Farming News Review - November 2005

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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

At trade talks in Geneva – preliminaries to a major WTO (“Doha Round”) meeting of 150 countries in Hong Kong in December – both Rob Portman and Peter Mandelson, the US and EU trade representatives respectively, offered to cut agricultural subsidies, stop export subsidies and reduce import tariffs substantially – though conditional on concessions by other developed countries. Both were criticised “at home” for going too far. France in particular attacked Mandelson for exceeding his negotiating mandate; EU farm commissioner Mariann Boel also expressed concern over the apparent threat to the still recent CAP Reform. Nevertheless, Mandelson secured the backing of the European Council. He was subsequently criticised for saying that further EU concessions on agriculture would be dependent on tariff cuts on industrial goods by developing countries.
Junior Defra minister Lord Bach has announced an £8 million support package for the English beef industry, consisting of £5.5 million for a Beef Restoration Scheme to promote exports and £1 million for a Beef Better Returns initiative and £1.5 million to the Red Meat Industry Forum to help farmers improve their efficiency. More than 20 organisations attended a “beef summit” at Defra headquarters; a joint agreed statement was issued on ways to improve the current situation.
NFU president Tim Bennett met prime minister Tony Blair during October to discuss a wide range of key agricultural issues.
Horst Seehofer has replaced Renate Kunast as the German farm minister, following the recent general election.

CAP (etc.) support details/payments

EC proposals that would have delayed still further the receipt of Single (Farm) Payments have been dropped. Defra says payments in England should be made in February or early March. In Scotland, Wales and Northern Ireland payments will begin in December, but not initially for the full amounts.
Defra has decreed that for the 2006 scheme year farmers in England will be able, under the 10-month rule, to designate two different start dates for different parcels of land on their holdings.
For 2005 crops the proteins supplement per ha (after deducting modulation) will be £36.00 in England, £35.43 in Scotland and £36.19 in Wales. The energy crops supplement will be £29.15, £28.70 and £29.31 respectively. The durum supplement (England only) will be £31.37.

Grants/regulations/legislation/environment

Defra reports that applications for the Entry Level Environmental Stewardship Scheme now exceed 1 million hectares. Over 6,000 schemes (700,000 ha) have received approval to date; payments will begin in early February next year. Progress with the Higher Level Scheme is much slower; the first projects will not start until early next year instead of 1st November this year, as previously planned.
New measures as part of the Clean Neighbourhoods and Environment Act, which came into force in mid-October, mean that fly-tippers prosecuted for dumping rubbish on farmland can be forced to foot the clean-up bill.
The main new points of the Animal Welfare Bill, introduced into parliament in mid-October, are tougher sentences and harsher punishments for offenders. There are few other changes of note.
On 31st October the final 48,418 ha of countryside (the West, and East of England) were opened up (i.e. given “the right to roam”) under the Countryside Rights of Way Act.
The aid rate for coppice planting under the Scottish Forestry Grant Scheme has been raised from £600/ha to £1,000/ha, the same rate as in England under the Energy Crops Scheme. A new £90 million wood-burning power station is to be built at Lockerbie, operational by late 2007.
Despite considerable opposition, nationally as well as locally, the largest wind farm in lowland England, namely 26 turbines on Romney Marsh near the Kent-Sussex border, has been approved by the government.
Syngenta has opened its first Centre for Environmental Excellence in the UK: at Whittlesford, Cambs. Five more are planned across the UK.

Other matters of farm finance and tenure

HM Revenue & Customs has won a (Warwickshire) court case that farmers’ inheritance tax agricultural property relief will only cover the agricultural value of a farmhouse, not its full market value, i.e. the 40% tax will have to be paid on the difference. The Revenue has been pushing hard for this for the past five years. Leave to appeal has been granted. The judges further commented that the farmhouse should only qualify if the owner or their spouse farms the land on a day-to-day basis, or used to before retirement.
Defra has launched “The Farm Business Advice Service – Knowing Your Options”: a service free to English farmers to help those claiming the Single Payment to consider the implications for their businesses and explore options for change. It will cost £7.5 million.
The Crown Estate has purchased the 946 ha (2,337 acre) Ashby St. Ledgers estate in Northants and sold 710 ha (1,750 acres) of its Ewerby Estate in Sleaford, Lincs.

Product prices

A. Crops

Feed wheat prices improved a little during October but the milling premium dropped to just below £10/tonne. Feed peas and beans prices fell a little.
Average prices in late October (£/tonne, ex-farm): feed wheat 63.50, milling 73; feed barley 63; oilseed rape 140; feed peas 79, feed beans 77.
Average potato prices slumped from near £100/tonne at the start of October to around £85/tonne at the end.

B. Livestock

Beef prices have risen at last, though not before the average finished steer price had fallen to 91.5p/kg lw; it ended October close to 97p.
Finished lamb prices fell during October to 96p/kg lw at one point but ended the month at 98p.
The average pig price dropped from 104p/kg dw at the start of October to below 102p/kg dw near the end.
Cuts in farm milk prices have continued. Dairy Farmers of Britain reduced its producer prices by 0.3ppl from 1st October, Dairy Crest its liquid milk price by 0.275ppl from 1st November and three other cuts were announced during October. The purchasers blame a fiercely competitive market, together with increases in energy, fuel and haulage costs.

Other crop news

Across most of the UK autumn drilling has been completed in mainly excellent conditions and crops generally look well.
General impressions are that overall cereals plantings are likely to be down again, including especially malting barley. Less Group 1 and more Group 2 wheat varieties appear to have been sown and substantially more oilseed rape.
The British Potato Council reports lower average yields this year than last but better storage quality: lower wastage is expected and there is less soil contamination. Harvesting conditions this autumn have been the best for many years. EU15 production is estimated to be down by 12%.
The government-commissioned Biomass Task Force, led by Sir Ben Gill, has issued its report. The 84 pages include 42 recommendations, most notably £20 million in grants to support the installation of biomass heating boilers. The report has been heavily criticised, particularly for ruling out a renewable heat obligation, which the report says is unworkable.
Green Spirit Fuels, the company established by Wessex Grain to develop its ambitious bioethanol project, has received financial backing from two major city investors; there have also been boardroom changes at both companies. Planning permission has been obtained to build the plant, which is at Templecombe in Somerset. Some 330,000 tonnes of wheat will be needed, possibly by 2007, if all goes to plan.
A nine-year study of GM crops has concluded that GM technology has reduced pesticide use, improved the environment generally and raised farm incomes. The report, “GM Crops: The Global Economic and Environmental Impact – The First Nine Years 1996-2004”, has been produced by independent UK-based consultant PG Economics. (Tel. 020 7395 7062 or see www.pgeconomics.co.uk).
Exeter University’s Centre for Rural Research has produced a new report on organic farming, commissioned by Defra. 640 farmers were surveyed; 31% had never worked in agriculture before.

Other livestock news

Avian flu was given major national media coverage during much of October, particularly as it spread to Turkey, Romania and Croatia. An imported parrot in quarantine in the UK was found to be infected. Brussels and the UK government refused to panic but various precautionary measures have been taken. The EU banned poultry imports from the affected countries and later placed a temporary ban on all imports of wild birds. If the situation worsens producers in high-risk areas could be told to bring all birds indoors – a big problem for free range producers. Scientists are insisting that the threat to the health of UK citizens is minute.
Milk production continued well below profile in September; consultants blamed poor weather and poor grass growth. The chances of reaching quota this milk year already look to be extremely low. Quota (4% BF) was down to 0.5ppl to lease, 4.9ppl to buy, near the end of October.
Nine EU member states face superlevy for exceeding quota in the last milk year, with Germany and Italy particular offenders.
The British Veterinary Association is the latest organisation to urge the government to do more to tackle the spread of bovine TB.
TB was one of the issues discussed by NFU president Tim Bennett at his meeting with Tony Blair (see I.3 above). This provided a neat headline: “TB meets TB to discuss TB”.
Government beef support: see I.2 above.
Fresh outbreaks of foot-and-mouth in Brazil led to an immediate EU ban on beef imports from several of its states. Russia and China also banned shipments.
Yet another report on the British foot-and-mouth outbreak has been published, this by Lancaster University’s Institute for Health Research: “The Health and Social Consequences of the 2001 Foot and Mouth Disease Epidemic”.
UK breeding pigs can now be exported to China, following several missions and other visits by the British Pig Executive (BPEX).
A new dairy technology centre is being built at Barony College in Dumfriesshire. It will incorporate an automatic milking station.
A cheesemaker has been told that it must re-brand its “Yorkshire Feta”; the European Court has decreed that the name “feta” may only be used by Greek cheesemakers.

Inputs/Supply businesses

Fertiliser prices continue to rise. 20:10:10 is likely to average £155/tonne delivered in November and could be £10/tonne more next spring.
J & H Bunn, Britain’s third largest manufacturer of compound fertiliser, is ceasing its 30,000 tonne bagging and blending operation in Birkenhead.
Prices of several important autumn herbicides have fallen by up to 10%.
Certified seed sales have fallen substantially, with farmers using more and more farm-saved seed. Britain’s largest seed retailer, Frontier, has closed its Lincolnshire plant. Royalty charges for farm-saved seed look certain to be increased.
A new animal feed production and marketing partnership, to be named Bibby Agriculture, is being launched by Carrs Billington Agriculture, the Wynnstay Group and Welsh Feed Producers. This follows the recent acquisition of Pye Bibby by Carrs Billington.
Countrywide Farmers (CwF)’s decision to stop manufacturing animal feeds earlier this year cost the business £2.26 million in restructuring.
ABN is to close its feed mill in Framlingham, Suffolk. The company has 10 other mills in the UK.
North east co-op Farmway has completed its £1.8 million refurbishment of the Piercebridge mill near Darlington, which is run as a joint venture with Lloyds Animal Feeds under the FeedCo banner.
The Pesticides Safety Directorate has successfully prosecuted a West Country distributor for selling an imported herbicide formulation without approval for use in the UK.
Prof. Jon Ayres, of Aberdeen University, is the new chairman of the Advisory Committee on Pesticides, replacing Prof. David Coggan.
New, stricter rules governing the supply of veterinary medicines came into effect on 30th October.
Stuart Beer, fertiliser director of Terra Nitrogen, has been elected chairman of the Agricultural Industries Confederation. He was previously vice chairman and succeeds Richard Banks.

Marketing

Camgrain, the 120,000 tonne grain storage co-op, is to use Grainfarmers as its marketing agent for its members’ wheat, oilseed rape and pulses, bringing Grainfarmers’ total tonnage to more than 450,000. Camgrain has switched from Fengrain, after the latter’s members voted against a merger with Centaur Grain in the summer. However, Gowlett Grain will continue to market Camgrain’s malting barley and oats.
Dairy processor Arla Foods has sold its London Food Service business, including the freehold site at Nine Elms, to Dairy Crest for £4 million.
Following a decision by the Office of Fair Trading to refer Robert Wiseman Dairies’ proposed purchase of the fresh milk business of Scottish Milk Dairies to the Competition Commission Wiseman pulled out of the deal, saying defending the purchase would cost too much.
The milk buyer Longslow Food Group has closed its factory at Mochdre, North Wales. It denies rumours that it is about to enter administration and says the money owed to 55 direct suppliers will be paid in full by mid-January. It lost its contract with retail chain Spar in August at three months’ notice.
Meadow Foods has closed its casein plant in Cheshire.
Jim Walker has been dismissed as chairman of Quality Meat Scotland and been replaced by Donald Bigger as interim chairman.
Blade Farming has acquired the calf marketing business (the Mole Valley Initative) of Mole Valley Farmers.
The School Meals Review Panel has said that schools should serve food from local farmers and suppliers where possible. This followed a government announcement that it aims to ban junk food in schools.
Cirencester’s new livestock market opened on 1st November.

Miscellaneous

Farmers Weekly is to surrender its tenancies of Easton Lodge and Sacrewell Lodge after next harvest and close its Easton Lodge pig unit immediately. Publishing company Reed Business Information has decided that farming cannot be considered core to its central business. Farmers Weekly began farming in 1943 and acquired the tenancy of Easton Lodge in 1966. Farms manager John Lambkin, who has been involved with the farms for 30 years, has been highly praised by the publishers.
Farmers For Action has called for a three-day food supply strike from 2-4 November.
SAC’s 26th edition of its Farm Management Handbook (2005/06) is now available (£21 post free UK; tel. 0131 535 4120), as is the 36th edition of the Farm Management Pocketbook (2006), £16 plus £1.50 p & p; tel. 01664 564508).