trade union UNISON.
Given that 3 months has now passed since the final cleansing and disinfection of premises involved in the outbreak of avian influenza, the UK is now officially free of the disease.

Inputs/Supply businesses

Farmers are being encouraged to switch 2009 nitrogen requirements to urea following a fall in bulk prices from $800 per tonne in August to just $242 per tonne. Urea currently only accounts for about 10 per cent of nitrogenous fertilisers used in the UK.
TAG UK has warned that soil index levels for phosphate have reached an all-time low and are likely to lead to problems with the growing of future potato crops.

Marketing

TNS World panel has reported that grocery price inflation fell to 8.9 per cent in the 12 weeks to October, down from 9.3 per cent in the previous 12 week period.
Analyst IGD expects the UK food and grocery market to be worth £170 billions by 2013, an average increase of 4 per cent each year until then. The value of online food and grocery is forecast to double over the next 5 years from £3.2 billions to £6.2 billions.
Year on year growth at Aldi reached 24 per cent in the 12 weeks to the end of October helping to increase the market share of the discount sector – Aldi, Lidl and Netto – to 6.2 per cent. This can be compared to growth rates of 1.3 per cent at Waitrose, 9 per cent at Asda and 9.4 per cent at Morrisons. The overall share of the market held by Tesco has fallen from 31.3 per cent to 30.9 per cent and Sainsbury’s fell by 0.1 per cent to 15.9 per cent.
The Government has claimed it has increased the sourcing of British food for its departments. The NHS sources 70 per cent of its food from domestic sources compared with 58.5 per cent a year ago; the Ministry of Defence sources 59 per cent of its food from British producers compared with 43 per cent a year ago; 100 per cent of eggs used are British; almost 100 per cent of milk is British. However, no bacon consumed is British while only 15 per cent of chicken and 19 per cent of lamb is UK reared.
The European Tomato Growers Group has called upon the European Commission to reform the entry price system for produce from third countries entering the European Union claiming that some operators are not paying the customs duties they are required to and that fraud is being committed regarding third country tomato imports.
Freshgrowers Ltd have launched a preparation-free parsnip called Piccolo for Sainsbury’s.
The Jersey Produce Marketing Organisation is to cease trading after 72 years as a result of the almost complete ending of tomato exports.

Miscellaneous

The Waste and Resources Action Programme is inviting firms to tender for a research project to develop resource maps for fresh fruit and vegetables through the retail supply chain. The aim is to develop detailed resource maps that quantify food waste and packaging waste through the fresh fruit and vegetable retail and wholesale supply chain.
Tractors stolen from farmers in Kent, Hampshire, Sussex and Berkshire valued at more than £200,000 have been found in Poland.
One of Ireland’s longest established horticultural colleges, in existence for over 80 years, is to close. The college, at Warrestown, County Meath was founded in 1923.
Waitrose has appointed Sir Don Curry as non-executive chairman of its Leckford Estate.
Lord Rooker is to be the next president of the Royal Association of Dairy Farmers.