Farming News Review - February 2007

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Policy issues CAP (etc.) support details/payments Grants Farm finance Product prices

Other crop news Other livestock news Marketing Miscellaneous

Policy issues

Further talks have taken place in Davos, Switzerland in an attempt to resurrect the stalled Doha Development Round of world trade talks.
Whichever political party is in power it would seem possible that Single Payments will be abolished before long. Both David Miliband and David Cameron announced at the Oxford Farming Conference that their parties would seek an end to Pillar One payments by 2020. David Cameron went further calling for a renationalisation of farm policy.
The EU Commission has set a target of reducing Europe’s greenhouse gas emissions by 20 per cent by 2020.
The European Commission is planning to introduce an EU-trade organic label which would reduce the threshold at which some products can be described as organic but which would introduce new controls for imported products.

CAP (etc.) support details/payments

The European Commission has proposed reforms to the Common Market Organisation which would result in much of the fruit and vegetable industry’s subsidies, which currently total £1.5 billions each year, scrapped with funding directed towards protecting the environment and increasing consumption. The fruit and vegetable sector would be integrated into the Single Payment Scheme.
Defra’s request to allow the four UK regions to set their own modulation rates has not been well received by the European Commission. Proposals are being considered whereby member states could allow modulation deductions of up to 20 per cent but the same rate must apply across a member state. Mariann Fischer Boel believes the UK stance could cause problems for other member states.
Provisional flat rate entitlements for the 2006 Single Payment Scheme are: Non-SDA £31.11; upland SDA other than moorland £25.76; upland SDA moorland £4.39.
The RPA has announced that 20,000 businesses had Single Farm Payments scaled back in 2005 suffering penalties in excess of £15 millions. The main cause was as a result of claims for invalid areas of land and £1 million was lost because claims were submitted late. Cross-compliance breaches were relatively few.
By early 2007, the Rural Payments Agency has still not resolved incorrect 2005 Single Farm Payments made to farmers.
By the end of January more than 20,000 farmers had received their 2006 Single Farm Payments in full.

Grants/regulations/legislation/environment

In the opinion of Andrew Watson, chairman of the Association of Independent Crop Consultations, Defra is likely to declare the whole of England a Nitrate Vulnerable Zone.
Researchers from Reading University have concluded that the Entry Level Scheme will not deliver the Government’s own targets for bio-diversity and will not reverse the decline in farmland bird numbers by 2020.
New European waste directives, which come into force on 15 May, will mean that an exemption licence will be required to burn any kind of waste on land.
A study from the Centre for Ecology and Hydrology has found that climate change is significantly increasing the levels of migratory insects visiting the UK bringing the risk of disease to UK crops.
The third round of bio-energy capital grants in England has recently been opened by Defra providing grants for up to 40 per cent of the difference in cost compared to installing a fossil fuel system. Grants can range from £25,000 to £1m, the closing date is 9 March.
The Biotechnology Research Council has awarded 18 projects grants totalling £13m towards research into crop disease problems and climate change issues using plant science and genetics. East Malling Research Station has been awarded £750,000 to study strawberry wilt disease.
The Seasonal Agricultural Workers Scheme and the NFU are to take a legal challenge against the Home Office after it forced them to give priority to workers from Bulgaria and Romania.
The Agricultural Industry Confederation, Country Land and Business Association and the NFU are to join forces to promote understanding and change to minimise greenhouse gas emissions from farming. A jointly funded study is expected to take 6 months to complete.
Tesco is to run 75 per cent of its distribution fleet on bio-diesel.
Four companies, Thames Water, Southern Water, Sutton & East Surrey Water and Three Valleys Water have lifted hosepipe bans despite forecasts that 2007 may be dry and hot. Bans remain in place in areas covered by South East Water and Mid Kent Water.
A mushroom grower from Norfolk has lost an employment tribunal case involving a migrant worker highlighting the fact that workers from overseas have the same rights as UK staff.
Fresh Direct of Bicester, Oxfordshire has been fined £26,000 for failing to correctly recycle packaging.
The Danish Food Safety Association found chemical traces in 67 per cent of Danish fruit samples in 2005.

Other matters of farm finance and tenure

The Competition Commission has called upon farmers to provide evidence of mistreatment by supermarkets claiming the evidence received to date is inconclusive.
Bank of England base rate rose by 0.25 per cent to 5.25 per cent, the highest level since 2001.
Total Income from Farming reported an increase in 2006 of 10 per cent over 2005 to £2.72 billions with average income per person up to £14,000 from £12,700 in 2005. A better year was had in the arable, potato, vegetable and beef sectors but dairy and sugar beet fell back further. The total includes £2.9 billions of subsidies so without support the industry lost over £200 millions.
English arable land prices rose by 7.5 per cent in 2006 to an average of £3,161 per acre according to agents Strutt & Parker. Most agents believe less land will come to the market in 2007 than in the previous year.
According to agents Knight Frank, the value of farmhouses rose by 11 per cent in 2006 to average £1.24 millions.
The average price of stock-proof fields of up to 6 acres for use as pony paddocks increased to £17,120 per acre in 2006 in the south of England according to agent Woolley & Wallis.
A survey carried out by Royal Bank of Scotland has concluded that diversified enterprises could account for more than 25 per cent of farm business income by 2010. Nearly 40 per cent of farmers have already diversified and diversification activity already accounts for more than 17 per cent of turnover.
A survey conducted by Lloyds TSB has revealed that optimism among Scottish farmers is at a 10-year high with most planning to expand and invest in their businesses.
Defra has published “Farm Business Data 2007”, a handbook to assist farmers in Northern Ireland with financial planning for 2007.

Product prices

A. Crops

Reports on the present favourable growing conditions in the USA, combined with the International Grains Council’s estimated 5% increase in world wheat plantings in 2007, have had a negative effect on wheat futures this month. Despite this, spot prices for wheat have fluctuated marginally around £91/tonne over the course of the month, whilst the milling wheat premium has dropped back sharply over this period, closing the month at £7.50. Barley prices have strengthened over the month as a result of the good export market and pea and bean prices have strengthened steadily on the back of this. The oilseed rape market has weakened slightly in comparison to the recent levels but still remains £30/tonne above 2005 prices. Average prices in late January (£/tonne ex-farm): feed wheat 91, milling wheat 97; feed barley 91; oilseed rape 168; feed peas and beans 95.
The potato market has moved modestly over the course of the month, peaking at £138/tonne but closing where it started at £136. This remains £35 above the market one year ago. Prices are thought to be held back this month by the substantial levels of poor quality samples coming to market. Baker sized tubers are still commanding the best premiums. It is predicted that the best samples are still in storage awaiting higher prices later in the season. Overall trade remains good as packers and processors call in contracts. At the end of the month, King Edwards were achieving between £190 and £200 tonne for quality samples, increasing to £220 tonne for top quality. Top grade Maris Piper samples continue to achieve £230/tonne and good quality, graded baking samples of Estima are still achieving between £270 and £300/tonne.

B. Livestock

The average steer price, after the pre-Christmas boom seen last month, continued to settle back down, ending January at 111p/kg; the level seen at the end of November.
Lamb prices held their level relatively steady this month, finishing the month at just below 100p/kg lw. Bluetongue outbreaks continue to be reported to DEFRA; the newest reports being confined to the eastern side of the Netherlands and West German borders.
The average pig price has commenced the new year by steadily dropping from the opening price of 108p/kg dw down to 106.5p/kg dw.
After numerous press releases, shareholders of Arla Foods UK have finally been offered 71 pence per share by Arla’s Scandinavian parent company in a deal scheduled to be approved on 12 March. The new year has brought with it increased milk quota trading, with values dropping to 1.54ppl for clean, 4% butterfat holdings by the end of the month.

Other crop news

Defra has revised its estimates for the 2006 cereals harvest to wheat 14.735 million tonnes; barley 5.239 mt; rape seed 1.87 mt.
Plantings of genetically modified crops worldwide increased by 13 per cent in 2006 to 252 million acres according to the International Service for the Acquisition of Agri-biotech Applications. In Europe Spain leads the way with 148,000 acres while India had the highest growth worldwide increasing its area to 6.1 million acres.
Root yields from the 2006 sugar beet crop are at levels not matched since 1982 with many growers having harvested over 80 tonnes per hectare. Sugar content has been average at around 17 per cent.
A new web-based wheat disease encyclopaedia has been launched by HGCA.
The Birds Eye factory in Hull is to close by September with production transferring to Lowestoft and Bremerhaven but pea growers have been told that pea processing will remain in Hull.

Other livestock news

The deadly H5N1 virus of avian flu has been confirmed at a turkey farm in Suffolk owned by Bernard Matthews. More than 2,600 birds died on the farm and a further 160,000 have been slaughtered. An 800 square mile restricted zone has been put in place. Concern has been expressed regarding the delays between initials signs of the disease and the time taken by Defra to initiate necessary procedures.
An estimated 60,000 poultry workers are to be offered vaccinations against human flu to counter the risk of workers catching both human and avian flu types at the same time potentially creating a more serious mutated form of the flu virus.
The EU has permanently banned imports of wild birds as a defence against the spread of avian flu.
The Food Standards Agency has asked the European Commission to rule on the legality of selling milk and meat from cloned animals and their offspring after a calf was born to a cloned cow on a Shropshire farm.
Organic cereal prices have not only risen by £95 per tonne since harvest due to poor yields across Europe but supplies are becoming very short leading to the prospect of livestock producers having to resort to conventional feeds and the risk of loss of organic status. The European Commission has proposed to ease the rules in an effort to address tight supplies.
The Soil Association is considering banning Holstein breeds from organic milk production because of animal welfare concerns.
The first ever genetically modified hen has been created by scientists from the Roslin Institute in Edinburgh. The whites of the egg are believed to contain medicinal properties which could be used to fight a variety of diseases.
The EU plans to force the UK to introduce full electronic identification of sheep from January 2008.
A study published in the European Heart Journal has concluded that adding milk to tea cancels out the health benefits of the drink.
Despite a challenge from the NFU, Defra is to press ahead with the extension of premovement testing to cattle over 42 days on 1 March. The NFU claim the policy will destroy parts of the South West livestock industry.
Milk production fell in December to 22.5 million litres below the quota profile. With only 3 months of the quota year remaining, production is 397 million litres below profile.
Milk producer numbers fell by 112 in December to 13,270 according to the Milk Development Council. Nearly 1,000 producers left the industry in 2006. The greatest fall was in the north west while the smallest was in Scotland.
Defra is to be sued for up to £40 millions by a group of farmers who ceased trading during the foot-and-mouth crisis of 2001 alleging negligence. The case surrounds the use of swill as a feedstuff.
West Devon Meat, which had its licence suspended on 1 December, has recommenced taking Over-Thirty Month cattle.
ADAS has been commissioned by Defra to undertake research into the level of animal health planning on English farms. About 2,500 randomly selected livestock farmers are to be consulted.
Morrisons has followed Somerfield in importing free range eggs from Holland to fulfil demand in its discount line of products.
The British Pig Executive has launched a new training programme for pig producers, “Certificates of Competence”.
The English Beef and Lamb Executive has published a free manual “breed a better flock”.
Sainsbury’s is planning to give around 500 beef producers free computers, software and training to enable the farmers to exchange information with their supply chain partners in an attempt to reduce costs and improve the competitiveness of British beef.
The farmer-owned dairy cooperative Arla Foods amba is to acquire the 49 per cent shareholding in Arla Foods UK it does not already own. The move was welcomed by the Arla Foods Milk Partnership.
Calon Wen, a Welsh organic dairy cooperative, has become the first UK dairy company to be awarded the Ethical Trade Organic Standards Certification by the Soil Association.

Marketing

The NFU is to create a “responsibility index” which will rank the UK’s major retailers on labelling, relationships with suppliers, use of Red Tractor produce and standards applied to imported goods.
A Defra Expenditure & Food Survey has found that spending on fruit and vegetables was 7.7 per cent higher in 2005/06 than in the previous year and at the highest level in the past 20 years. Fruit sales increased by 13 per cent, vegetables, excluding potatoes, 6 per cent and potatoes 2 per cent.
The annual growth rate of the UK organic sector has reached 30 per cent amounting to £1.6 billions. While the sector only has 5 per cent of total agricultural land in the UK, 70 per cent of organic foodstuffs sold in supermarkets is UK sourced.
The Eat in Colour campaign has begun, aimed at increasing the consumption of fresh produce.
Asda claims that unwashed potatoes and carrots have a shelf life 3 weeks longer than washed items and that, on average, unwashed vegetables will last twice as long in the homes of consumers.
Administrators are seeking a buyer for Natures Way Marketing which went into administration in December. The company was one of the largest packers and distributors of fresh produce in the UK.

Miscellaneous

An in-depth survey of its membership is to be undertaken by the NFU in an attempt to improve the quality of services offered to members.
Lantra, the employment skills body, is undertaking a survey of the skills of the 300,000 migrant workers employed in the UK to determine if more training is required.
The Country Land and Business Association has launched the “Just Ask” campaign to encourage the public to be aware of the source of food.
The Sector Skills Agreement for England has been launched, supported by the Horticultural Trades Association and the RHS School of Horticulture. A 12-point action plan is designed to improve business performance, develop workforce skills and improve the quality of entrants to the sector.
Defra is seeking tenders for the contract to maintain and curate the National Fruit Collections at Brogdale Farm in Kent.
The total registrations of agricultural tractors over 40hp was 4.3 per cent higher in 2006 that the previous year.
United Auctions, the largest auctioneering and procurement specialists in Scotland, is to be bought by its management from its parent, the Glasgow-based property specialist Elphinstone.
Milk Link has paid £47 millions for Glanbia’s share of The Cheese Company giving it full ownership.
Total Produce has bought Redbridge Holdings to create the largest single UK-based fresh produce supplier.
Lewes Farmers, a farmer controlled buying group, is to cease trading after 44 years.
The Wye College Community Land Trust has been formed with a view to taking a tenancy of the college farm.
Plans are being considered to merge the Pershore Group of Colleges with the nonhorticultural Herefordshire and Warwickshire colleges.
Writtle College in Essex is to create a standalone school of horticulture including a centre for innovation.
The new chairman of English Apples and Pears is to be Sir Ben Gill who will succeed Robin Pooley.
David Walker has been appointed as chairman of the British Potato Council.
A number of members of the farming industry received awards in the New Year Honours List. Professor Howard Dalton, Defra’s chief scientific adviser, received a knighthood; Terrig Morgan, former chairman of the NFU Milk Committee, an MBE; Susan Eades, head of Defra’s TB division, an OBE; Michael Seals, chairman of the National Fallen Stock Company, an MBE; Bill Graham, head of education at Farming and Countryside Education, an OBE.