Farming News Review - April 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

The World Trade Organisation secretariat, based in Geneva, has admitted there has been no convergence by the major countries in response to proposals published earlier this year. As a consequence there is little prospect of further negotiations.
Harmonisation of maximum pesticide residue levels across the EU has moved closer as three key annexes of the relevant Regulation fixing pan-EU harmonised maximum pesticide residue levels on fresh produce were published in the Official Journal of the EU. Publication in the Official Journal is a prerequisite to full implementation in September.
EU Agriculture Ministers have agreed a 2 per cent quota increase on 1 April to help meet growing global demand for milk. It estimates that an extra 8 million tonnes of milk production will be required to meet continued growth until 2014.
The European Commission is expect to publish a new definition of Less Favoured Areas basing criteria solely on land areas with socio-economic factors excluded.

CAP (etc.) support details/payments

By mid-March the Rural Payments Agency had paid out 82 per cent of the estimated total fund of £1.45 billions, exceeding its target to have paid 75 per cent by the end of March.
The European Commission has amended its proposals for modulation and capping by proposing modulation of 17 per cent by 2012 and capping of a similar percentage for the largest farmers.
By April 2009, the full name, municipality and postcode of every recipient of EU farm payments will be published on nationally managed websites.

Grants/regulations/legislation/environment

Defra has launched the Organic Conversion Information Service. The free national advice service will be delivered by Natural England.
LEADER funding worth over £57 millions has been made available to rural communities in Scotland to grow local economies, improve rural facilities and conserve the environment.
Marks & Spencer is encouraging farmers to install wind turbines to help the supermarket meets its energy targets after a successful pilot scheme in Aberdeenshire.
The Chilled Food Association believes that product carbon footprint labelling is misguided for chilled foods and will be misleading to consumers. It favours carbon foot printing of a business.
Baraka Foods, based at Gelli, in the Rhondda, has been awarded a £100,000 Welsh Assembly processing and marketing grant. The company produces chilled and frozen meat-based meals.

Other matters of farm finance and tenure

The era of higher global food and agricultural commodity prices is here to stay according to The World Bank. It believes the shift in prices is permanent and will last for many years claiming the principal cause has been the increased growing of biofuel crops.
European Union farm incomes rose an average by 5 per cent in 2007; UK farm incomes rose by 6 per cent; Lithuania 39 per cent; Estonia and Czech Republic 20 per cent. Of the major countries only Denmark and the Netherlands had lower gains than the UK.
Opposition politicians have claimed that Defra rules and regulations are costing the agricultural industry over £1 billion to implement. Defra has admitted implementing over 1,000 new regulations since 2000 with an administrative cost of over £500 millions.
Sarasin Investment Management has launched its Agrisar fund, offering investors the opportunity to invest in agriculture and associated industries. Schroders has been forced to close its agriculture fund at a value of £3 billions due to overwhelming demand, having generated a return of 42 per cent in 18 months. Private investment in the agricultural industry has risen from £10 billions in 2003 to £150 billions in 2008.
A report from UPM Tilhill and Savills suggests that commercial woodland values rose by up to 40 per cent in 2007.

Product prices

A. Crops

Throughout March grain markets have remained highly volatile, particularly wheat and oilseed futures prices which, in the early stages of the month when the daily limits were altered, showed huge growth followed by similarly large losses. High levels of futures trading outside the agricultural industry still mask the true market; concerns over world financial markets seeing many traders liquidate their holdings in late March. Many realworld influences are adding to the price instability: the International Grains Council has increased its estimate of the 2008 world wheat yield by over half a per cent; adverse weather in China and India is bolstering the palm oil market; Defra has revised its UK wheat area figures for the 2008 harvest higher at 1.9 million ha; the pound has weakened against both the US Dollar and the Euro. Despite all these influences, the average prices have closed at similar levels to February, but futures prices and currency exchange rates suggest a general weakening for the UK prices in coming months. Average prices in late March (£/tonne ex-farm): feed wheat 181, milling wheat 200; feed barley 159; oilseed rape 360; feed peas and beans 215.
Average potato prices dropped back marginally, by £2/tonne, in early March where they held steady over much of the month. The market did show signs of improvement in the latter stages of the month, closing at just below £158/tonne, up £5/tonne on prices in late February. Overall prices continue to be led largely by the high levels of average and lower quality crop on the market. Demand for clean, high quality samples remains strong. The free market premium at the end of March sat at just above £5/tonne. Average prices a year earlier sat £5 higher and the average free market price was a full£17 higher. In late March, Maris Piper were being traded at anywhere between £150 and£200/tonne, with good quality graded samples achieving as much as £240/tonne. King Edwards were calling for between £150 and £220/tonne, with quality samples making£250/tonne; Desiree prices have held steady at £150 to £180/tonne; £200/tonne for top quality. Estima prices remain highly variable, depending on quality and baker content, obtaining between £120 and £220/tonne, with high baker content samples obtaining up to £280/tonne.

B. Livestock

The average steer price continued the positive trend seen since the turn of the year, although to a slightly lesser extent. With a mid-month peak of 140p/kg lw and a closing position of 136p/kg lw, prices sit 2p/kg above those in the previous month and a full 30p/kg above those in late March 2007. The strength of the market is thought to be due to soaring world demand, particularly in Asia, and the aftermath of the EU ban on Brazilian beef.
UK average lamb prices showed marked improvement this month, largely for similar reasons to beef prices. Increased world demand combined with the increasing desire for local sourcing saw prices reach an end of month crescendo of 140p/kg lw, with high quality animals achieving as much as 150p/kg lw.
The average pig price, whilst also improving on its February close, has not demonstrated the same level of strength as the red meat sector. With prices closing the month at 114p/kg dw, the pig sector is still suffering from inflated feed prices and pressure from imports. Prices in late March 2007 were 106p/kg.
The average farmgate milk price for January (reported in March) demonstrated further weakening, losing 0.58ppl to give an average of 26.02ppl. This remains 8ppl above prices a year earlier. Reports of high import levels of dairy products into Russia and global improvements on butter and milk powder prices leave the market relatively positive. Milk quota prices continue to weaken as the likelihood of exceeding the 2008 UK production limit remains small. Clean, 4% butterfat holdings were being traded in late March for 0.87ppl, 0.08ppl down on February prices.

Other crop news

The English wheat planting area is estimated to be up 10.4 per cent on 2007 at 1.9 million hectares. The Scottish wheat area is up 11.4 per cent at 114,000 hectares. Winter barley is up 13.9 per cent in England and 6.9 per cent in Scotland. Oilseed rape is up 2.3 per cent in England.
The French government has instigated a one-year ban on the growing of Monsanto MON810 GM maize amid reports of adverse effects upon insects and earthworms, despite the crop being widely grown in Spain.
Production of Jersey Royal potatoes has slowed following a very early start to the season. Volumes grown under glass have been hit by the cold and dull weather.
Poor weather in March has held up progress for some crops. Late drilling of onion crops has been delayed and cauliflower crop losses of up to 20 per cent have been reported from Lincolnshire.
Sainsburys is claiming to have broken the record for the first arrivals of UK strawberries this season. Punnets arrived at its Hull store on 14 March having been grown at the East End Nursery at Keyingham.
Two new and exclusive UK-grown everbearer strawberry varieties have been introduced to the market by BerryWorld. Sweet Eve and Eves Delight have been bred by Peter Vinson.
The Scottish Raspberry Breeding Consortium has released a new floricane raspberry, Glen Doll.
East Malling Research Station has terminated early its agreement with marketing company Meiosis in order to trial its new varieties itself through its own Strawberry Breeding Club.
Bramley sales have increased by 15 per cent year on year.
Waitrose is to become the first UK super market to plant its own grape vines. The vines will be planted at its farm in Hampshire, the aim being to produce sparking wine for sale by 2014.

Other livestock news

Bluetongue cases have been reported in Hertfordshire, Lincolnshire and the New Forest.
Twelve livestock organisations have joined forces to launch the Joint campaign Against Bluetongue to support the joint industry/Defra vaccination plan.
The Federation of Veterinarians of Europe has criticised Defra claiming its strategy on bluetongue will not be sufficient to halt the spread of the disease and accusing it of “cost cutting” on vaccination.
The ban on importing female cattle from Bluetongue Zones to Northern Ireland is to be extended after the European Commission proposed a permanent amendment to movement restrictions across Europe. The ban applies to all female cattle over 12 months and female sheep over 6 months from bluetongue restricted zones.
The Veterinary Medicines Directorate is expected to imminently announce a provisional licence for Intervet’s BTV8 bluetongue virus vaccine.
Dr Iain Anderson has published his report, “Lessons Learned”, into the 2007 foot-andmouth outbreak. He claims the Government management of the Pirbright site was“muddled and ineffective” and described the facilities at Pirbright as “shabby and dilapidated”. He has demanded the Government replace the Institute of Animal Health with a new National Institute of Infectious Diseases.
Avian influenza restrictions are expected to be lifted imminently in the light of no new cases.
A new EU health regulation may result in processors being prohibited from turning fresh meat into mince from carcases that are more than six days old.
The Meat Hygiene Service is to close regional offices in Cardiff, York, Taunton, Wolverhampton and Edinburgh.
NFU Scotland has called for animal health budgets to be under the control of the Scottish Government.
Levy rates for pig producers have been reduced by 10p per animal from 1 April when the new Agriculture and Horticulture Development Board came into being.
Research from Savills has predicted a 50 per cent rise in dairy incomes as a consequence of the strong world market.
A report produced by Promar and commissioned by First Milk has concluded that dairy farmers need an average milk price of at least 29.64 per litre in order to cover costs and leave a margin for investment.
The 2 Sisters Food Group is to invest a further £5.5 millions in poultry company Lloyd Maunder. The aim is to increase throughput from 530,000 chickens a week to 710,000 by the end of the year.
Noble Foods, the UK’s largest egg producer, has increased free-range egg sales by a third since the beginning of the year.
Richard Ali has retired as chief executive of the English Beef and Lamb Executive.

Inputs/Supply businesses

Marketing

The Fresh Produce Consortium is concerned that the lack of clear guidance from Defra regarding the introduction of new plant health legislation is threatening fresh produce supplies to retailers’ shelves. The Consortium claims that Defra’s “uncooperative and unhelpful attitude will threaten continued supplies of imported fruit and vegetables when new imports legislation is fully implemented.”
Food from Britain, responsible for promoting British food abroad, is to close at the end of March 2009 after Defra withdrew its funding.
A report, issued by the Meat and Livestock Commission on behalf of the NFU, has urged supermarkets to label food with country of origin information.
Organic home delivery company Abel & Cole has opened a new depot in Aylesford, Kent to be used as its main distribution centre for deliveries in the south-east.
Sir Terry Leahy of Tesco has been named Retail Leader of the Year, Morrisons won the award for Retailer of the Year.

Miscellaneous

Sainsbury’s potato buyer, John Maylam and Greenvale AP’s operations director, Dave Baxter have been arrested and released on bail after Greenvale alerted City of London police to alleged bribery and corruption uncovered by its auditors. John Maylam is alleged to have taken bribes to the tune of £3 millions from Greenvale.
The Gangmasters Licensing Authority has uncovered abuse of workers in the cut-flower, plant and bulb industry in Lincolnshire, including suspected debt bondage. Operation Bismark targeted labour providers to the ornamentals sector around Spalding and Boston.
Industry analyst, Plimsoll Publishing, has identified the UK fresh produce industry as being cash rich and ripe for an acquisition bonanza. However, it has also found evidence that the gap between those businesses making massive profits and those just keeping their heads above water has widened.
The Asparagus Growers Association has appointed Adrian Barlow as its direct link with the major supermarkets.
Top fruit grading, storage, packing and distribution firm Fruit First Ltd has ceased trading.
Smith Gore has taken over the rural division of Cluttons.