Farming News Review - July 2009

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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

Mariann Fischer Boel, the EU agriculture commissioner, has announced plans to introduce food labels which better reflect farmers’ “commitment to excellence”. The plans would extend the scope for protected food marks, include progressive adoption of obligatory place-of-origin labelling and create a unique register for geographical indications.
A draft Animal Health Responsibility and Cost Sharing Bill was included within the Governments’ draft legislative programme recently announced. Defra hopes to have the legislative process completed by November 2011 with a view to a new independent body for animal health coming into being in April 2012.
The European Commission is proposing to extend a new set of “biophysical indicators” to identify disadvantaged areas. These would be based on natural handicaps such as poor soil, extreme climate and steep slopes instead of economic hardship. The House of Lords EU Committee has called for “the swift adoption” of the reforms.

CAP (etc.) support details/payments

The EU agriculture minister, Mariann Fischer Boel, has announced that there will be further CAP reform in 2013 to ensure that direct payments to farmers are retained in some form so as to provide an income safety net.
The Scottish Government has announced it will not take advantage of Article 68 of the CAP which would have allowed it to top-slice 10 per cent of Single Farm Payments to provide funds for specific sectors. However, it is to provide £15 millions in increased support to upland farmers. The Welsh Assembly has also ruled out using Article 68.
Farmers are to be sent an updated map of their farm by the Rural Payments Agency combing aerial photography with updated Ordnance Survey information. Acceptance or otherwise must be dealt with by no more than 28 days from receipt.

Grants/regulations/legislation/environment

Defra has launched a public consultation seeking views from farmers and landowners in coastal areas on how businesses should be supported, how coastlines should be managed and how to manage roads and key local infrastructure.
The Government has tabled amendments to the Marine and Coastal Access Bill so as to provide farmers and landowners with a right to appeal the position and management of a coastal route on their land if it affects their business.
A report carried out by the University of Reading and funded by the Soil Association has concluded that organic production cuts greenhouse gas emissions and water pollution.
The Department of Energy and Climate Change intends to extend the climate change discount scheme, which gives an 80 per cent rebate of the levy in return for agreed energy savings, when the current arrangements ends in 2013.
A study from CE Delft has revealed that belching dairy cows account for only 3 per cent of global greenhouse gas emissions, a drop of 30 per cent since 1990.
Proposals to extend the Integrated Pollution Prevention and Control directive to glasshouse nurseries with total boiler capacity in excess of 20 Mw have been postponed to at least 2012.
13 people have been awarded grants by the Scottish Executive under its Food Processing, Marketing & Co-operation Grant scheme. Angus Soft Fruits has been awarded £189,000 for the installation of a new refrigeration plant and packing line while Branston Ltd has been granted £117,000 to modernise the potato production line at its Abernethy site.
The Scottish Government is providing £3.9 millions towards the cost of a new creamery to be built by First Milk at Campbeltown.
Scottish Water Waste Services is constructing a £7 millions anaerobic digestion plant at Deerdykes to recycle food waste. When completed the plant is expected to generate one Mw of electricity each year from 30,000 tonnes of food waste.
Defra has announced a number of grants under the Anaerobic Digestion Demonstration Programme including those to GWE Biogas in East Yorkshire, a Dairy UK project at Blackmore Vale Dairies, Biocycle in South Shropshire and Staples Vegetables.
Robin Faccenda, chairman of the Faccenda Group, a major chicken producer, has invested £300,000 in a new student centre at Harper Adams and a further £200,000 to fund a longterm programme of student financial support.

Other matters of farm finance and tenure

The Agricultural Wages Board has increased the grade 1 rate by 7p to £5.81 per hour with effect from October and has increased all other grades by 2.2 per cent. The Scottish equivalent increased rates by only 1.9 per cent but NFU Scotland still called for the Board to be abolished.
A Defra survey has found that the average farm income of horticultural businesses in 2007 rose by nearly 25 per cent to nearly £52,000. In 2008 the income of soft fruit producers increased by a third to over £40,000 while the income of growers of glasshouse edibles rose to over £46,000. However, the income of growers of outdoor vegetables fell by 4 per cent to £75,000.
The 32nd annual Tenanted Farms Survey of the Central Association of Agricultural Valuers has revealed that 81 per cent of 1986 Act tenancies which came to an end in 2007/08 were relet as farm business tenancies. One in seven of every farm business tenancies covered land not previously let and the average length of a tenancy was 3½ years, the lowest since 1998.
In its latest study, Plimsoll Publishing has reported that 321 of the UK’s top 1,000 fresh produce companies have a strong financial rating while a further 184 companies were deemed to hold a respectable position. Overall the report concluded the industry was outperforming many other business sectors.
Specialty Produce Ltd has regained its status as a producer organisation after the High Court quashed two recent government decisions. The group, which grows salad leaf, spring onions and soft fruit, has been frozen for two-and-a-half years.

Product prices

A. Crops

With the exception of milling wheat which dropped back slightly, average prices for cereals and oilseeds weakened by a considerable margin throughout June, largely as a result of the commencement and progress of the Northern Hemisphere harvest. As ever, many opposing forces have affected the market but the main aspects (the strengthening of the Sterling against both Dollar and Euro; the relatively high level of 2008 harvest carried over and reports that US harvest is progressing well, with good yields) have suppressed prices. However, Strategie Grains again reduced its prediction of the 2009 EU-27 wheat crop this month, this time by a further 2% (now standing at 126Mt), which may have had a small positive effect on prices. Reflecting the progress of harvest and the realisation of some expectations, LIFFE wheat futures also weakened over the course of the month. At the end of June, deliveries in November 2009 and 2010 respectively stood at £114 (down £17) and £120 (down £6).
Average spot prices in late June (£/tonne ex-farm): feed wheat 95, milling wheat 143; feed barley 79; oilseed rape 236; feed peas 145; feed beans 147.
Average potato prices held relatively steady for the second month in a row, dropping slightly below £127 but building back to £130/tonne. Early crop lifting was in full swing by the end of June, but was slightly behind harvest at the same time last year. Demand for 2008 crop from the packing and processing sectors remains steady for those with contracted tonnages. Meanwhile, as the 2009 crop harvest dovetailed in with the end of the 2008 packing season, the free market saw some volatility as packers and processors sought to fill small gaps in schedules. In late June the average potato price stood 30 per cent below prices a year earlier at £130/tonne; by contrast the free market average price moved from an opening position of £118/tonne, down to £113, up to £128 but closing back down at £117/tonne (45 per cent below June 2008).
At the end of June King Edward was still in short supply and achieving between £200 and £230/tonne, whilst Desiree prices fell back slightly to a range of £90 to £145/tonne depending on grade-out. Estima prices continued to be wide-ranging, sitting between £100 for wholecrop and £160 for best samples. Demand for Maris Piper seems to be mainly for the higher end of the market at £180 to £200/tonne, whilst poor quality samples achieved £100 and £130/tonne.

B. Livestock

Average steer prices in June showed a similar growth pattern to May, increasing in the first half of the month (by 5p) but then falling back in the latter half (by 2p) to close 3p/kg higher at 158p/kg lw; 2.5 per cent above prices in June 2008. By contrast, average heifer prices rose steadily over the course of the month to close with a premium of 3p/kg lw over steers. Dairy cows in late June were achieving an average price of £1,271 per head, down 1 per cent on prices at the end of May and 9 per cent below those a year earlier.
Lamb prices in the early part of June increased marginally to a peak of 205p/kg lw. However, due to the high volume of new season animals coming to the market place, prices dropped substantially over the remainder of the month (down to 155p/kg lw, a drop of just less than 25 per cent). Prices in June 2008 stood lower still at 142p/kg lw.
Average pig prices grew further this month, but the rate of increase continues to drop off. By late June prices stood at 154p/kg lw (up a further 1 per cent on last month and 16 per cent above prices a year earlier).
The average farmgate milk price for April (reported in June) recorded a materially weaker position, a full 1.11ppl lower than March prices, at 23.26ppl. The average price for the same month a year earlier was 1.69ppl (7.2 per cent) higher. Average milk quota prices held steady at 0.25ppl for clean holdings (based on 4% butterfat average).

Other crop news

The National Association of British and Irish Millers has decided that a full mycotoxin test will be required on all wheat delivered this harvest.
The Potato Council has warned that the decline in consumption must be halted otherwise the industry stands to lose up to 11 per cent of the crop’s total consumed volume, equivalent to 600,000 tonnes.
The National Institute of Agricultural Botany has confirmed the presence of a new race of yellow rust affecting Solstice and varieties with Solstice in their pedigrees.
The survey “Horticulture Production in England” conducted by the University of Reading has found a noticeable long-term drop in the output of vegetables. The area of field vegetables fell 15 per cent in the past 10 years to 115,000 hectares; outdoor-grown soft fruit rose to 9,400 hectares; glasshouse soft fruit rose from 53 to 146 hectares; protected vegetables fell by 48 per cent to 686 hectares.
Grey Friars (UK) Ltd is to develop a £4.5 millions energy-efficient facility in Yorkshire to yield 150,000 lbs of mushrooms per week.
A new research centre dedicated to researching the DNA of plants and animals used in food production, The Genome Analysis Centre, has opened near Norwich.
The Greencore Group has exposed its malting plant at Buckie, Scotland to 59,000 tonnes each year.
The National Institute of Agricultural Botany is planning an independently run demonstration of courgette varieties which will be open to growers by early September.
East Malling Research Station is to launch two new strawberry cultivars and a new raspberry variety. Fenella, a late-season June-bearing strawberry has been bred from the cross Lucy x EM972 while Lucy is a high-yielding mid-season June-bearing strawberry. Autumn Treasure is a mid-season pest and disease-resistant primocane raspberry cultivar.
The Co-operative Farms has invested over £2 millions in a strawberry-packing plant near Dundee. The site was bought from Gowrie Growers Ltd.
Biotech company Cambridge Theranostics is to launch a “tomato pill” to help prevent cardiovascular disease.

Other livestock news

Attempts to change EU plans to introduce compulsory EID in sheep whereby farmers would have been exempt from having to use electronic tags until sheep left the holding of their birth have failed after they were rejected by EU agriculture ministers.
Defra has announced six bovine TB hotspot areas where badgers will be vaccinated next year as part of a 5 year project. Catchment areas of 300 sq.km. have been identified and within these locations, vaccination will take place over smaller areas of up to 100 sq.km. The areas are the Eccleshall area of Staffordshire; North of Bromyard and East of Tenbury Wells in Herefordshire/Worcestershire; North-east of Cheltenham; North-west of Stroud; East of Tiverton; West of Tiverton.
In the first 3 months of 2009, 12,000 cattle were slaughtered because of bovine TB, a 19 per cent increase on the same period in 2008. More than 5,000 farmers were under TB restrictions at some point in the period.
The Farm Animal Welfare Council has set out 6 principles in a newly-published report to improve the welfare of poultry before slaughter. This includes slaughter personnel being properly trained, competent and caring; only fit birds being slaughtered; handling of birds with consideration; slaughterhouse equipment being fit for purpose; birds being unconscious and insensible to pain prior to slaughter; birds must not recover consciousness.
EU Ministers have agreed new rules which will come into effect in 2013 which will modernise slaughterhouses, improve skinning techniques and allocate a welfare officer to every abbatoir.
Dairy Farmers of Britain has been put into receivership leaving the 1,800 producers with the loss of May milk cheques and also the loss of capital invested.
Dairy Co’s 2009 ‘Farmer Intentions Survey’ forecasts a fall in British milk production of 4.9 per cent to 10.5 billion litres by 2010/11. It also records the lowest number of farmers intending to expand since the survey began in 2004.
Global packaging specialist Tetra Pak’s Dairy Index is forecasting a compound annual growth of 2.2 per cent in the consumption of liquid dairy products over the next 3 years. In 2008 global consumption reached 258 billion litres, an increase of 1.6 per cent over 2007, the past 4 years have seen an annual increase of 2.4 per cent. Emerging markets such as India, China and the Middle East will account for 96 per cent of the annual growth of 2.2 per cent.
Dairy Crest cut its Davidstow milk price by 0.5ppl on 1 July but has stated that this price will be the maximum for at least 4 months.
An article in The New Zealand Farmers Weekly suggests that world dairy leaders believe there will be no improvement in the prices of milk and dairy products before mid-2010.
A survey conducted by the NFU’s south east regional office has found that a third of dairy farmers are threatening to quit the industry because of the costs of meeting Nitrate Vulnerable Zone requirements including constructing winter slurry storage.
Milk Link has purchased the cheese factory of Dairy Farmers of Britain at Llandyrnog. French-owned Lactalis McLelland has bought the Somerset Lubborn cheese facility.
Kerrygold, which is owned by the Irish Dairy Board, has opened a new 80 tonne per week cheese-packing facility in Leek.
The Dairy Event and Livestock Show is to be relocated from Stoneleigh to the NEC in Birmingham in 2010.
In view of the fact that British livestock farmers import about 20 per cent of animal feed from the US, Argentina and Brazil, sharp cost increases are anticipated after a shortfall in the soybean crop. In the US the crop is expected to be 75 million bushels, down from the April estimate of 165 million bushels. The Argentinian harvest is expected to be 40 per cent down on last year. Over the past 2 months prices on the Chicago Commodity Exchange have risen by 28 per cent.
SCA NuTec, owned by Provimi, has completed a £2 millions investment in a new animal feed blending facility at its Dalton, Thirsk site.
The legal battle against the tabular valuation system has come to an end after law lords refused permission for the case to be taken to the House of Lords.

Inputs/Supply businesses

The International Fertilizer Industry Association Outlook 2009-2013 suggest an increase in world fertilizer consumption. In 2008/09 consumption fell by 5.1 per cent to 159.6 million tonnes, nitrogen by 1.6 per cent, phosphate by 7 per cent and potash by 14 per cent. However, growth of 3.6 per cent is expected in 2009/10.
The UK’s only fertilizer manufacturer, GrowHow, has announced its Nitrogen prices at levels similar to 2007, well down on 2008 prices. July Nitram is quoted at £175-£178 per tonne with £2 per tonne increases from July to September.
A report commissioned by the Potato Council has indentified that the greatest economic loss to the industry following the revision of EC Directive 91/414 will be as a result of the removal of blight products mancozeb and maneb. The cost of alternative programmes will be a financial burden of £28 millions. The likely removal of herbicides linuron, pendimethalin and metribuzin will increase the cost of weed control by £13 millions. In addition, the implementation of the Water Framework Directive could result in the removal of active substances such as metaldehyde and bentazone could result in the removal of active substances such as metaldehyde and bentazone could cause losses in excess of £100 millions.
Scientists at Rothamsted Research and the New South Wales Department of Primary Industries have developed a method of encapsulating insecticide into crystals that dissolve after 5 hours giving a naturally occurring organic chemical, piperonyl butoxide, time to block enzymes which insets develop before the insecticides active ingredient is released. An agreement to apply the technology in horticulture has been made with Endura Fine Chemicals.
A seed treatment has been developed at Lancaster University and Stockbridge Technology Centre which uses jasmonic acid, a naturally occurring plant compound which protects plants from insect damage. Worldwide marketing rights have been granted to Becker Underwood.
The total ban on the use and storage of herbicide IPU came into force on 30 June.

Marketing

Talks on proposals for a voluntary ombudsman to oversee retailer-supplier relationships appear close to collapse in the light of opposition from the major supermarkets. If this happens it is likely that the Department for Business, Innovation and Skills will introduce a mandatory regulator.
A survey of 3,000 people by AXA PPP healthcare’s Nutrition and Fitness website has revealed that consumers lack knowledge of the seasons of UK products and the origins of imports. Only 2 per cent of those surveyed knew asparagus was a native UK vegetable, 75 per cent could not indentify gooseberries while 25 per cent thought the potato to be native to the UK. The potato was voted the favourite fresh produce item.
Of the 27 EU countries, 24 will participate in the European School Fruit Scheme in 2010. The initiative is backed by a €90 millions fund which is to be matched by funds from national governments and private budgets.
A survey of 100,000 members by the Co-op has revealed that worries about payment to fresh-produce suppliers came top of a list of shoppers’ concerns. Other major issues were concern for animal welfare, environmental impact and food quality.
Normal Collett Ltd, the top fruit specialist, has acquired Metrofruit Ltd.

Miscellaneous

Jim Fitzpatrick has taken over from Jane Kennedy as Defra Minister of State.
Awards in the Queen’s Birthday Honours List included an MBE to Caroline Drummond, chief executive of LEAF; an OBE to Meredydd David, the principal of Reaseheath College; a CBE to Professor Chris Lamb of the John Innes Centre; an OBE to Ian Bell of the ARC-Addington Fund.
Lord Rooker is the new president of the Royal Association of British Dairy Farmers.