Farming News Review - November 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

John Beddington, the Government’s top scientific adviser, has admitted a crisis for funding science and research. He has suggested that by 2030 demand for food production will rise 50 per cent, water by 30 per cent and energy by 50 per cent. As a consequence he claims that money needs to be spent on research into crop improvement, stemming losses due to pests and diseases, reducing post-harvest losses and improving irrigation.
Defra has created the Council of Food Policy Advisers, a group of up to 10 advisers from across the supply chain and from bodies involved in regulation, distribution and consumption. The body will advise the Government on all aspects of food production, including affordability, security of supply and its environmental impact and will draw up a policy for security and supply.
The deadline for responses to the proposal by the Agriculture and Horticulture Development Board to introduce a single quality assurance scheme has now passed and the Board will decide upon an action plan this month. The industry is split on the benefits of such a scheme, BIFGA wants money spent on research while the HTA “vigorously opposes” the proposals.

CAP (etc.) support details/payments

The European Central Bank has announced that the exchange rate for the Single Farm Payment will increase by 13.4 per cent making €1 worth £0.79030, 10p to the € more than in 2007.

Grants/regulations/legislation/environment

A report by the Royal Agricultural Society of England has found that growing in Britain was “in real danger of abusing its most precious asset – the soil.” It believes the UK’s soil and water research base has diminished “catastrophically” from its peak and now fails to offer enough support for growers and land managers. The report “Current Status of Soil and Water Management in England” is available from joanner@rase.org.uk
The PA52050 standards have been launched by the BS1 British Standards, the Carbon Trust and Defra. The standards provide a consistent method of measuring greenhouse gas emissions. The guidelines are expected to provide the opportunity for wide-scale carbon labelling on food produce.
The Waste & Resources Action Programme is making an undisclosed amount of funding available for partnerships involving suppliers, retailers, manufacturers, designers and other relevant groups on projects that help cut household and supply-chain food waste.
The Environment Food and Rural Affairs Committee, comprising MP’s of all parties, has criticised Defra claiming the department had marginalised rural affairs, failed to support rural businesses and failed to address key issues such as transport, communications, planning and further education.
The Scottish Crop Research Institute has secured funding of £700,000 for the Chromosome 4 project which will allow researchers to map exactly where genes in potatoes responsible for traits like colour, shape and disease resistance are located.
The South East England Development Agency has agreed to make a 40 per cent grant towards the cost of a £1.9 millions expansion by Weald Granary.
A LEADER grant worth £3 millions has been awarded to support the rural communities of the North York Moors, Howardian Hills and East Cleveland.

Other matters of farm finance and tenure

Agricultural land prices in Scotland have increased by 134 per cent over the past 5 years to an average of £4,262 per acre. The average value of a farm in Scotland is £1,154,615, 40 per cent higher than the average for the UK. While arable land now averages £5,588 per acre, mixed farm land has seen the largest rise at 156 per cent.
The Welsh Assembly has announced a support package of £6.8 millions for the organic sector in Wales. All 2008 Organic Farming Scheme applications can be supported and the 2009 scheme will be extended by a further 100 applications.

Product prices

A. Crops

With the 2008 harvest results now analysed, the UK’s wheat harvest has been calculated at record levels by Defra (17.5Mt), total barley yield is also up, whilst the oilseed rape harvest is down due to lower than average yields and the smaller area sown. To combat the volatility in world price, the EU reintroduced cereal import duties at the end of October; the effect should emerge in the coming months. Strong demand for milling quality wheat remains, reflected in premiums above £50/tonne being paid. Agricultural commodity prices are still suffering from the reeling world economy. LIFFE wheat futures have continued to fall over the course of October, but showed signs of settling in the latter stages, partly assisted by the weakening of the crude oil price to $64/barrel; its lowest level in sixteen months. At the end of October futures for delivery in November 2008, 2009 and 2010 were £90, £111 and £120 respectively (down by £13, £8 and £12). Average prices in late October (£/tonne ex-farm): feed wheat 82, milling wheat 125; feed barley 83; oilseed rape 245; feed peas and beans 105.
Average potato prices dropped back, week on week, throughout the month. High volumes of poor quality samples with weak storage prospects, combined with flat demand and supermarket-driven pressure in the form of value-packs and promotional offers, are largely responsible. Opening the month at £127/tonne, the average price by late October was down £24/tonne at £103/tonne (£22/tonne lower than those in October 2007). The free market price at the end of the month remained below the average price at £97/tonne, £40 below levels a year earlier. Growers that have yet to finish maincrop harvest are now finding the wet conditions very difficult; high volumes of soil in lifted samples and wet rots are greatly increasing riddling costs. Growers are now starting to write crops off and plough them in. In late October, King Edward were achieving £120 - 170/tonne, up to £190 for best samples; Desiree were between £100 and £140/tonne and Estima were achieving £70 to £100/tonne for wholecrop and up to £120 for baker-grade samples. Marfona were achieving £75 - £100/tonne, whilst Maris Piper were selling at £100 - £120, but getting £150/tonne for best quality.

B. Livestock

The average steer price, starting from a relatively strong position at 152p/kg lw, continued to drop in line with the trend at the end of September. By the end of October, prices had dropped back to 144p/kg lw, remaining 37p/kg higher than those a year earlier. Heifers continue to hold a premium over steers; which by the end of the month was up to 4p/kg.
UK average lamb prices, opening the month at 124p/kg lw, dropped steadily over the course of the month. Having reached a low of 111p/kg, prices indicated a more positive market at the end of the month, bouncing back. The average price in late October was 114p/kg lw, 41p/kg above prices a year earlier.
The average pig price managed to hold relatively steady throughout the month, staying within a penny of its opening position. Prices in late October sat at 136p/kg dw; up 1p on September’s close and now sitting 28p/kg above the prior-year comparative.
The average farmgate milk price for August (reported in October) showed, against expectation, further improvement, gaining 0.47ppl to sit at 26.27ppl. This puts milk prices 5.56ppl above those in August 2007. Overall demand for milk in the UK continues to fall, but ever increasing health-awareness is seeing demand for skimmed milk up. The future of milk quota (or lack of one) is back on the current agenda of the EU, pushing quota prices down. Clean holdings (4% butterfat) in late October were obtaining 0.25ppl; down by 0.15ppl.

Other crop news

The European Union is to reintroduce cereal import duties as a consequence of the fall in grain prices.
The COPA-COGECA estimate of the 2008 cereal harvest in the EU 27 member states is 306 million tonnes, over 50 million tonnes and 20 per cent up on 2007. Wheat production has risen from 119 million tonnes to 146 million tonnes.
Figures released by the NFU suggest that UK wheat yield is expected to be up by 17.1 per cent with production at 17.558 million tonnes, a 32.6 per cent increase on last year. The planted area was up by 13 per cent. Spring barley is expected to be up by 27 per cent at 3.481 million tonnes, partly as a result of a 7.4 per cent increase in yields and an 18.3 per cent increase in planted area. Winter barley yields increased by 10.5 per cent with total production up 21.5 per cent at 2.841 million tonnes. Conversely oilseed rape production was 11.1 per cent down at 1.875 million tonnes.
Cereal production in Scotland increased in 2008 by 15.7 per cent with the planted area up by 13 per cent and yields up by 2.5 per cent.
Rothamsted Research scientists have predicted that climate change will put wheat crops under increasing heat stress but not drought stress. As temperatures increase by 2050 winter wheat crops are expected to mature around July 18, some 20 days earlier than at present.
Muntons, the malt manufacturer, has joined forces with Grainfarmers, GrainCo and Centaur to form Muntons Malt Supply Chain to ensure continuity of supply and demand for malting barley.
A New Holland CR9090 Elevation combine has broken the world record by harvesting 551.6 tonnes in 7 hours on 26 September at a farm in Northumberland.
The results of a Potato Council levy-payer consultation has shown that growers want a greater research and development focus on pesticides, energy use and GM technology.
Scientists at the John Innes Centre have expressed genes from snapdragons in tomatoes to grow genetically modified purple tomatoes high in health-protecting anthocyanins.
Bacterial canker has been found at two tomato nurseries in the UK for the first time in 10 years.
The NFU has estimated that growers have lost around £20 millions of crops because of labour shortages.
The total strawberry market in 2008 has been flat with sales of premium varieties being 15 per cent down on 2007.
UK Bramley production seems likely to hit 90,000 tonnes with 57,500 tonnes coming from England and 32,500 tonnes from Northern Ireland. The crop is likely to result in an oversupply of juicing fruit and lower prices particularly as a result of a significantly reduced demand from Magners.

Other livestock news

Dutch authorities have confirmed that four farms in the south of the country have been infected with serotype 6 – a bluetongue virus strain previously only seen in Southern Africa. It is thought the outbreak may have come from a live vaccine imported from Southern Africa. BTV-1 has spread to Brittany. No vaccine exists in the UK to protect livestock against either BTV-1 or BTV-6. An export and breeding ban on sheep and cattle has been imposed.
The Food Standards Agency has agreed there is an overwhelming case on public health grounds to raise the limit for cattle going into the food chain from 30 to 48 months. However, the Agency is seeking further assurances that effective surveillance will remain in place. The European Commission has set a provisional date of 1 January 2009 for member states to make the change but this is subject to approval from the FSA, Defra and the Health Ministry.
Defra is to provide £2 millions of interim funding to the National Fallen Stock Company as part of the strategy of shifting animal health costs to farmers. When the subsidy expires the Company will transfer to industry ownership.
The NFU is taking action on behalf of 14 farmers against Defra and the Institute of Animal Health, claiming compensation of £1.5 millions. The solicitors involved believe the case could take up to three years to reach a conclusion but could ultimately result in thousands of farmers claiming damages.
Robert Wiseman has backdated an increase of 0.4ppl in the price paid for liquid milk to 1 October and raised prices by a further 0.6ppl from 1 November. Dairy Crest has increased prices from 1 November by 0.5ppl but not for suppliers on Sainsbury’s, Waitrose and Marks & Spencer contracts.

Inputs/Supply businesses

Scientists at Lancaster University have discovered a seed treatment that could increase crop resilience to pests. Researchers have found that plants grown from seeds first dipped in Jasmonic acid are more pest-resilient without any adverse effect on growth. The acid sends out chemical signals to leaves to mobilise their pest defences making them difficult to digest.

Marketing

A storm of protests has greeted the decision of Tesco to ask suppliers to fund its bid to be Britain’s biggest discounter. Tesco is calling for over-rider increases of 5 per cent plus along with reduced prices.
The latest TNS Usage panel data indicates that just 12 per cent of UK consumers are eating their 5 A DAY. In value terms, sales of chilled fresh fruit and vegetables have increased by 5 per cent in the year to September 2008, sales of canned vegetables have increased by 3 per cent but tinned fruit has experienced no growth. Sales of frozen vegetables have increased by 8 per cent.
A new retail food price forecast from the English Farming & Food Partnerships suggests that food inflation has peaked at 12 per cent and is set to fall to around 3 per cent by mid- 2009.
Defra has confirmed that companies importing fresh produce from non-EU countries that needed phytosanitary certificates will not be charged for imports notified to PEACH, the IT notification system, from 1 March to 31 October 2008.
The Scottish Government is to inject £4 millions into the country’s food and drink industry.
Tesco has reported a 75 per cent year-on-year increase in sales of turnips.
The Office of Fair Trading has closed the investigation into milk price fixing allegations which began in 2006. It has concluded there is insufficient evidence to pursue the case.

Miscellaneous

The Soil Association is launching its Organic Apprenticeship Scheme. The two-year programme aims to encourage young people and new entrants into organic farming by offering a structured training programme and to promote organic farming as an attractive career choice.
Greenvale AP has come top in sustainability in a two-year study of 12 companies undertaken by the Cambridge University Institute for Manufacturing. The study assessed five acres of the UK food industry-strategy, corporate social responsibility, process control, lean manufacturing and sustainability – as part of its Competitive and Sustainability Food Manufacturing Project. The results ranked the potato supplier as the highest scoring company in the research programme.
Jane Kennedy has replaced Jeff Rooker as Minister for Farming and the Environment.