Farming News Review - May 2010

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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

Dacian Ciolos, the European Agriculture Commissioner, has launched a debate seeking the views of the public on the future of European farm policy. He has asked “Why do we need the CAP?”; “What are society’s objectives for agriculture?”; “Why should we reform the CAP?”; How can the CAP meet society’s expectations?”.
The European Commission is preparing new regulations to succeed its Generalised System of Preferences to aid developing countries through trade. The existing regulations, through which 176 countries and territories gain preferential access to EU markets in the form of reduced tariffs, expires on 31 December 2011.
A Spanish plan to reinstate the EU ban on the sale of misshapen fruit and vegetables has been rejected by the European Parliament.

CAP (etc.) support details/payments

A temporary UK scheme to grant aid of up to £13,000 to UK farmers affected by the economic crisis has been approved by the European Commission.
The Rural Payments Agency has resumed payments to most producer organisations but eight have been permanently suspended as a result of investigations into the use of “shared facilities.”
Following cross-compliance inspections in 2009 the Rural Payments Agency has revealed that cattle identification failures were the most common with 1,663 breaches including not reporting the movement of an animal; not reporting an animal’s death; not recording or incorrectly recording movement details on CTS or in farm records; not tagging animals.
A report by the National Audit Office has warned that millions of pounds of EU funds, much of which has been taken from Single Payments by voluntary modulation, may be forfeited as the Single Payment Scheme ends in 2013 and any funds unused by 2015 will be retained by Brussels. In the UK unused funds have arisen because of a lower than expected take-up of rural development schemes and also exchange rate movements. The National Audit Office has found that take-up of rural development schemes has “tailed off” , forecasting that spending will be £160 millions compared to Defra’s estimate of £176 millions.
The Rural Payments Agency is to reduce the cost of processing Single Farm Payments by 15 per cent within a year and cut administration costs by 9.8 per cent following criticism from the National Audit Office.

Grants/regulations/legislation/environment

“Accelerating the Uptake of Anaerobic Digestion in England: An Implementation Plan” has been published by Defra. It sets out how the Government is supporting growers, farmers, other businesses and local authorities in adopting the new technology.
The Flood & Water Management Act received Royal Assent on 8 April. The Act will allow the Environment Agency to flood any areas it sees fit because flood barriers are too expensive to maintain.
“Global Water Security: an engineering perspective”, a report prepared for Engineering the Future Alliance, has warned that the UK’s reliance on water embedded in imported food is exacerbating water shortages in other countries. The report stresses that the UK must take a lead with sustainable management of its own water resources.
ADAS has launched an on-line tool to help growers assess and reduce energy consumption and carbon emissions.
Natures Way Foods, the prepared salad and fruit producer, has been certified by the CRF Institute, as one of the UK’s top employers, in terms of best human resources practice in 2010.

Other matters of farm finance and tenure

The “National Strategic Skills Audit 2010” has ranked agriculture 26 out of 27 in a table charting the economic significance of industry groups across England with only wood and paper manufacture being lower.
English Farming and Food Partnerships has forecast that food inflation will remain below 2 per cent in 2010 and will fall further in 2011 to 1% or possibly deflation.
The latest Plimsoll Report suggests that UK fresh produce businesses have returned to rapid growth post-recession. The report indicates that 366 of the top 984 companies are now growing at a rate of more than 10 per cent a year.
The Government’s Labour Force Survey has estimated around 300,000 people were unemployed in rural areas at the end of 2009 compared to 228,000 at the end of 2008.
A Defra report “the Incidental Socio-economic Benefits of Environmental Stewardship” has revealed that an investment of £249 millions in environmental schemes has generated an additional £65 millions for local economies and 665 new full-time equivalent local jobs.
A survey conducted by the European Commission has found that 79 per cent of British people are in favour of paying farmers to stabilise their income while 68 per cent favoured maintaining or increasing financial support over the next 10 years.
The latest Knight Frank Farmland Index reports that average values increased by 5.4 per cent in the first 3 months of 2010 pushing the increase over the past 12 months to 15.5 per cent. The average price is now £5,397 per acre. The amount of farmland publicly advertised for sale in 2010 is down on last year by 20 per cent.

Product prices

A. Crops

The grains market remained subdued this month, with prices strengthening, albeit by small margins, on all crops for the second month in a row. Producers are generally unwilling to sell at current price levels, which should have a positive influence on offered prices, but the currency markets and the investment funds remain the primary drivers. With Sterling still weak against the Dollar, but stronger against the Euro, the world market dynamics are shifting. The International Grains Council’s 2010/11 world wheat harvest projection holds steady at 658 million tonnes; with the current outlook for the northern hemisphere being above average for next year and stock carry-over from this harvest expected to be notably higher, the market is not expected to become bullish. LIFFE wheat futures in late April were all improved over the March closing positions: deliveries in May 2010 and November 2010 and 2011 stood at £104/tonne (up £7), £106/tonne (up £2) and £113/tonne (up £3) respectively, whilst May 2012 futures continue to improve, standing at £121/tonne (up £3). Average spot prices in late April (£/tonne ex-farm): feed wheat 95; milling wheat 108; feed barley 79; oilseed rape 252; feed peas 130; feed beans 132.
Potato prices have disappointed growers yet again this month. The average price dropped back by almost 10 per cent at the start of the month, improved marginally midmonth, only to drop back again as the month drew to a close. Prices in late April stood at £103/tonne, down 4 per cent from last month and a full 21 per cent lower than prices a year earlier. The free market price followed a similar graph, dropping down to £76/tonne with marginal recovery to a close of £81/tonne, down 4% in the month and almost 37% below the April 2009 price. Despite the Sterling’s improved position against the Euro compared to recent months, exports are still playing a material part in the current market. However, the fundamental problem remains that too much average quality product is on the market and buyers are simply not interested. As ever, good quality will still find a home at premium prices. By late April, King Edward prices had spread further, to between £50 and £80/tonne for value pack and anywhere between £130 and £160/tonne for general pack, whilst top quality samples were obtaining as much as £280/tonne; Estima remained weak, obtaining £50 to £90/tonne for wholecrop, reaching £105 for best; Desiree prices remained pretty steady with general pack achieving from £100 to £130/tonne, £145/tonne for highest quality; Maris Piper prices also remained spread but improved, ranging from £100 to £140/tonne; best are still achieving up to £200/tonne.

B. Livestock

Average steer prices dropped back to 146p/kg mid month, but recovered marginally in the later stages to a closing position of 147p/kg lw, which was down 3p (2 per cent) on March’s close and 5 per cent below April 2009 closing prices. The average heifer price declined slightly more to end the month at 151p/kg lw, bringing the premium over steers back down to 4p/kg. The average price for dairy cows in late April, despite being far higher during the month, stood at £1,249 per head, similar to last month’s close.
Lamb prices have been highly volatile this month, peaking at a year high of 207p/kg lw mid month, then dropping back in the latter part of the month. By late April the average UK lamb price was 3.5p above March’s close at 190p/kg lw – a net improvement of 1 per cent in the month, standing 8 per cent above prices a year earlier.
The steady rise of the average pig price continued this month, with further gains of 1.5p/kg over the course of the month to close up by 1 per cent at 143.5p/kg lw. Current average prices are now 4 per cent below the April 2009 closing levels.
The average UK farmgate milk price for February (reported in April) had dropped by 0.51ppl from January’s average to stand at 24.16ppl. The average price a year earlier was 0.89ppl higher (3.6 per cent). Milk quota prices gained 0.06ppl this month, following three months of decline. In the late stages of April clean 4% butterfat holdings were valued at 0.42ppl. Leased quota (4% butterfat) held steady for yet another month at 0.07ppl.

Other crop news

The US Department of Agriculture has published its “Prospective Plantings” report which states that US farmers will reduce wheat acreage this year by 9 per cent in favour of soya and corn. The total planted area will be steady at 320 million acres but soybean acreage will increase by 3 per cent to the second largest planted acreage since 1947. The wheat acreage will be the smallest since 1970.
A crop of Einstein winter wheat in New Zealand has achieved a world wheat record at 15.637 tonnes to the hectare breaking the previous record of 15.36 tonnes per hectare produced by the same farmer with a crop of Savannah. As John Nix would say, “must have been from the middle of the field only!”.
A report from the National Research Council in the United States claims that farmers who grow genetically modified crops are realising substantial economic and environmental benefits but also warns that technology could add to weed problems rather than reduce them and that farmers need to also use other proven weed and insect management practices.
Quality Oats, a 5 year product funded to the tune of £4.9 millions by the Biotechnology and Biological Research Council, Defra, the Welsh Assembly and the Scottish Government, is aiming to develop improved varieties of oats designed to provide economic and environmental benefits. The project is a response to the increased use of oats in diets.
Defra has allowed Leeds University to conduct a second trial of genetically modified potatoes. The focus of the research will be on tubers that have been modified to resist infection by potato cyst nematodes.
Brown rot has been confirmed in a stock of harvested ware potatoes in south-west England but the Potato Council has advised the outbreak has been contained.
Jersey Royal growers have had to hire security guards to protect the newly developed Jersey Royal Pearl as thieves have dug up £5,000 worth of potatoes. The new potato has been specially cultivated for Tesco and retails at £6 per kilo, 10 times the price of standard new potatoes.
Consumption of vegetables across the UK in 2008 was 0.67 per cent below the average of the previous 5 years while fresh vegetable consumption fell by 14.2 per cent compared to the 5 year average.
A project by the University of East Anglia and Consejo Superior de Investigaciones Clientificas in Madrid has discovered how the phytate enzyme is produced in plants. It is a naturally occurring phosphate deposit which animals cannot digest. It is therefore transferred to the soil via manure and consequently pollutes waterways.
Bakhavor and The Watercress Company have joined forces to apply for Plant Breeders Rights for Old Flame, a red watercress variety.
A report published in the US Journal of the National Cancer Institute arising out of research for the European Prospective into Cancer and Nutrition has concluded that eating 5 items of fruit and vegetables each day does very little to reduce the incidence of cancer.
A survey of 2,000 people by the Blackcurrant Foundation has found that 53 per cent considered green-coloured foods to be healthiest in their diet while only 14 per cent considered purple-coloured foods to be the most beneficial.
Tesco has reported a doubling of rhubarb sales since Waitrose launched a multi-million pound marketing campaign!
A study by New Zealand company Plant & Food Research has found that natural chemicals from blackcurrants may help breathing in some types of asthma.
Total Cherry, the stonefruit arm of Total Produce UK, has established a domestic cherry trial using 20 varieties in Kent.
KG Growers is to be renamed Berry Garden Growers so as to fully integrate with marketing company Berry Gardens Ltd.

Other livestock news

The Veterinary Medicines Inspectorate has given approval to the use of the Badger BCG vaccine which will be manufactured in Denmark. The result will be a Defra-funded Badger Vaccination Deployment Project in six 75,000 acre areas across England.
The High Court has ruled that the Welsh Assembly does have the lawful power to carry out a badger cull as part of its bovine TB eradication programme. As a result trapping and shooting will start this month in north Pembrokeshire and parts of Ceredigion and Carmarthenshire.
New European legislation has resulted in changes to the Transmissible Spongiform Encephalopathies regulations including cattle eligible for BSE testing no longer being exempt if home-slaughtered; it is an offence not to remove specified risk material from cattle, sheep and goats that are home-slaughtered; it is an offence to use sheep/goats milk or milk products from a holding where classical scrapie is confirmed; notice can be served to destroy sheep/goat milk or milk products produced between the dates of official suspension and killing on a holding on which BSE cannot be excluded; it is permitted to feed fishmeal to unweaned ruminants but not to adult ruminants.
Scotland’s fallen stock companies have reported record numbers of dead sheep as a result of bad winter weather with some collectors increasing collections by 35 per cent. In England and Wales collections were up by 8 per cent in February.
The Scottish Government is to provide emergency aid of £200,000 to sheep farmers as a result of increased livestock deaths last winter.
Defra figures show the national sheep flock fell by 15 per cent in the period 2004-2009 while the national cattle breeding herd fell by 10 per cent. Dairy cow numbers have fallen by 13 per cent and Eblex forecasts a further reduction of 3 per cent over the next 2 years. It forecasts a further 1 per cent fall in breeding ewe numbers but a stabilising in 2011. Beef numbers are expected to remain stable but the proportion of beef cows in the national herd will increase to 47 per cent by next year.
Eblex is to launch a study to benchmark the quality of beef being sold in English supermarkets whereby it will secretly purchase packs and then test for quality.
The RSPCA has been given £2.7 millions by the Tubney Charitable Trust to work on a 5 year study to deliver better “outcomes” of animal welfare.
The DairyCo’s “Farmer Intentions Survey” for 2010 has forecast that 9 per cent of UK dairy farmers will leave the industry in the next 2 years but the loss of production will be more than compensated by the expansion plans of 32 per cent. 43 per cent of dairy farmers are intending to implement a succession plan, up from 24 per cent suggesting an influx of the younger generation.
Dairy Crest has announced that all its milk producers will be aligned to a retailer, product or brand. Those producers still in the general pool will be aligned to the “Country Life” brand.
UK milk deliveries for 2009/10 fell by 0.3 per cent compared to 2008/09 despite a fall of 3.8 per cent in producer numbers. This is the lowest level since 1971/72 and 4.2 per cent below the 5 year average production level. The fall is entirely due to a 7 per cent reduction in Northern Ireland production while in Great Britain deliveries increased by 0.8 per cent.
Marks & Spencer has introduced “Milk Pledge Plus” whereby its supplying dairy farms will be rewarded for animal health and welfare. From November a health and welfare element, marked green, amber or red, will be built into the price, those farms awarded green will benefit most. At the moment the top mark would be worth 0.75ppl.
First Milk Direct, the producer’s procurement business allied to First Milk, has formed an alliance with Anglia Farmers to broaden the range of products and services available to its members.
A 0.47ppl reduction in dairy producers’ costs as computed by the Promar Cost Tracker costings has resulted in a lower agreed Tesco milk price for the next 6 months with the maximum price being 26.9ppl. Those not participating in the Cost Tracker scheme will be paid 26.4ppl.
The Supply Chain Efficiencies scheme, part of the Rural Development Plan for Wales 2007-2013, is to inject £33 millions into the Welsh dairy industry over the next 3 years to help improve levels of efficiency, sustainability and added value in the dairy supply chain.
Sales of free-range eggs accounted for 53 per cent of the market in 2009 compared to 47 per cent in 2008.
The Scottish Agricultural College has been commissioned by Marks & Spencer to examine developments in livestock production and breeding that might help the retailer’s farmer-suppliers reduce its supply chain’s carbon footprint.
A report from the UN’s Food and Agriculture Organisation has found that cows are responsible for 2.7 per cent of global greenhouse gas emissions, increasing to 4 per cent if emissions relating to meat produced from dairy animals is included.
Little Hen Rescue, a charitable organisation which re-homes former battery hens, has arranged for a Somerset craft club to knit woolly jumpers for the hens. No wonder the price of wool has “jumped”!!

Inputs/Supply businesses

GrowHow UK has reported stable fertilizer prices with good stock levels but that Bulgarian, Lithuanian and Polish ammonium nitrate is retailing at £10 per tonne less than prices offered by the major exporters.
ADAS has indicated that measured Soil Mineral N results from early spring samplings on arable land suggest levels may be slightly lower than average, probably due to the very cold winter resulting in slower release of mineral N from mineralisation of soil organic matter.
The Chemicals Regulation Directorate has withdrawn approval for the use of dimethoatebased product Dandim.
The herbicide Aramo has received approval for use on salad onion crops.
Grazelle SG has been approved for use on both outdoor and protected crops of spinach, cress and herbs with particular protection against aphids.
Mascel, a plant regulator used in the chemical thinning of applies, has been granted a 120- day emergency approval.
Fandango, the barley fungicide, will be reintroduced this month following formulation problems last season.

Marketing

The Soil Association’s Organic Market Report 2010 has indicated that the decline in organic fruit sales halved in the 12 weeks to the end of January and forecasts a positive 2010. Sales fell from a high of £2.1 billions in 2008 to £1.84 billions in 2009.
Fresh fruit imports into the EU fell by 7.1 per cent by volume in 2009 and 5.8 per cent by value. Vegetables yielded a 0.45 per cent increase by volume and a 1.5 increase by value.
Retail and consumer analyst IGD, following a survey of 1,036 shoppers, has found that, while 43 per cent reported eating five portions of fruit and vegetables a day, up from 32 per cent in 2006, only 26 per cent of consumers in the lowest social grades were doing so. This figure has remained static over the past 4 years.
The National Farmers’ Retail & Markets Association is to unveil two new certification schemes: GO and GOAL.

Miscellaneous

NFU Mutual has recorded a surplus of £274 millions in 2009 compared to a loss of £453 millions in the previous year, on turnover of £1.2 billions.
French packaging multinational Groupe Guillin has taken over Sharp Interpack.
Fresh produce firm Simms & Woods, based in Pershore, has gone into administration with the loss of over 100 jobs.
The World Sheepdog Trials will be held in England for the first time in September at the Lowther Park Estate near Penrith.
Sir Mike Tomlinson, former chief inspector of schools, is to be the next president of the Royal Agricultural Society of England.