Farming News Review - December 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

A report from the Agriculture and Rural Development Directorate General has concluded that, under current regulations, the EU is facing a major feed shortage which could have dire consequences for livestock businesses. The report claims that slow approvals of new crops and the EU’s zero-tolerance stance on unapproved varieties is likely to disrupt feed stocks. As a result ministers at a meeting of the EU Agriculture and Fisheries Council have urged the EU Commission to improve the approval procedure for new biotech crops.
Defra has issued a consultation paper seeking views on whether the Pesticides Safety Directorate and the Health & Safety Executive should merge.
Defra has been asked by the Treasury to make savings of £270 millions, on top of savings of £200 millions last year and a 5 per cent reduction in administration costs.

CAP (etc.) support details/payments

A meeting of the European Farm Council has given qualified support to the CAP health check proposals. Agriculture Commissioner Mariann Fischer Boel has agreed to simplify cross-compliance regulations. The proposals are expected to be published by 1 May next year and the target date for completion is 1 December 2008. If the proposal to cap Single Payments is accepted, the loss to British farming could be as much as £56 millions.
The majority of farmers in Scotland and Wales are expected to receive Single Farm Payments in full on 3 December, the earliest possible payment date. However, the Rural Payments Agency has refused to indicate when payments in England will begin. It has a target of making 75% of payments by the end of March 2008.

Grants/regulations/legislation/environment

The EU-funded Quality Low Input Food project, the biggest ever study into organic food having taken four years and having cost £12 millions, has concluded that organic food is more nutritious than conventionally grown produce. The study found that some organic fruit and vegetables contained 40 per cent more antioxidants.
A Defra consultation involving over 11,000 respondents has revealed that 95 per cent are opposed to conventional and organic crops being grown alongside GM crops.
East Malling Research Station and the Waste & Resources Action Programme are conducting research into ways of reducing fresh produce wastage by consumers. The results are due to be published in April 2008.
Natural England has launched a campaign to increase public awareness of agrienvironment schemes which are used by farmers and land managers to help conserve the environment.
The Scottish Cabinet Secretary for Rural Affairs has advised there will be no approval of the Scottish Rural Development Plan by the European Commission until the implementation of the Nitrates Directive in Scotland has been agreed.
The Heritage Lottery and Yorventure have made grants totalling £70,000 to the National Park Authority to assist with costs associated with the preservation of the freshwater pearl mussel in the River Esk.
The NFU Mutual Charitable Trust has donated £40,000 to the Fresh Start initiative.
A grant of £49,600 has been awarded by the Heritage Lottery Fund to help safeguard the future of the Lincolnshire coastal grazing marsh.

Other matters of farm finance and tenure

Borrowing by the agricultural industry has risen by £388 millions in the past three months following an increase of £319 millions in the previous quarter. Total lending now stands at £9.829 billions.
According to Strutt & Parker, sales of arable land in England in the last six months have averaged £4,262 per acre, grassland £4,063 per acre. These averages are up 33 per cent and 23 per cent respectively on the previous year.
Official confirmation is awaited that Herefordshire County Council has dropped its policy to subject existing and proposed polytunnel developments to planning permission.
The NFU has obtained information on 19,000 seasonal workers as part of its research to provide evidence to the Home Office that there will be a shortage of labour in 2008.
The Food Chain Centre has unveiled its completion report claiming it has saved farmers and growers more than £14 millions. The project evaluated business improvement techniques and involved 2,000 farm businesses and 120 food companies.
The Organic Farming Scheme in Wales is to reopen this month.
Meetings of farmers are taking place throughout the country to protest at increasing fuel prices. Action could involve blockading ports preventing foreign hauliers entering the UK.

Product prices

A. Crops

The cereals market has seen conflicting forces this month, resulting in unexpected price fluctuations. The proposal to remove EU cereal tariffs saw future and commodity prices drop, whilst in the latter part of the month reports from the US of dry weather threatening crop quality had the opposite effect. Wheat prices fell over the month, but milling wheat bounced back in late November to sit £88/tonne above prices a year earlier. Oilseed rape prices, having strengthened marginally over the month, jumped a further £15/tonne in the latter stages to close £20 up on October prices and £95/tonne above 2006 prices.
Average prices in late November (£/tonne ex-farm): feed wheat 154, milling wheat 188; feed barley 145; oilseed rape 265; feed peas and beans 196.
Average potato prices showed very strong gains during the month, climbing £25 per tonne in the first three weeks, to peak at £150/tonne. However, the latter part of the month saw this drop back marginally to close at £145/tonne. The free market sat £11 higher at £156/tonne. With harvest complete for all but a very few, growers are now turning to marketing their produce. Better quality potatoes, however, are mostly being sent to store on the expectation that market prices will improve in 2008. As the season progresses, concerns of high tuber damage and grade-outs are being confirmed and crop quality remains highly variable. Trade continues to be strong as buyers are seeking, and paying premiums for, good quality samples. Average prices sit £12 higher than a year ago.
In late November, King Edwards were achieving between £170 and £200/tonne; Desiree were achieving £140 to £210/tonne; quality samples of Estima with good baker content were commanding £170 to £220/tonne and good samples of Maris Piper were changing hands for between £180 and £220/tonne.

B. Livestock

The average steer price has responded to the lifting of the Foot and Mouth “restricted zone” by gaining back some of the previous months’ losses. Prices, still in decline at the start of the month, reached a low of 108p/kg lw but then strengthened over the remainder of the month to close at 112p/kg lw, still 4p/kg lower than prices a year earlier.
UK average lamb prices, having dropped to 72p/kg lw at the start of the month, started to recover marginally over the remainder of the month. Trade improved as the news on UK bluetongue became more positive. Prices closed just below 80p/kg lw, 17p/kg below prices in November 2006.
The average pig price held relatively steady at 109p/kg dw, peaking at 109.5p early on before dropping to 108.5p mid-month. Feed prices remain the chief cause of producer difficulty, a position that is unlikely to change in the short to medium term. Prices by late November were 109.0p/kg dw; 2p/kg above prices at the same time in 2006.
The average farmgate milk price for September (reported in November) gained almost 2.5ppl over the August level - 23.1 ppl; 4.5ppl above the 2006 price. Arla, Dairy Crest, Dairy Farmers of Britain, Milk Link and Robert Wiseman each announced October price increases ranging between 2.45 and 4.6ppl, with November increases set for First Milk and Milk Link of 2 and 1.2ppl respectively. The price of milk quota took a further hit this month as, in addition to the weakening market, the EU stated its intention for a ”soft landing” for the abolition of the current quota regime; the uncertainty weakening purchaser confidence. Clean, 4% butterfat holdings were changing hands for 1.7 ppl in late November.

Other crop news

The European Commission has decided to suspend all import duties on cereals until 30 June 2008, apart from those covering Oats, in an attempt to bring down the cost of importing animal feed.
The voluntary levy paid by pea and bean growers to fund the PGRO is to be increased from 50p per tonne to 75p per tonne with effect from the 2008 crop.
Yields ranging from 9 to 90 tonnes per hectare are being reported from the sugar beet harvest. Average yields are proving to be disappointing but are being compensated by increased sugar levels.
Cultivation of GM crops in Europe has increased by 77 per cent over the past year to 110,000 hectares. The area in France increased by 400 per cent while the area in Spain, the largest GM cultivator, increased by 40 per cent.
The UK’s first bioethanol plant, adjacent to British Sugar’s Wissington factory in Norfolk, has been officially opened by Hilary Benn, Defra Secretary of State. The plant will produce 70 million litres of ethanol from sugar beet.
The Food Chain Centre has concluded the fresh produce industry is wasting £400 millions annually. For all the products examined, more than 95 per cent of the time between harvesting and consumer purchase was redundant and added no value.
Sainsbury’s has entered a 2 year contract with Camgrain to provide all the wheat used in its in-store bakeries. The supermarket has sought a guaranteed supply of traceable wheat.
The world’s largest biomass plant is to be built at Port Talbot, South Wales. The wood chip burner will provide enough electricity to power half the homes in Wales but most of the raw material will be imported.
A new system for measuring onion pungency has been developed by Cranfield University.
Scientists at Warwick HRI have found a method of breeding brassicas resistant to turnip mosaic virus.
Defra is to fund a LINK project to develop better measures to control bruchid beetle which affects dry and broad beans. The research is to be undertaken by the Processors & Growers Research Organisation, the National Institute of Agricultural Botany, Rothampstead Research Station and Syngenta.
2008 has been officially named International Year of the Potato.
A climate change monitoring unit based at Maynooth University has claimed that global warming could result in the disappearance of the Irish potato crop over the next 50 years as the potato will be most affected by increased summer temperatures and reduced rainfall.
A Yorkshire carrot grower, Guy Poskitt, is to trial grow truffles on behalf of Asda.
Work has started at Thanet Earth, the site which will become the UK’s largest ever glasshouse development for pepper, tomato and cucumber production. The 94 hectare site will include seven glasshouses, a 30,000 sq metre packhouse, a research and development centre and wildlife and education projects. Up to 550 jobs are expected to be created.
Sales of UK-grown soft fruit increased by 11 per cent in 2007 to £282 millions. Sales of UK-grown blackberries increased by 44 per cent in 2007 making it the fastest growing berry.
Poor weather has resulted in a fall in French pear production by 8 per cent when compared to 2006 and by 10 per cent when compared to the last five years.
Growers and producers in the South East are being encouraged to join a Local Food Alliance to distribute locally produced food to supermarkets and other outlets.

Other livestock news

Outbreaks of the H5N1 avian flu virus on the Norfolk-Suffolk border appear to have halted. Nearly 29,000 birds have been culled but some hatcheries have culled chicks because of movement restrictions. No firm evidence has yet been obtained as to the source of the outbreak.
Defra has suspended the Specified Animal Pathogens Order of Merial as a consequence of a faulty valve at its Pirbright laboratory allowing live foot-and-mouth virus to enter the drainage system. However, Meriel has stated it is confident it would still be able to deliver a bluetongue vaccine by next summer. The leak of the virus was contained on this occasion, unlike the occasion earlier this year.
Professor John Bourne, the former chairman of the Independent Scientific Group on Bovine TB, has attacked both Lord Rooker, Food and Farming Minister, and Sir David King, the Government’s Chief Scientific Officer for making “ill-informed and misleading” comments about the ISG report on badgers and bovine TB. The learned journal Nature has claimed Sir David King’s report recommending a badger cull was politically motivated.
The TB committee of the National Beef Association has advised Defra that farmers in the South West will not accept additional cattle controls even if part of a deal to secure a badger cull.
The Standing Committee for the Food Chain and Animal Health has announced the relaxation of export rules. Surrey and surrounding counties will be subject to some export restrictions while the rest of the country is subject to no restrictions.
Defra has issued a tender for 10 and 20 million doses of a bluetongue vaccine.
The European Commission has given approval to the Scottish Government paying £19 millions in emergency payments to sheep farmers, equivalent to about £6 per ewe. However, no similar payments have been made available to sheep farmers in England and Wales.
The European Commission has announced plans to introduce export refunds for pig meat. The Aid to Private Storage scheme, only set up in October, is to be scrapped.
A £100,000 fund has been launched by the East of England Development Agency to support the region’s farmers affected by avian flu, foot-and-mouth and bluetongue. EBLEX, Business Link and agricultural charities will use the fund to help pay for financial planning and marketing support.
Hybu Cig Cymru chairman, Rees Roberts, has warned that half the Welsh lamb industry could disappear within the next two years unless supermarkets increase producer payments.
MLC Economics has forecast an increase of 17 per cent in imports of beef in 2008 while UK production is anticipated to be 4 per cent down on 2007 at 880,000 tonnes. While the Republic of Ireland accounts for about 60 per cent of imports, supplies from this source are expected to fall with increased imports from Germany, the Netherlands and France. Exports are forecast to grow by 40 per cent to 70,000 tonnes, total production in 2007 should be about 8 per cent up on 2006 at 913,000 tonnes.
The English Beef and Lamb Executive has computed that the average beef producer made a loss of between £94 and £430 per head in the year to March 2007 compared to a loss of between £75 and £425 per head in the previous year, without taking into account any income from the Single Farm Payment. The average sheep producer made a loss of between 65 pence and £36 per head compared to between £2.45 and £49 a year earlier.
A Quality Meat Scotland benchmarking report has concluded that market prices from Scottish hill suckler herds would need to be two and a half times the 2006 average if farm businesses were to cover their costs while hill sheep businesses would need to double the 2006 average.
Quality Meat Scotland has received an additional £1 million of funding from the Scottish Government to help promote the red meat sector.
The Scottish Beef Cattle Association has called for a ban on Brazilian beef imports after the EU’s Food and Veterinary office concluded that production standards in Brazil were not satisfactory.
The British Grassland Society has launched a computer program, “Silage Decisions”, to help beef and sheep farmers make grass silage.
SAC Veterinary Services and the Scottish Government have developed a scheme whereby aborted calf carcase disposal costs will be waived if a blood sample from the affected cow is submitted along with the foetus to one of SAC’s eight diagnostic laboratories.
First Milk is seeking financial support from the Scottish Government to develop a new cheese and whey manufacturing facility on the Kintyre peninsula.
Defra has announced new double tagging regulations for sheep and goats. Only breeding animals will require two tags, animals destined for slaughter before 12 months of age will only need one.
A Defra budget error has resulted in local authority animal health teams having to cut 12 per cent from animal health budgets in the remaining five months of this financial year.
Increased demand for British wool should result in higher payments to producers, with the average over 40p per kg.
Dairy Farmers of Britain has increased milk prices by 1.5 pence per litre with effect from 1 December.

Inputs/Supply businesses

World demand for fertilizer is now outstripping supply with pressure on the supply of raw materials for nitrogen, phosphates, potash and other compound components. A shortage is expected in the coming season and the price of nitrogen is expected to exceed £200 per tonne with 20:10:10 costing about £215 per tonne.
Wet weather and flooding across northern Europe has affected seed supplies and quality and shortages are being reported for carrots, spinach, cabbages, peas and beans.
TwinN, a soil-conditioning product, has been approved for use by Organic Farmers & Growers and the Soil Association.
Syngenta has announced the development of two new fungicides for the control of Botrytis and downy mildew in onions.
Griffin and Target have been dropped from the NIAB/PGRO Recommended list of winter beans for 2008 leaving only Wizard, Arthur and Clipper.

Marketing

The NFU and NFU Scotland have called for an independent supermarket ombudsman to be appointed to ensure fair play in the supply chain.
Friends of the Earth has launched its Shop Local First campaign, aiming to encourage shoppers to use local outlets rather than large supermarkets.
The Co-op has been named Retailer of the Year by the British Free Range Egg Producers Association.

Miscellaneous

Animal health specialists employed by Defra are to ballot on industrial action having rejected pay proposals. More than 730 staff including those in the Marine Fisheries Inspectorate, Plant Health and Seed Inspectorate, Veterinary and Animal Health, Veterinary Medicines Directorate and Pesticides Safety Directorate are to be asked to vote.
The former Bomfords vegetable packing and distribution centre in Atherstone on Stour, now operated by Wealmoor Atherstone, has been destroyed by a fire which resulted in the deaths of four firefighters.
Tractor sales in October increased by 5 per cent on the same period last year. To date, sales in 2007 are 15 per cent up on 2006.
Russian tractor maker Rostelmash has acquired an 80 per cent stake in Canadian manufacture Buhler.
CRB Recruitment of Merseyside has been denied the right to renew its licence by the Gangmasters Licensing Authority as a result of breaching licensing standards.
Produce World has acquired Marshalls Holdings.
The Poupart Group has acquired specialist cherry importer Norton Folgate Marketing.
Tim Smith, former chief executive at Arla Foods, has been appointed chief executive of the Food Standards Agency.
Henry Aubrey-Fletcher has been appointed president of the Country Land and Business Association.