Farming News Review - September 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

Following a damning report by the Court of Auditors, the European Commission has put forward proposals to harmonise the criteria which are employed to designate Less Favoured Areas. The proposals could result in parts of East Anglia, the Midlands and the South of England being redesignated. The NFU has labelled the proposals as “illogical” and is concerned the benefits to those who face genuine hardship will be diluted. The Commission has provisionally proposed factors such as climate, terrain and soil properties as potentially triggering an LFA designation.

CAP (etc.) support details/payments

The Uplands Entry Level Scheme, which is due to replace the Hill Farm Allowance in 2010 and is being trialled on 60 hill farms, has been branded by the NFU as “totally impractical.” The NFU has identified four main areas of concern: the banning of ring feeders and troughs on moorland allotments; the requirement for a 12 metre “riparium” strip alongside all watercourses where supplementary feeding and fertiliser spreading would be banned; the inadequacy of points awarded for maintenance of stone walls; the difficulty facing those farmers already in Stewardship schemes to achieve sufficient points to qualify for the new scheme.
Vegetable and fruit growers will be entitled to apply for Single Payment Scheme entitlements with effect from 2010.
With effect from 16 October, all Single Payment Scheme payments will be made by BACS transfers.
All Common Agricultural Policy payments to UK farmers will be published on a single website from 30 September.

Grants/regulations/legislation/environment

A 5 year skills initiative is to be funded through the European Union’s Regional Development Programme for England and administered by the British Pig Executive. A total of £300,000 is to be made available, £77,000 has already been allocated to the Yorkshire and Humberside Region.
The Renewable Fuel Agency has reported that the UK biofuel industry is dominated by imports which fall short of basic environmental standards. In 2007 biofuels accounted for 2.14 per cent of UK road fuel compared to a target of 2.5 per cent. However, only 19 per cent of biofuels met its environmental standards compared to a target of 30 per cent. Only 7 per cent of the biofuel used on British forecourts came from UK sources.
Farmers and landowners are likely to have to carry out annual risk assessments for individual trees, under draft proposals issued by the British Standards Institute, and an expert assessment every 5 years.
The second round of funding from the £400,000 Farm Resource Efficiency Programme has been launched by Yorkshire Forward. The aim of the programme is to improve the economic performance of livestock holdings by introducing environmental technologies into the activities of the business.
A joint initiative by the Association of Convenience Stores and the Department of Health will result in grants totalling £200,000 per year over the next 3 years made available to “corner stores” to help them increase sales of fresh produce.

Other matters of farm finance and tenure

Latest costings from Anglia Farmers show that costs on a mixed arable/livestock farm are up by 35 per cent since last September. Fertilizer, which accounts for half of the Anglia Farmers Agricultural Inflation Index, has increased by 17 per cent; feed costs are up by 44 per cent; machinery costs are up by 15 to 20 per cent.
Bank lending to agriculture has increased by £889 millions to £10.6 billions, its highest ever level. The main reason has been increased costs of production. While borrowing by arable farmers has increased significantly, higher profits have enabled dairy farmers to reduce debt levels.
Sales of farmland have exceeded £500 millions in 2008, the first time this level has been exceeded. The South East has seen the largest number of farms sold, double the number sold in the whole of 2007.

Product prices

A. Crops

The UK harvest has been hampered by rain throughout the month, leaving farmers a fair way behind in comparison to the 2007 harvest. Early reports are of good average yields, but the high yield in conjunction with the weather delays is seeing comparatively low protein content and ever-dropping hagbergs; furthermore, the harvest reports from France and Germany mirror this. With the expectation of lower volumes of quality milling wheat, the milling premium is already increasing; the flip side of which will be higher than expected volumes of feed wheat hitting the market in the coming year and a lower feed price. The main non-agricultural factors affecting the market continue to be the fluctuation of currencies and the volatile oil price. The dollar has been strengthened on the back of the unrest between Georgia and Russia, whilst the oil price seems to be relaxing. LIFFE wheat futures have fallen over the course of August: futures for delivery in November 2008, 2009 and 2010 dropped by £13, £6 and £10 respectively to close at £120, £134 and £138 respectively. Average prices in late August (£/tonne ex-farm): feed wheat 111, milling wheat 146; feed barley 108; oilseed rape 299; feed peas and beans 164.
Average potato prices, having stabilised at £148/tonne by the end of July, fluctuated marginally about this level throughout August; dropping down to £144 and reaching as high as £151. Prices in late August sat £26/tonne higher than those a year earlier at £150/tonne. The free market price at the end of the month was below the average price at £145/tonne but is still £28 above August 2007 levels. With 2007 crop sales complete, 2008 crop sales remain steady. Supply is largely by means of contract with low levels of free market trade. Recent weather has hampered, in some cases prevented, harvest and in turn the conditions have become more attractive to blight, but harvest progresses nonetheless. In late August, King Edward (set skin) were achieving £230/tonne for whole crop and up to £340 for best samples; set skin Desiree were obtaining up to £225 - £240/tonne whilst Marfona were achieving between £150 and £170/tonne; Maris Piper with set skin are not yet forthcoming, but were selling at up to £220/tonne and set skin Estima were changing hands are £150 – 170/tonne.

B. Livestock

Beef prices, having dropped back over the course of July, were far more buoyant in August as the supplies to the market dropped back. Having opened at 142p/kg lw, the average price of steers steadily increased to reach 152p/kg lw by the end of August; average heifer prices mirrored this trend but sat 2p/kg higher. Average steer prices sit 40p/kg higher than those in August 2007.
UK average lamb prices, continued to drop in the early part of the month, down to a low of 120p/kg lw. The latter part of the month saw prices recover slightly. The average price in late August was 129p/kg lw, 20p/kg above prices a year earlier.
The average pig price levelled off this month and showed signs of dropping back at the end of the month. Having reached a season high of 137p/kg, prices in late August were at 136p/kg lw; the same level as a month earlier. Prices sit 27p/kg higher than those a year earlier.
The average farmgate milk price for June (reported in August) recovered marginally, gaining 0.51ppl to sit at 24.96ppl; 6.9ppl above prices in June 2007. The milk industry, having predicted breaking the 30ppl barrier by the end of the year, is now not so confident. It has been noted, surprisingly, that milk sales are being materially affected by the credit crunch; not what is expected of a staple food. Clean milk quota holdings (4% butterfat) were changing hands in late August for 0.50ppl; down 0.25ppl from levels in late July.

Other crop news

The Pesticides Safety Directorate has warned that the face of British agriculture could change if the European Commission’s pesticide proposals are passed. It concludes the proposals would harm control programmes for the major disease of wheat in the UK with potential for yield losses of 20-30 per cent; yield losses of up to 100 per cent could affect crops such as carrots, parsnips and onions; the control of blackgrass would be jeopardised leading to yield losses; there would be no effective compounds for the control of the major diseases of oilseed rape.
Poor weather has resulted in a slow wheat harvest. By the end of August 40 to 50 per cent had been cut in the Eastern Counties; 25 per cent in East Anglia but only about 20 per cent in the Midlands.
Wheat and barley straw prices have increased by £10 to £15 per tonne compared to last year because of high input costs and poor harvesting conditions.
Scientists in Victoria, Australia believe they have developed a genetically modified variety of wheat which is capable of withstanding severe droughts and increasing yields by as much as 20 per cent.
Negotiations between the NFU and British Sugar have resulted in an increase in the contract price of £2 per tonne and over 97 per cent of growers have returned contracts.
A guide on how to tackle the black dot potato skin disease, “Managing the Risks of Black Dot”, has been launched by the Potato Council.
Greenvale AP has launched a new salad potato variety, Sofia, specifically for Tesco.
The Voluntary Initiative has introduced a new crop protection management plan aiming to reduce the paperwork required by farmers and growers. An on-line version will be available at www.cpmponline.com
Research undertaken by scientists from the University of Copenhangen’s Department of Human Nutrition has found no evidence that organic food is more nutritious than food grown with the use of pesticides and other chemicals.
The Scottish Crop Research Institute has launched a new, large-berried variety of raspberry, named Glen Fyre. Fruit is expected to be sold via supermarkets within 12 months.
Waitrose has increased year-on-year sales of gooseberries by 91 per cent.
The University of Warwick’s horticultural research centre at Kirton, Lincolnshire, is to close.

Other livestock news

Rams imported from central France and held on farms near Lewes and Hemel Hempstead have proved positive to bluetongue virus. Eight bulling heifers imported from Germany and held on a farm in Devon have also tested positive.
The whole of England is now a bluetongue Protection Zone meaning that livestock can be freely traded across England and Wales.
In France, the number of cases of BTV8 has increased by 3,000 in just 5 days to more than 8,200. In addition the French have 100 cases of BTV1.
The National Fallen Stock Company has advised Defra that it will take responsibility for the collection of fallen cattle for BSE testing provided Defra contributes towards the cost. With effect from 10 January 2009 Defra intends to cease paying for collections but will continue to pay for BSE tests.
Plans to shortly be unveiled by Defra involve an annual registration scheme for livestock farmers which would call for a fee per head to be set for each species. Payments by farmers would be based on the number and types of animals owned. A self-declaration form would be required.
Defra has advised farmers not to carry out TB skin tests at the same time as undertaking bluetongue virus vaccination after the vaccine generated false positives on some TB tests.
The Dutch farmers union has called upon Britain to guarantee exports of veal as being TBfree before any resumption of trade.
Defra has decided to appeal against the High Court ruling that its tabular valuation system is unlawful.
Restrictions on livestock and meat exports from the UK into China has been lifted.
The Veterinary Medicines Directorate has published a report revealing that year-on-year sales of therapeutic antimicrobials have fallen from 335 tonnes to 314 tonnes.
The Scottish Government has announced a funding package worth £1 million to support the Scottish pig industry. An immediate £200,000 is available to improve the marketing of pig meat products; £100,000 has been allocated to research into labelling and animal health; £700,000 has been set aside for future partnerships with the industry.
A portable machine which can be used at the scene of a suspected outbreak of avian flu is being developed by scientists at Nottingham Trent University. The project is being funded by the European Union and will be developed by a French company.
Dairy Crest has increased the price paid for supplies to its Davidstow Creamery by 1 pence per litre.
Long Clawson Dairy, the Leicestershire co-op, has acquired the Stilton and speciality cheese business of Dairy Crest including its Hartington creamery.

Inputs/Supply businesses

The Freight Transport Association has published facts highlighting the impact of high oil prices and fuel duty; duty represents 47 per cent of the cost of a litre of bulk contract diesel; bulk contract diesel prices have increased by 21 per cent since January; fuel costs as a percentage of the total operating costs of a 40-tonne articulated lorry have increased from 31 per cent to 35 per cent since 2000; UK diesel duty for industry needs to fall by 25 per cent to be on a par with the rest of Europe.
Growhow UK is to invest £11.5 millions in its ammonia plant in Ince, Cheshire.

Marketing

The Institute of Grocery Distribution has revealed that sales of home-sourced food and drink have increased by 15 per cent in the last 3 years to £4.3 billions.
Data of supermarket grocery sales in the past 3 months shows that price is now the main driver. Total sector sales grew by 7.2 per cent by value but were static by volume. Aldi sales grew by 19.8 per cent and Lidl by 12.3 per cent.
The Competition Commission has sanctioned a request by The British Independent Fruit Growers’ Association whereby the group will monitor the way supermarkets carry out the Groceries Supply Code of Practice.
Checkfresh has launched a weekly survey of retail price information.
The Great British Carrots Campaign has appointed the Processed Vegetable Growers Association to manage its administration.
A report released by the School Food Trust has revealed that up to 1.7 million children in the UK never eat fruit. It claims that children given free fruit at school are less likely to be fed fruit at home.

Miscellaneous

Dairy Farmers of Britain incurred a loss of £3.6 millions in the year to March mainly due to restructuring costs.
Countryside Farmers increased operating profit in the year to March by £0.3 millions to £1.8 millions on turnover up 18 per cent to £190.7 millions.
Lord Sandy Bruce-Lockhart has died. He was a Kentish fruit grower, president of the Marden Fruit Show Society and former chairman of the Local Government Association.