Farming News Review - September 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

With parliaments closed and many politicians taking their holidays, there was no significant policy news during August.
In a new report, “Prospects for Agricultural Markets and Incomes 2005-2012”, the EC predicts an 11.7% increase in agricultural income in the EU-25 over that period, consisting of a “rather modest” 4% increase in the EU-15 but a 50% increase in the new member states (137% per labour unit). Separate forecasts are given for each main agricultural sector: cereals, meat, dairy etc.
The EC has authorised the UK to grant a 687 million euro rebate on the climate change levy introduced in 2001; it is payable over the next ten years.
The RSPB, WWF and Oxfam say the EU proposals for the reform of the sugar regime will favour the larger, richer producers at the expense of poor farmers and the environment. They call for reforms that do the opposite.
In a new book, “CAP and the Regions: The Territorial Impact of the Common Agricultural Policy”, academics from the Universities of Aberdeen and Newcastle conclude that the CAP Reform benefits the wealthier EU member states at the expense of the poorer ones in the south and east.
The 2003-04 Expenditure and Food Survey has been published. Purchases of alcoholic drinks rose by nearly 10% in a year but consumption of fruit and vegetables fell slightly. Expenditure on eating out has risen 50% between 1995 and 2004, with the average amount per person increasing to £10.93 per week.

CAP (etc.) support details/payments

The EC is to repay UK farmers around £5 million as a partial payback of the large scaleback (29.7% in England) on the second 2004 Beef Special Premium Scheme claims; the repayments are unlikely to be made until next year as the Rural Payments Agency staff are prioritising the single farm payment. This follows a significantly larger refund to Irish farmers on their 23% scaleback: around 50%, instead of up to 25% in the UK.
The Rural Payments Agency has not been able to confirm the 2006 set-aside rate even by the end of August: under EU rules farmers should have been told by 1st August.
The Rural Payments Agency has set the minimum yields for non-food crops on set-aside in 2005. Any farmers who fail to achieve these yields will be subject to financial penalties.

Grants/regulations/legislation/environment

Only 5,181 conditional Entry Level Stewardship Scheme agreements had been issued by the first start date, 1st August, although by then more than 43,000 farmers had requested application packs.
A survey by the British Trust for Ornithology of 89 pairs of organic and non-organic farms found that the former supported a far greater biodiversity, including 32% more birds and 109% more wild plants within the cropped area. The NFU has questioned the methodology employed: whether the survey was comparing like with like.
A consultation has been launched on changes to the Environmental Impact Assessment, which is required if a farmer wants to undertake operations on uncultivated or semi-natural grassland; these are less likely to be wanted in the future.
TEG Environmental, which converts organic waste into fertiliser, has won an 11-year contract to develop a composting operation in Perthshire.

Other matters of farm finance and tenure

The RICS has reported an average farmland price for the second quarter of this year of £9,713/ha (£3,931/acre), as compared with £9,530/ha (£3,857/acre) for the first quarter and £8,694/ha (£3,518/acre) for the same quarter last year. The amount of farmland on the market increased for the first time in three years.
Farm lending rose to £8.75 billion in the second quarter of this year, 2% up on the first quarter and 4.5% up on the same period last year.
The bank base rate was reduced from 4.75% to 4.5% on 4th August: the first change for a year and the first cut in two years. This was widely expected. A further 0.25% cut was anticipated by many before the end of the year but a recent rise in the consumer price index has put that in doubt.
The pound strengthened against the euro during August, which is the opposite to what happened in July. The sterling value of the euro was 69p at the start of the month fell to below 68p by the 18th but rose again to 68.2p near the end of the month. Its value on 30th September will determine the value of this year’s single payments.

Product prices

A. Crops

Current values for feed wheat ex-farm have been averaging £60/tonne; £5 to £10/tonne more in Scotland. Milling premiums are expected to settle around £15/tonne for Grade 1 and £10 for Grade 2 (e.g. Solstice). Feed barley prices are a little higher than those for feed wheat in England but lower in Scotland. Oilseed rape is just over £130/tonne.
Average prices in late August (£/tonne): feed wheat 60.5, milling 72; feed barley 61.50; oilseed rape 132; feed peas 83, feed beans 81. Potatoes: £108.

B. Livestock

During August finished steer prices fell even lower, to below 95p/kg lw near the end of the month.
Finished lamb prices averaged close to 106p/kg lw for most of the month but slumped to 101.5p/kg lw later.
The average pig price has drifted down a little, to just over 105p/kg dw.
Protests continue over low milk prices, especially in Scotland. Dairy Crest has announced a third increase in its price for cheese milk, by 0.1ppl.
The Holstein breed record for an in-calf heifer was broken at the Sterndale sale at Buxton, Derbyshire: 27,000 guineas.

Other crop news

In the south of England at least the August weather has been a great deal kinder for harvesting than last year. There have been several rainy spells but also many dry days. Oilseed rape yields have generally been above average in England but below average in Scotland. Most of the wheat in the southern half of England had been harvested by the end of August but the weather has been less kind in East Anglia and significantly worse in northern England and Scotland. Wheat yields have disappointed on light land in south-east England, where the winter-spring-early summer drought was worst. The overall quality has been reasonably good.
According to company surveys more of both oilseed rape and wheat will be grown for the 2006 harvest than for the current one.
First forecasts are that all major apple varieties will be higher in overall volume than last year; yields will however be lower on low-lying sites, which suffered from some sharp frosts in May.
Following an almost vintage crop last year a significant downfall in both Conference and Comice pear production is expected this year. Crops in the Netherlands and Belgium have been badly hit by the exceptionally cold weather in the spring and early summer.
The raspberry crop this year has been described as “superb”, although all soft fruits, including of course strawberries, were very “late-to-arrive” and slow to develop following the inclement weather early in the season; periodic spells of heavy rain since spoilt many crops.
Blackcurrant growers across the British Isles have linked up with industry partners to launch “Blackcurrant Foundation”, the first ever marketing campaign to extol the merits of British blackcurrants.
The Worshipful Company of Farmers is actively promoting education within the horticultural industry; it is supporting a Nuffield Scholar for the first time.
The government’s Biomass Study Task Force, set up last October, headed by Sir Ben Gill, has published an initial report, outlining 35 draft recommendations; the final recommendations will be published in late October. It believes biomass could eventually account for 5% of UK’s electricity, with possibly one million hectares of farmland available for non-food uses by 2020.
The EC has cleared imports of GM maize produced by Monsanto for animal feed. It is being claimed that there is a legal loophole that allows farmers to grown their own GM maize.

Other livestock news

July UK milk production was the lowest for the month since 1998/99. Quota values (4% BF) have fallen to 0.6ppl to lease, 5.3ppl to buy.
The report of a new survey of the milk industry by Manchester University says the drop in production well exceeds its predictions two years ago and that it could fall by a billion litres over the next 24 months. Some are questioning the reliability of these findings.
Brazilian beef imports have been heavily criticised as falling well short of UK domestic standards regarding quality assurance and traceability.
The Independent Scientific Group on cattle TB has dismissed the NFU’s proposals for tackling the problem. Road Traffic Survey data covering seven counties badly affected by TB found that only one in seven dead badgers was infected, with no clear correlation between the levels of TB in cattle and badgers.
The Food Standards Agency says that as a reliable BSE testing regime for over-30 months cattle has been successfully designed and trialled the Over Thirty Months Scheme could now be wound down and replaced by testing, once a number of measures had been finalised to ensure its effectiveness.
According to preliminary evidence from the Veterinary Laboratories Agency, based on experimental work, BSE can be transmitted naturally between sheep, with mothers appearing to transmit the disease to their offspring. However, the scientists admit that there is no evidence as yet of BSE in the UK sheep flock.
A blood test for the rogue proteins that cause BSE has been developed by US scientists. They hope soon to be able to screen people for vCJD.
The national pig herd has fallen by 10% in the past 12 months but most of this occurred last year, when cull sow prices were very high; the herd has fallen only 2.5% since December and slaughterings have in fact increased in the last three months.
Avian flu having spread from East Asia to Russia, there is increasing concern over the possibility of its spreading into Western Europe. The Dutch government has decreed that all poultry must be kept indoors and Germany may follow suit.

Inputs/Supply businesses

UK made AN, delivered in 500kg bags, is currently averaging about £145/tonne. The price is expected to rise to £160/tonne in December.
The average price for red diesel has reached 35ppl, compared with 22p at the start of the year.
French parent company Limagrain is to merge seed companies Nickerson UK (which it bought in 1990) with Advanta Seeds UK (which it bought in February this year). The new company, which will have sales of £35 million, will be called Nickerson-Advanta and have its head offices at the present Nickerson HQ at Rothwell, Lincs.
Agrovista has formed an alliance with seven regional seed and fertiliser suppliers to link variety, agronomy and input programmes to local farmer requirements.
IAWS, Britain’s biggest fertiliser blender, is rationalising its operations. It is building a new facility at Immingham and is to close two of its other six plants: Teesside and Althorpe, Scunthorpe.
NWF Agriculture has acquired the privately owned company Nutrition Express, which specialises in importing feed materials and selling them on.

Marketing

The Office of Fair Trading, following a long review, has concluded that there is no evidence that supermarkets deal unfairly with their suppliers and therefore the Supermarket Code of Practice does not need to be changed. The reactions have been highly predictable, with the word “whitewash” well to the fore. The Association of Convenience Stores said the OFT’s conclusion “beggars belief”. The NFU Scotland president John Kinnaird measured his words carefully when expressing his view of the report: “It stinks”, he said.
The NFU had earlier produced a “Buyers’ Charter”: a voluntary code to protect suppliers. Tesco said it has no intention of signing up to it and Sainsbury’s and Asda have indicated that they too would be unlikely to support the proposal.
3 Tesco has increased its share of the UK food market to a record 30.5%. Asda is second with 16.7% and has just made price cuts and promotions worth £130 million in an endeavour to regain its claim to be the cheapest supermarket. The head of Asda’s parent, Wal-Mart, has called for a government investigation into Tesco’s dominance.
Members of Fengrain voted overwhelmingly against its Board’s proposed merger with Centaur Grain (though the tonnage vote was much closer). Fengrain’s chairman, John Heading, immediately resigned.
Grainfarmers’ managing director Tim Pollock is to step down from 1st September.
Milk Marque is balloting its 10,149 members to approve a change of legal status that will enable the conversion of some £15 million of undistributed profits into members’ shares – and invest those shares. Otherwise the defunct dairy co-op will be wound up, as originally planned in 2000 when it ceased trading, and changes in pension fund rules mean that the money is likely to be lost to members.
Robert Wiseman Dairies has bought Scottish Milk Dairies, which supplies 12 million litres a year to independent retailers from its Hamilton depot near Glasgow, for £900,000. SMD is a wholly owned subsidiary of dairy co-op First Milk.
Dairy Farmers of Britain has sold its Llangadog creamery to pet food manufacturer Cambrian.
Milk Link has steamlined its corporate structure. It is creating two different business units to concentrate on the wholesale and retail trades.
Milk Link is to launch its full range of Moo long-life dairy products onto the European market.
A Scottish project, North Highland Initiative, has been launched to promote Highland beef and lamb in supermarkets. It will include the brand Mey Selections and has the backing of Prince Charles.
In response to a Food Standards Agency call, Assured Food Standards has entered a formal agreement with local authorities through LACORS, the co-ordinating body for local authority regulatory services.

Miscellaneous

Bishop Burton College, near Beverley in East Yorkshire, is planning to spend £17 million over the next few years on the development of its campus, which will include a new indoor riding arena and the redevelopment of its dairy unit.