Farming News Review - May 2007

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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

Having earlier this year announced plans for the reform of the fruit and vegetable industry, EU agriculture minister Mariann Fischer Boel has stated she would be prepared to consider a transitional period before introducing decoupling. A number of southern European member states have expressed a desire for a period of transition.
The EU has proposed an end to all tariffs and import quotas on agricultural products from the African, Caribbean and Pacific group of countries from next January.
Reports are circulating in Westminster that if Gordon Brown becomes the next Prime Minister he plans to enlarge Defra by adding the Department of Trade and Industry’s energy portfolio.

CAP (etc.) support details/payments

Voluntary modulation is to be 12 per cent in 2007 rising to 14 per cent in 2009. With the EU rate on top of this, the overall rate will rise to 19 per cent.
Of the £3.9 billions budget for the Rural Development Programme for England covering the period 2007-2013, £3.3 billions will be allocated to agri-environment and other land management schemes.
The government has agreed to co-finance agri-environmental schemes to the tune of 40 per cent.
The Rural Payments Agency is expecting to fail to achieve the EU target of making 96.14 per cent of 2006 Single Payment Scheme payments by 30 June. This could result in fines of over £240 millions being levied by Brussels.
The UK has been fined £36 millions by the European Commission for payment problems at the Rural Payments Agency prior to the introduction of the Single Payment Scheme. The fines primarily relate to delays in making beef payments in 2003 and 2004.
However, employees at the Rural Payments Agency received £572,000 in performancerelated bonuses between 2004 and 2006 with over 1,000 members of staff benefiting.
A UK apple importer has revealed that the Rural Payments Agency is trying to revoke a licence which cost £5,000 for failing to import enough non-EU grown apples.
Following a decision by the dairy management committee to sell the last remaining stocks, Europe now has no butter in intervention.

Grants/regulations/legislation/environment

British Summer Fruits has joined forces with the NFU to attempt to persuade the Ministry of Communities and Local Government to clarify the planning policy with regard to polytunnels.
European Ministers have called for the threshold of GM contamination of organic food to be reduced from 0.9 per cent to 0.1 per cent.
The EU has announced widespread changes designed to simplify the cross-compliance system. The changes have been welcomed by the NFU.
The Ulster Farmers Union has been given permission to seek a Judicial Review into the Department of Agriculture and Rural Developments’ handling of the new EU Farm Waste Regulations.
The latest programme of residue testing by the Pesticide Residue Committee covering the latter part of 2007 found no samples of fruit or vegetables supplied to school above the legal limit.
The Environment Agency has reminded growers and farmers of the impending May 15 deadline for completion and return of waste exemption packs with only 20 per cent having complied with less than a month to go to the deadline.
The Environment Agency has agreed that, with effect from 2 May, use of lined biobeds will be permitted on farms.
Hadlow College has joined a US-based carbon trading platform which will enable it to manage a scheme for farmers and landowners who wish to sell carbon credits.
Scientists at the University of East Anglia have developed a nitrogen isotope-based testing system designed to catch rogue traders passing off fruit and vegetables as organic.
Cornerways Nursery, the subsidiary of British Sugar, has begun planting tomatoes at what is believed to be the largest project for reusing heat and carbon dioxide in the UK alongside the British Sugar plant at Wissington, Norfolk. The glasshouse complex covers 5.7 hectares.
A White Paper “Heritage Protection for the 21st Century” has been published.
Dairy Farmers of Britain and First Milk have been awarded processing and marketing grants totalling £3.2 millions by the Welsh Assembly.
The first fleet of tractors in the UK to run on 100 per cent biodiesel has been imported by the Eden Project from New Holland.
A Private Members’ Bill has been introduced in Parliament which seeks to require all offroad motorcycles and quadricycles to be registered and carry number plates.
A report from IGD “Beyond Packaging: Food Waste in the Home” has found that more than 75 per cent of consumers want to see a reduction in food waste.

Other matters of farm finance and tenure

A government-backed study undertaken by Sir Michael Lyons has recommended the abolition of rates exemptions on agricultural land and buildings. The cost to the industry is estimated to exceed £450 millions.
The latest survey of its members by the Royal Institution of Chartered Surveyors reports average land values increasing by 18 per cent in the second half of 2006 to £3,304 per acre compared to the same period in 2005. Arable land averaged £3,420 per acre while grassland averaged £3,188 per acre. The biggest increase was in the North West at 27 per cent while the South West recorded the smallest rise at 14 per cent.
Strawberry grower S & A Davies has lost its planning appeals against an order of Herefordshire Council to remove developments used to house hundreds of seasonal workers.
Falling milk prices has been blamed for a 29 per cent fall in the incomes of Welsh farmers in 2006, down by £44 millions.
Lincolnshire-based labour provider AAA Personnel Ltd has become the first company in the region to have its licence revoked by the Gangmasters Licensing Authority.
Eight mushroom pickers from eastern Europe who worked for less than half the statutory minimum wage in the Irish Republic have been awarded £76,500 in a back-pay settlement.

Product prices

A. Crops

Reports from the US department of agriculture early on in the month suggested good progress for the US wheat crop, which stalled cereal prices slightly. However, by late April these reports had changed to concern, as US crops suffered a severe setback from cold temperatures. This, combined with the fact that Australia, northern Europe and Ukraine are all crying out for rain, had a strengthening effect on cereal prices in general. Average prices in late April (£/tonne ex-farm): feed wheat 95, milling wheat 102; feed barley 91; oilseed rape 158; feed peas and beans 93.
Average potato prices jumped considerably at the start of the month, on the back of the steady rise seen in March, peaking just below £177/tonne. The market dropped back marginally but remained above £171/tonne, where it held steady for the remainder of April. The closing price was £7 up on the March closing price and £48 above prices in April 2006. Overall trade remains steady as packers and processors are calling in contracts in line with demand expectations. Sourcing from the UK open market is marginal as exports from Egypt and Israel are now on line. In late April, King Edwards were achieving between £180 and £210/tonne; up to £250/tonne for top quality. Prices for Desiree continued to be highly spread, obtaining prices of £170 for average samples up to £270/tonne for top quality. The limited availability for top grade Maris Piper means samples now are achieving £270 to £330/tonne, whilst samples of Estima are now only obtaining between £170 and £200/tonne; samples with high baker content are still commanding up to £250/tonne.

B. Livestock

The average steer price gained 6p/kg in the first half of the month, peaking at 119p/kg lw. Over the latter half of the month the price dropped the same 6p/kg, to end the month back at 113p/kg lw. By coincidence, the price at the end of April 2006 was also 113p/kg lw.
Lamb prices broke away from the seasonal price trend; the expected steady gain was not seen, as the price fluctuated marginally around 120p/kg lw. The latter stages of April saw prices strengthen slightly, closing at 121p/kg lw.
The average pig price continued, albeit marginally, the price recovery seen in March. Prices opened at 105.5p/kg dw and closed at 106.5p/dw, standing 5.5p/kg higher than those seen in late April 2006. The positive effects of the Norfolk bird flu outbreak are thought to have dissipated at this stage.
Average milk prices followed the seasonal pattern, dropping back further to 18 ppl. The highly publicised increase to Tesco’s milk price has not affected many producers, but in the longer term this is expected to have a positive effect on milk prices in general. Milk quota trading continues to demonstrate signs of market recovery, with clean, 4% butterfat holdings obtaining 2.21 ppl; an increase of 0.6ppl over late March.

Other crop news

BASF has postponed plans for GM potato trials in the Irish Republic.
The Processors and Growers Research Organisation has estimated a reduction of 15 per cent in this year’s spring pea plantings and 20 per cent in spring field beans compared to 2006.
The UK onion marketing season is likely to finish by mid-May, a month earlier than usual resulting in a tight supply situation until the end of August.
Apple sales in the UK grew by 10 per cent in the year to March to be worth £610 millions. The beginning of 2007 has seen a 10 per cent increase in price against a 4 per cent decrease in volume giving welcome price increases to growers.
Waitrose and Fruition, the retailer’s top-fruit category manager, is to carry out research into organic apple varieties that offer higher resistance to scab and mildew.
Drax Power in Yorkshire is increasing its existing miscanthus supply contract from 100,000 to 300,000 tonnes.
A leaked European Commission document suggests that growers will be allowed to participate in the sugar industry’s restructuring scheme.
A study published by Aberdeen University has suggested that apples can protect young children from asthma.

Other livestock news

Tesco has created a dedicated milk supply pool of about 850 producers rewarding them with a price of 22 pence per litre. It is also to source “local choice” milk from 150 small farms of less than 100 cows paying a price of 23 pence per litre.
Waitrose has announced a 1.7 pence per litre increase for its dedicated supplies via Dairy Crest taking the price to 23 pence per litre.
The Milk Development Council’s fourth annual Farmer Intentions Survey predicts that national milk production could fall by at least 7 per cent over the next two years. Only 20 per cent of farmers are expecting to expand while the number intending to leave the industry has risen to the highest level for three years.
Robert Wiseman Dairies is planning to increase the capacity of its new dairy at Bridgewater by more than 200 million litres.
Dairy Farmers of Britain’s Whitby dairy is to close.
The Cheese Company, Milk Link’s cheese manufacturing business, has won the contract to supply Sainsbury’s own-label high quality cheddars for England and Wales.
The Food Standards Agency has announced there is insufficient evidence for a prosecution arising out of the recent avian influenza outbreak.
The European Food Standards Agency has published the results of a survey which has found that salmonella is estimated to be in 24 per cent of Europe’s broiler flocks.
The Met Office and the Institute of Animal Health have issued a warning that May is the start of the danger point for the arrival of bluetongue disease in the UK. Midges, which spread the disease, are believed to have survived the mild winter evidenced by recent outbreaks in Germany.
Cases of bovine tuberculosis increased at the start of the year. In January and February there were 788 new incidents compared to 703 in the same period last year.
Exports of British breeding cattle have exceeded £1 million after only 9 months of returning to international markets.
A stakeholder group including the NFU, Holstein UK, National Beef Association and Milk Development Council is working with Compassion in World Farming, the RSPCA and retailers to find ways to boost the domestic market for calves ending the need to export dairy bull calves.
Imported fresh and frozen lamb increased from 47 per cent in early 2006 to 56 per cent today according to a report from Eblex and is regarded as a major contributor to the recent poor lamb prices.
A Devon farmer has granted permission to bring a Judicial Review of DEFRA’s tabular valuation system. The farmer is being supported by the NFU which claims the system is “unfair” to farmers with higher value animals.

Inputs/Supply businesses

An EU Commission report on member states’ implementation of the Nitrates Directive has concluded that, while progress is being made, tougher controls on nitrogen fertiliser use will be required to fully achieve the objectives of the directive.
Defra’s annual report on agriculture highlights that spending on fuels has risen by 500 per cent since 1973 despite usage falling by 60 per cent; spending on fertiliser has levelled out at £750 millions; spending on pesticides rose by 25 times between 1973 and 1997; net farm incomes in 2006/07 are expected to be up by 20 per cent on 2005/06.
Research by the HGCA has indicated that no specific fertiliser adjustments are required for crops grown for the bioethanol market.
Five new fertiliser products marketed by Potash have been granted Soil Association approval.

Marketing

The Competition Commission has announced a delay in the publication of its inquiry into the UK grocery market. It will publish provisional findings in September with the full report now not expected until February 2008.
Exports of British Food and drink in 2006 was £10.5 billions, an increase of 6 per cent over 2005.
Consumers spent almost £1.5 billions on potatoes in 2006 with fresh produce taking 60 per cent of the market. Sales have grown by 20 per cent in the past five years, the biggest increase being in the premium varieties.
A report entitled “Recipe for a Greener Curry” by Zeenat Anjari for London Food Link has suggested that UK growers are failing to take advantage of the opportunities which exist in supplying produce required by ethnic communities.
Despite a ruling by the Competition Commission that Noble Foods will have to be broken up, Deans Foods and Stonegate Farmers have decided to proceed with their merger. The combined business will have 70 per cent of the retail shell egg market and 50 per cent o the supply of liquid eggs.
Scott Farms Inc of North Carolina has established a base in Evesham to supply the UK market with sweet potatoes.

Miscellaneous

Tesco has announced a full year profits increase to £2.55 billions, up by 13 per cent an 11 per cent increase in turnover to £46.6 billions. Turnover amounts to £1 in every £3 spent on food in the UK.
Total Produce has acquired the trade and trading assets of George Smalley Ltd, a fresh produce wholesale with a turnover of £10 millions.
Anglia Farmers, the UK’s largest agricultural buying group, increased profits by 64 per cent in the year to January on turnover of £72 millions.
The Springdale Group, based in Yorkshire, has gone into administration. The group had contracts with farmers for the production of hemp, crambe, camelina, sweet quinoa and oilseed rape.
Jack Buck Growers, a division of Jack Buck (Farms) Ltd, is to be sold to DGM Grower Ltd and become part of the Fresca Group. The business grows and markets vegetables such as chicory, celeriac and fennel and is based in Holbeach.
The National Register of Sprayer Operators scheme is to be reviewed with a view to designing a more user-friendly version for farmers.
Defra is selling 6 ADAS research sites totalling over 3,200 acres.
NFU president, Peter Kendall, has been elected as vice-president of COPA-COGECA, the umbrella organisation representing all farmers in Europe.
Lord Sandy Bruce-Lockhart has succeeded Lord Mayhew as President of the Marden Fruit Show Society.
David Johnson, head of post-harvest research at East Malling Research Station, has been awarded the Marsh Horticultural Research Award.