Farming News Review - September 2007

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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

The European Commission has issued a draft framework directive on the sustainable use of pesticides. It proposes a range of measures to tackle pesticide use including national action plans, training for users, new rules on inspection of pesticide equipment and special measures to identify areas where minimal or even zero pesticide use is permitted.
A European Commission assessment has concluded that the 10 per cent minimum target for all transport fuel to be derived from biofuels by 2020 can be achieved without any adverse effect upon the food industry.

CAP (etc.) support details/payments

The fruit, vegetable and potato authorisation system is to be abolished in England from 2008. This means that growers will be free to use Single Payment Scheme land to grow fruit, vegetables and potatoes without any area restriction. Land used for the production of orchard and nursery crops will become eligible to support a Single Payment Scheme claim.
The suspension of the cross-compliance standard concerning the use of mechanical equipment and vehicles on waterlogged soils has been extended to September 10 in view of continued problems with waterlogged land in some parts of the country.
The annual report of the Rural Payments Agency indicates that it will not be operating the Single Payment Scheme effectively until at least 2008.

Grants/regulations/legislation/environment

Proposals have been announced by Defra to increase Nitrate Vulnerable Zones from 55 per cent to 70 per cent of England; to reduce the whole farm livestock manure Nitrogen loading limit for grassland from 250kg/hectare to 170kg/hectare of total Nitrogen per calendar year; longer closed spreading periods for organic manures, between 3 and 5 months depending on rainfall, soil type and land use; a minimum manure storage capacity of 26 weeks (pig and poultry) or 22 weeks (cattle); recordkeeping for at least 5 years.
McCain Foods is to install three 80 metre-high wind turbines at its Whittlesey chip factory in Cambridgeshire.
An NFU report “Water Matters” has revealed that farmers have spent more than £3.3 millions on improving water efficiency.

Other matters of farm finance and tenure

A report from the European Commission reveals that EU farm incomes are expected to rise by more than the rate of inflation until at least 2014. Positive prospects are predicted for grains and oilseeds but medium-term prospects are less good for sugar, beef and dairy.
Bank borrowing by agriculture reached £9.72 billions at the end of June, the highest level ever according to the Bank of England.
The Competition Commission has announced that the incomes of fruit growers fell by 20 per cent in the period 1996-2005. Despite retail prices increasing, farm gate prices have remained relatively stable as a consequence of the buying power of supermarkets and the increasing reliance on imported fruit.
The Competition Commission has received evidence from a Grant Thornton industry survey which has revealed that 8 out of 10 UK food suppliers expect more businesses in their sector to become insolvent in 2007 with more than half blaming supermarket pressure.
Seasonal Agricultural Workers Scheme worker fees are likely to rise by up to 30 per cent in 2008 as a result of the difficulty in sourcing adequate supplies of labour.
The Gangmasters Licensing Authority has revoked the licence of Baltic Work Team after having been found to be non-compliant with licensing laws and breaching the health and welfare of 40 Bulgarian workers. The licence of Ashcroft Employment Services Ltd has also been revoked.

Product prices

A. Crops

This month has seen an unprecedented movement on UK crop prices. The combined effect of several factors (further reduction in USA’s predicted yields; International Grain Council’s reduction of the 2007 world wheat estimate by 1.1%; the lowest global grain stocks for over 25 years, among others) has sent the UK grain market soaring higher than any previous predictions. Furthermore, with harvest all but finished, expectations that quality levels may not be met for many milling and malting crops are driving premiums higher still. Milling wheat delivered to Liverpool was achieving above £200/tonne at the end of August.
Average prices in late August (£/tonne ex-farm): feed wheat 155, milling wheat 181; feed barley 146; oilseed rape 212; feed peas and beans 151.
Average potato prices continue to settle as the level of 2006 crop in the market place tails off. 2007 crop prices dropped back £10 to £120/tonne over the course of the month as progression of harvest brought more crop to the market. Average prices sit £30 lower than the same time last year. Erratic weather conditions over past months have left many farms still embroiled in cereal harvest and cultivations, delaying potato lifting. In some cases the weather has resulted in crop damage and heavy yield loss. In all parts of the UK, blight remains a problem. 2007 harvest is now underway for maincrop varieties. In late August, King Edwards for packing were achieving between £170 and £180/tonne - good samples reaching £200; skin-set Desiree was achieving between £160 to £170/tonne, whilst good samples of Maris Piper were priced between £180 and £190/tonne.

B. Livestock
Restrictions from Foot-and-Mouth Disease have limited market information this month

The average steer price opened the month by gaining 5p/kg, peaking at 119p/kg lw. By the end of the month this had tailed off slightly, ending August just above 114p/kg lw, 3p/kg above the price at the same time in 2006.
UK lamb prices started the month at 113p/kg lw. Once movement restrictions ceased, trading recommenced at just above 100p/kg, soon climbing back to 110p/kg, but tailing off near the end of the month to close at just above 104p/kg lw, 6p below prices a year earlier. Blue tongue remains a strong risk, with outbreaks reported close to the French coast of the English Channel.
The average pig price dropped back slightly over the course of the month. Prices by late August were 109p/kg dw, 1p/kg above those at the same time in 2006.
The average milk prices for June (reported in August) recorded an improvement to 18.10 ppl. Dairies continue to announce price increases with Dairy Farmers of Britain announcing a 2.3ppl increase from 1 September (to 20.26ppl) and Robert Wiseman Dairies announcing a liquid milk price of 25.7ppl from 1 October. Milk quota prices continued to strengthen in correlation with the milk price and the subsequent demand for quota. Clean, 4% butterfat holdings were changing hands for up to 3.17 ppl in late August, a 65% increase on late July’s prices.

Other crop news

Initial harvest reports suggest wide variations in wheat yields and quality across the UK. The South East and East Anglia have good quality grain but quality worsens to the north and west with evidence of low Hagbergs and specific weights. Overall UK yields could be down as much as 10 per cent or 1.5 million tonnes with Europe in a similar situation.
While oilseed rape and winter barley trials yields stood firm, yields of winter wheat in the HGCA Recommended List trials are down by about 12 per cent compared to the 5-year mean.
The Crop Protection Report released by the US Department of Agriculture’s National Agricultural Statistical Service shows corn production forecast at 13.1 billion bushels, 10.6 per cent above the previous record set in 2004.
Winter wheat plantings are expected to increase this autumn if set-aside is removed but oilseed rape plantings are expected to be down on 2006.
The English apple season is 7 to 10 days ahead of last year as a result of an unseasonably warm April. The crop is expected to be only 5 per cent up on 2006 but as the European crop is 13 per cent down on last year the marketing potential is promising.
The Pesticides Safety Directorate has granted a one season extension of the use of SL567A (metalascyl-M). The chemical is almost the only effective treatment against Phytophtora which affects fruit in store and is caused by soil splash.
Assured Food Standards has developed the Cold-crush Oilseed Meal Scheme. It will start on 1 October and certify rape meal for animal feed where it has been produced by on-farm crushing.
A new industrial hemp processing facility near Halesworth in Suffolk has been given the go-ahead. Hemcore is to commission the facility at a cost of £3.6 millions, it will process 50,000 tonnes of hemp straw each year. The existing facility at Maldon, Essex, which can process 4,500 tonnes each year, will be closed.
Anglia Salads, based near Colchester, has increased the area devoted to the growing of melons to 10,000 square metres.
McCain Foods is to cease frozen chip production at its plant at Wombourne, Staffordshire.

Other livestock news

Foot and mouth restrictions were finally lifted towards the end of August allowing livestock movements and exports to Europe. Four separate investigations are progressing. The Government’s epidemiological investigation has already concluded it is “highly likely” the virus derived from the Pirbright research site.
Robert Wiseman Dairies has increased its milk price to 25.7 pence per litre from 1 October; Arla will pay 25 pence per litre from the same date; Dairy Crest is to increase the organic milk price to 33 pence per litre.
In the year to mid-July organic milk sales totalled £145 millions to be the fastest growing sector of the dairy market according to Yeo Valley Organic. Year on year growth was 20 per cent compared to 6 per cent for the whole sector.
A report “Dairy Farming in England” published by the Farm Business Survey Consortium has revealed that an increased percentage of producers have either less than 50 cows or more than 200. It also highlights that, despite an increase in yields, milk production in 2005/06 was at its lowest level since 2001/02. Overall milk consumption has fallen 23 per cent since 1985 while butter consumption has halved in the same period.
The equivalent report on pig farming shows a slight increase in numbers in 2006 over 2005 but 43 per cent of farms were generating negative net margins. The highest margins were recorded by those farms selling weaners.
Asda and Morrisons are to increase the price paid for cheese bought from First Milk by £400 per tonne.
First Milk, the country’s largest dairy farmer co-operative, has been unable to fulfil its contractual commitments as a consequence of milk production shortages. Increased feed costs and poor weather has led to a 5 per cent shortfall in members’ production volume.
Retailers and consumers have been warned that prices for meat, milk and eggs must rise significantly if the livestock industry is to survive according to producers.
Tesco is to increase the price to egg suppliers by an average of 4 pence per dozen.
The British Pig Executive claims that increased feed prices has resulted in some producers losing £22 on every pig they sell. There has been some movement on the prices of milk and eggs but the British Retail Consortium warned that supermarkets were in no position to deliver what the industry was demanding in view of the “fantastically competitive price war.”
Food and Farming Minister, Jeff Rooker, has indicated the Government will make a decision on badger culling before the end of October.
An initiative led by Biotechnology and Biological Sciences Research Council is to invest £11.5 millions over 3 years on research to tackle livestock diseases.
Germany has confirmed an outbreak of the H5N1 strain of avian flu in a commercial duck flock. France has confirmed an outbreak in wild birds in the Moselle region.
The number of cases of bluetongue disease in Belgium, France and the Netherlands has increased sharply as a result of the warmer weather. An outbreak of a new strain has been reported in Spain.
Bernard Matthews is to ensure all poultry products sold under its brand name are produced in Britain.
The final report of the 10-year Longwood Improvement Project has identified that longerliving ewes can make a major contribution to the improved performance of English halfbred flocks.
The European Ombudsman is to launch a formal investigation into beef imports from Brazil following a complaint made by Fairness for Farmers.

Inputs/Supply businesses

Seed shortages are expected in some varieties this autumn while in practically every species seed sales are ahead of the equivalent time in 2006.

Marketing

Tesco and Asda are facing investigation by the Competition Commission over claims that intimidating e-mails were sent to suppliers in order to reduce prices to help finance price wars.
The growth in the grocery market has slowed to 3 per cent in the 3 months to mid-August down from 6 per cent in the equivalent period to mid-May. Price competition is believed to be the main cause.
A report commissioned by the Milk Development Council “Dairy Products with Provenance” has identified marketing opportunities for producers of soft cheeses with provenance, spreadable butters and children’s snack cheeses.

Miscellaneous

NSF International, a global testing and certification company committed to public health protection, has acquired CMi, a leading European food safety and assurance company. CMi and Soil Association Certification are to form an alliance to create combined certification and assurance services to the UK.
Polehouse Nurseries, one of the UK’s largest strawberry growers, based in Norfolk and Essex, has gone into administration owing £5.9 millions.
JJ Barker, the grower and packer and part of the Bomfords Group, based in Kent and Lincolnshire, is to be wound down after administrator Deloitte failed to find a buyer for the business. Around 400 jobs will be lost. Bomfords growing business has been sold to G’s while the packing operation has been bought by Wealmoor. The prepared produce division has been sold to Keelings.
Pinguin Foods is to buy Christian Salvesen frozen vegetable business for an estimated £17.2 millions leaving only Pinguin and Bird’s Eye as major frozen vegetable businesses in the country.
A 2-year Defra-funded research project is being undertaken at Scottish Agricultural Colleges to assess the extent of the impact of climate change on UK livestock.
The Royal Agricultural Society of England is to move the Royal Show in 2008 from its traditional Sunday to Wednesday event to a Thursday to Sunday event. The change has angered organisers of the Great Yorkshire Show as there will only be one day between the two events.
Dairy Farmers of Britain recorded a loss of £6.2 millions in the year to March.
Lady Hazel Byford has been elected president of the Royal Association of British Dairy Farmers.
Thomas Wheatley-Hubbard has resigned as chairman of the Royal Agricultural Society of England.