Farming News Review - October 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

Members of the EU’s industry committee have voted to scale back plans to increase the use of biofuels derived from crops such as wheat and maize. The committee decided to retain the EU target of 10 per cent of all transport fuel coming from renewable sources on condition that 40 per cent of renewable fuels were sourced from second generation biofuels such as biomass from non-food parts of crops, non-food crops and algae.
The European Commission’s Joint Study Research Centre has concluded that GM food is safe to eat. It reported that “no demonstration of any health effects of GM food products submitted to the regulatory process has been reported so far.”
The European Parliament has called for a ban on the cloning of animals for the food trade.
The status of the Veterinary Medicines Directorate and whether it should remain an agency of Defra or be merged with another body is the subject of a consultation process launched by Defra.

CAP (etc.) support details/payments

The 12 member states which have joined the EU since the 2003 CAP reforms have called for the Single Farm Payment system to be scrapped in favour of an EU-wide flat rate scheme coupled with a shift in funds from agriculture to rural development.
John Dodd, owner of the Glenogil estate near Kirriemuir, has had his Single Farm Payment for 2006 cut by £107,000 by the Scottish government under legislation which makes the protection of wildlife a condition of the subsidy. The landowner was suspected of poisoning birds of prey on his 10,000 acre estate in Angus.

Grants/regulations/legislation/environment

The Government has published its Nitrates Vulnerable Zones Action Programme which will extend the zones from 55 per cent to 70 per cent of England. The new rules will ban farmers from spreading organic manure for up to four months of the year and will force farmers to have slurry storage capacity equivalent to five months output.
Rowse Honey Ltd has committed £100,000 towards honey bee health research.
Nottingham University has been awarded funding of £2.2 millions by the Biotechnology and Biological Sciences Research Council to develop a vaccine for mastitis.
Countrywide is to join forces with Land Energy to build a wood pelleting mill. The project, which will cost £10 millions, will include converting Presteigne Mill in Powys from an animal feed facility to a mill producing wood pellets.
Aberdeenshire farmer Dr Maitland Mackie has announced proposals to form a wind power generation company owned by rural investors who would provide funding of up to £10 millions.

Other matters of farm finance and tenure

The Government’s Migration Advisory Committee has recommended the reintroduction of the Seasonal Agricultural Workers Scheme to help reduce the labour crisis faced by farmers and growers.
The Agriculture and Horticulture Development Board is seeking views from the industry on whether levy funds should support a single quality framework across its various sectors of the food supply chain.
NFU Scotland has published “Manifesto for the hills”, a plan to halt the decline of hill livestock farming.
The Association of Labour Providers has issued updated temporary labour “Minimum Charge Rate” tables to take account of the new national minimum wage rates which come into force on 1 October.
A report from the North West Development Agency shows the average annual income of Cumbrian farmers as being £26,000 with hill farmers only achieving £7,400.
Savills “Farmland Market Model” has recorded an increase in the average price of agricultural land marketed to a peak of £8,400 per acre. However, indications are that prices are now falling and the agents are expecting the average to fall to £7,300 by the beginning of next year.
The Palmer European Farmland Fund has been created by Palmer Capital Investments and Bidwells, intended as a fund for institutions seeking to invest in EU farmland. It is projecting an average annual return of 5.5 per cent over its 10 year life.
Cheshire County Council’s County Farms Service has opened a new 115 acre farm at Centenary Farm, Ridley, near Chester.

Product prices

A. Crops

With the bulk of the UK harvest now complete, the primary wheat results are showing improvements to the average Hagbergs and specific weights over those in 2007. Reports of poorer protein and higher moisture contents are no surprise after the worst harvest conditions for many years. Final UK reports are expected to show a poorer picture due to the incorporation of the later gathered crops. Initial predictions of a dropping feed wheat price and a strong milling premium are proving to be correct as the proportion of milling quality grain is proving to be below initial expectations. The agricultural commodities market, despite its degree of separation from the money markets, is still feeling the shock-waves of the faltering world economy. LIFFE wheat futures have fallen further over the course of September: futures for delivery in November 2008, 2009 and 2010 dropped by £17, £15 and £6 to close at £103, £119 and £132 respectively.
Average prices in late September (£/tonne ex-farm): feed wheat 95, milling wheat 150; feed barley 94; oilseed rape 277; feed peas and beans 133.
Average potato prices, following on from the relative price stability of August, dropped substantially in September. Having sunk to £136/tonne early on in the month, the price recovered slightly mid-month but then dropped further. Prices in late September sat £21/tonne higher than those a year earlier at £127/tonne. The free market price at the end of the month was below the average price at £118/tonne and is now only £5 above levels a year earlier. 2008 crop sales are up to expected levels as maincrop harvest is now in its latter stages and more material is available. Supply has shifted to being freemarket driven as large volumes of product with questionable long-term storage potential are coming to market. Those with good storing samples may well benefit later in the year.
In late September, King Edward were achieving £200 - 230/tonne and up to £250 for best samples; Desiree were changing hands at up to £140 - £160/tonne and Estima for between £100 and £120/tonne; Marfona were achieving between £100 and £110/tonne; Maris Piper were selling at £140 - £160/tonne for best quality.

B. Livestock

Beef prices, represented by the average steer price, started from a strong level of 152p/kg lw at the end of August and continued to climb at the start of the month, reaching a highpoint of £155p/kg. By the end of August, prices had dropped back to 152p/kg; average heifer prices continue to mirror this trend but the 2p/kg premium over steers remains. Average steer prices sit 40p/kg higher than those in September 2007.
UK average lamb prices, having shown signs of improvement at the end of August, continued to improve early on in September to peak at £132p/kg. This level was shortlived as the price relaxed back to a low of 121p/kg lw mid-month. The latter part of the month saw prices recover again marginally. The average price in late September was 124p/kg lw, 40p/kg above prices a year earlier.
The average pig price, after peaking in August at 137p/kg, has also relaxed over the course of the month. Prices in late September were 135p/kg lw; down only 1p since last month’s close and remaining 27p/kg higher than September 2007 levels.
The average farmgate milk price for July (reported in September) continued the trend of improvement, gaining 0.84ppl to sit 6.15ppl above prices in July 2007at 25.80ppl, however this trend is expected to revert back to price reductions in light of the pressured market place. The market for clean milk quota holdings (4% butterfat) in late September was down 0.1ppl from levels a month earlier, sitting at 0.40ppl.

Other crop news

Global harvest figures have been reported by a number of countries. Australian wheat production is expected to fall by 6 per cent to 22.6 million tonnes following drought conditions; Ukraine and Russia have both increased their forecasts by 500,000 tonnes to 9 and 14 million tonnes respectively; France has increased its soft wheat estimate to 7.1 million tonnes. Canada has increased its wheat estimate to 25 million tonnes. The US is on target to produce its second largest ever corn crop and its fourth largest soybean crop.
A report prepared by Cranfield University suggests that EU proposals to restrict the use of crop protection substances will lead to a doubling of retail prices for vegetables and potatoes.
The Home Grown Cereals Authority has published a new guide aimed at those considering organic conversion, “Organic arable farming – conversion options”.
Trial sowings of a new variety of oilseed rape in Scotland have been found to contain traces of GM material not approved for use in the UK.
Grainfarmers and Centaur Grain have announced plans for a merger. The new company, Openfield, will handle around four million tonnes of grain each year, about 20 per cent of the UK market.
Restrain, the natural anti-sprouting system, has been approved by the EU Standing Committee on Organic Farming for the storage of organic potatoes and onions.
Greenvale AP has launched a new maincrop potato variety exclusively for Tesco. Vale Sovereign has been bred by the Scottish Crop Research Institute and has been undergoing market trials for the past two seasons.
Research undertaken by the Conservative Party has revealed that the UK deficit in fruit and vegetables has risen by 55 per cent in the past 10 years to £3.5 billions. Land planted in vegetables has declined by 24 per cent while fruit land has declined by 14 per cent. Self-sufficiency in vegetables has fallen from 71.5 per cent in 1997 to 59.6 per cent in 2007. Imports of vegetables have risen by 516,000 tonnes, fruit by 974,000 tonnes.
The Horticulture Development Council has launched Factsheet 18/08 concerning new diseases of carrot crops and setting out potential management strategies.
The British Nutrition Foundation has launched a guide “Potatoes: The Facts” on the nutritional content of raw and cooked potatoes.
The Assured Produce Scheme has reduced its number of critical failure points from over 50 to 5. The new rules come into effect on 1 October and will result in Assured Produce complying with UKAS EN45011 accreditation requirements.
Hugh Ermen and Garden Organic have launched a new apple variety “Bright Future”.

Other livestock news

Official figures regarding the incidence of bovine TB in the first five months of 2008 have been released showing an increase of 40 per cent in the number of animals slaughtered because of the disease. The number of herds confirmed with the disease has increased by 19 per cent and, as at 31 May, 9 per cent of British herds were under TB movement restrictions.
The EU is to introduce new rules concerning calf exports from the UK amid fears of the spread of bovine TB. Exports of calves under 42 days old will only be permitted from officially TB-free herds and, in addition to this, exports would only be allowed if the holding is in an area where the average TB incidence rate is less than 0.5 per cent or similar, strict rules.
Testing all 13,800 cattle herds throughout Wales is due to start on 1 October. The results of testing will dictate where and when a badger cull will take place with a decision expected in early 2009.
More imported cattle have tested positive for bluetongue type 8 virus. Cattle imported from the Limoges area of France into North Wales have been found to be infected as well as cattle imported from Germany into Durham. The whole of England and Wales is now a protection zone.
The European Commission has proposed new rules requiring slaughterhouses to monitor stunning techniques more regularly and to appoint a certified member of staff to check animal welfare. It also proposes that member states set up new research centres to provide support to official inspectors.
The European Commission has agreed to raise the BSE testing age for cattle to 48 months. The change is expected to come into force in January.
The Rural Payments Agency has requested all Older Cattle Disposal Scheme abattoirs to give priority to pre-1996 animals provided ear tag numbers are available.
National Milk Laboratories has launched the UK’s first screening programme for Johne’s disease.
The Food Standards Agency has announced that meat hygiene charges will increase next year so as to comply with EU minimum charge rates as a consequence of a fall in the value of the £. The increases will effect bovines aged over 8 months, up 18 per cent, and pigs weighing less than 25kg, up 6 per cent. Sheep and chicken are unaffected.
Lamb exports in the six months to June were up 20 per cent on the same period last year to £116 millions while beef exports rose 35 per cent to £90 millions.
Provisional results from the Scottish Government’s June 2008 agricultural census show that sheep numbers have fallen by 5 per cent and pig numbers by 6 per cent.
Asda has launched the 360 degree Sustainable Dairy Calf Scheme whereby dairy bull calves will be incorporated into the supermarket’s standard range beef.
Mark Allen, chief executive of Dairy Crest, has replaced David Curry as chairman of Dairy UK. The NFU expressed horror at the decision, immediately withdrew its support and its board representative, Gwyn Jones, resigned.
The Royal Association of British Dairy Farmers is to produce a national strategic plan for dairying.
A report from Kite Consulting suggests that the costs of milk production are likely to rise by 3ppl over the next 12 months.
Tesco has joined forces with Liverpool University to create the “Tesco dairy centre of excellence.”
Milk Link is to sell its Staplemead Creamery in Somerset to French food and dairy products firm Andros.

Inputs/Supply businesses

A report from the European Crop Protection Association, “Counterfeit Pesticides Across Europe : Facts, Consequences and Actions Needed”, has concluded that fake pesticides are present in most countries and that up to 7 per cent of the European market is affected by the illegal trade. As much as 86 per cent of counterfeit products emanate from China.
Solufeed has launched PeKacid, a new 0-60-20 soluble fertilizer formulated for calcareous soils and hard water.

Marketing

An index compiled by retail analyst Verdict Research has revealed that food prices have risen by 8.3 per cent since January with prices of fresh fruit and vegetables having risen by 14.7 per cent.
Asda has reported an increase of 25 per cent in sales of organic produce in the past three months while the rest of the market has grown at just under 3 per cent.
Morrisons is to fund the “Let’s Grow” campaign designed to educate children as to the source of food. Research by the supermarket has found that one in ten children are now aware that potatoes and carrots can be grown in a garden and one in four have never grown anything at all.
Exports of Jamaican bananas to the UK are to cease after more than 100 years as a result of plantations having been devastated by five hurricanes in the past decade.

Miscellaneous

First Milk achieved a pre-tax profit of £3.5 millions in the year to June 2008 on turnover up by 24 per cent.
Genus has increased profits in the year to June 2008 by 40 per cent to £28 millions.
The Wynnstay Group has taken control of Welsh Feed Producers.
Wessex Incineration has gone into administration.