Farming News Review - February 2009

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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

Natural England is drawing up plans to force farmers to manage up to 5 per cent of their land for “environmental purposes”. The so-called XC1 proposals are still being formulated with a consultation paper expected in the Spring. Natural England has admitted the proposals could create difficulties for many farmers in Entry Level Schemes.
The Soil Association has set a target of 2050 for all UK agriculture to be organic to ensure food security and improve sustainability.

CAP (etc.) support details/payments

Cross-compliance breaches in 2009 will result in 3 per cent reductions from Single Farm Payments. The Rural Payments Agency, which has previously adopted a “light touch” approach to breaches, has been criticised by European Commission inspectors.
The Rural Payments Agency has met its first target by distributing 75 per cent of Single Farm Payments by the end of January.

Grants/regulations/legislation/environment

Defra has created The Food and Environment Research Agency, bringing together the Central Science Laboratory, the Plant Health Division, the Plant Health and Seeds Inspectorate and the Plant Variety Rights Office and Seeds Division.
Farmers wishing to appeal against the designation of their land within nitrate vulnerable zones have had the appeal period extended to 10 March.
All the UK’s leading grocery retailers have now signed the Courtauld Commitment, an industry-wide food waste reduction objective. The signatories have agreed to work together to reduce the amount of food the nation’s householders throw away by 155,000 tonnes by 2010, against a 2008 baseline.
Growers wishing to appeal against the designation of their land within nitrate vulnerable zones have had the appeal period extended to 10 March.
Protected crops nurseries have had their energy saving target for the next two years set at 20 per cent under the Climate Change Levy rebate scheme, up from 12 per cent in the two years to 2008.
The Welsh Rural Affairs Minister, Elin Jones, has set up the Wales Land Use Climate Change Group to advise the Assembly Government on how agriculture can meet the challenge of food security while reducing greenhouse gas emissions.
Scottish farmers are being invited to apply for the 2009 Future Farmer Award which gives a £4,000 prize to a farmer who has managed land in a sustainable way.

Other matters of farm finance and tenure

A High court judge has ruled that the decrease in VAT to 15 per cent in December may postpone all rent reviews where tenants are charged VAT for three years. The implication is that a further postponement can occur when the VAT reduction is reversed.
The European Commission has challenged the UK government to correct “discriminatory” Inheritance Tax legislation. The matter concerns Agricultural Property Relief which is available on UK held property but not on land held overseas.
Agricultural income per worker rose by 7.2 per cent in the UK in 2008. Across the EU the average increase was 4.3 per cent. France fell by 9.2 per cent and Ireland by 9 per cent.
The latest report from Plimsoll into the UK fresh produce industry finds that almost 15 per cent of the UK’s leading companies are in the danger category. Of the 149 firms rated as being in danger, 63 increased their debts last year and are carrying almost twice the recommended maximum level of debt.
Braemar Group’s UK Agricultural Land Cell has bought a 280 acre Grade II arable farm in Suffolk for £1.37 millions, its first investment.

Product prices

A. Crops

In its most recent revision, the International Grains Council has marginally increased its world estimates for the 2009 crop, forecasting that production of total grains will be 1,788Mt (up 19Mt); with wheat representing 687Mt of this total (up 4Mt). After a marked post-Christmas decline in market prices, reports of excessively cold winter temperatures in Northern USA and drought conditions in South America, particularly Argentina, combined with strong demand from China and the still-weak sterling lead to stronger markets for cereals, oilseeds and pulses alike. LIFFE wheat futures improved by a fair margin in the latter stages of January, delivery in July and November 2009 and November 2010 were up overall by £10, £9 and £10 to £125, £130 and £135 respectively. Average prices in late January (£/tonne ex-farm): feed wheat 112, milling wheat 153; feed barley 101; oilseed rape 254; feed peas and beans 120.
Average potato prices, opened the month by climbing, albeit marginally, to peak at£122/tonne but proceeded to drop back to £115/tonne over the following weeks. The market is currently being masked slightly by the amount of lower quality crop being traded as supermarkets and packers are focusing on value product. As growers with better quality samples continue to hold on to their stocks, buyers are starting to increase offered prices. Opening at £121/tonne, the average price by late January was marginally down, at £118/tonne, £32/tonne below the price in January 2008. The free market price sat £5 below the average price at £113/tonne, £49 below the price a year earlier. In late January King Edward were making between £120 and 145/tonne; Desiree prices ranged from £100 to £135/tonne, with best samples reaching £150/tonne; Estima were
achieving £75 to £100/tonne for packing material and up to £140 for samples with good baker content. Maris Piper continue to command prices of between £80 and £130/tonne for grade general packing samples, up to £160/tonne for quality.

B. Livestock

The average steer price, having opened in a relatively strong position at 158p/kg lw, continued to improve in early January reaching 165 p/kg lw. However, in the latter part of the month prices relaxed slightly to a closing position of 159p/kg lw, 37p/kg up on those a year earlier. Heifers, having peaked above 170p/kg early on, also stood at 159p/kg lw by the end of January.
UK average lamb prices improved overall in January. Starting the month at 136p/kg lw
after a strong December, prices improved early on, peaking at 160p/kg, but dropped back to 155p/kg lw by the end of January to sit 45p/kg above prices a year earlier.
The average pig price rose very gently throughout January to close at 132p/kg dw, up 2p on prices in December 2008 and 22p/kg on January 2008.
The average farmgate milk price for November (reported in January) recorded a reduction in the average milk price of 0.23ppl to 27.08ppl, being 0.19ppl below prices a year earlier. The market suggests that prices have continued to fall throughout December and January and pressure has been applied to markets throughout Europe, leading the EU Agricultural Commission to reintroduce export refunds. Milk quota prices stabilised this month and regained some value to close just above 0.25ppl for clean holdings (4% butterfat).

Other crop news

With effect from 1 February cereal growers will have to ensure wheat passes stringent
deoxynivalenol mycotoxin testing and millers will not accept loads unless the relevant test results are provided.
The Processors & Growers Research Organisation has announced that it has seen an increase in the number of winter and spring bean samples testing positive for stem nematodes. About 20 per cent of all beans tested had been infested. The nematodes are able to multiply and remain viable in the soil for over 10 years.
Trials carried out at Langmead Farm, Chichester have found that green-waste compost can increase yields by 9 per cent in baby leaf spinach and 17 per cent in Romaine lettuce.
The Government has allocated £2.3 millions to the National Bee Unit to improve beekeeper husbandry. A further £400,000 is to be allocated to bee health research every year for the next five years to develop medicines and to breed bees resistant to the killer varroa mite.
The PGRO has published its 2009 edition of the Pulse Agronomy Guide.
The Thermal Pest Control concept is being launched across the EU. The technology uses a stream of hot air to reduce pesticide use and also helps speed up the photosynthesis process.
New Zealand is forecasting an export crop of apples and pears 309,000 tonnes, an increase of 16.5 per cent over 2008. Only 2 per cent of the total is pears.

Other livestock news

Defra has confirmed that farmers will not be required to electronically tag sheep intended for slaughter before 12 months. The exemption is expected to save the industry between £8 to £11 millions each year.
The National Sheep Association has taken responsibility for the semen archive established by Defra as part of the National Scrapie Plan. It has secured the database of 1,500 samples from 75 breeds.
Defra has announced that new EU guidelines, due to come into force in June 2010, will provide a legal baseline for all poultry producers and will introduce monitoring of birds at the slaughterhouse. The rules include new limits for ammonia and carbon dioxide and standards for temperature, humidity and maximum stocking density as well as requirements for training.
MEPs on the Environment Committee have voted to increase the rules of the Integrated Pollution Prevention Control Directive. The new rules will lower the poultry threshold, include on-farm feed mills and liquid feed preparation units and cover off-site manure spreading. Farmers currently operating under the Directive will face additional monitoring, reporting and inspections.
Sainsbury’s is to stop selling battery eggs with effect from February 5 and all its “Taste the difference” brand free range chicken will have been reared in a woodland environment.
Turkey producer Bernard Matthews is to cut 130 jobs at its Norfolk processing plant.
Robert Wiseman Dairies has reduced its milk price by 2.2ppl with effect from 1 February bringing the standard litre price down to 25.02 ppl. Dairy Crest suppliers on a standard liquid contract will suffer a reduction of 1.75 ppl.
The European Union is to reintroduce export refunds for butter, cheese and milk powders to help the dairy industry as a result of world market prices falling below EU intervention levels.
The number of dairy farmers in England and Wales fell by 646 or 5.1 per cent in the year to November 2008 while in Scotland the fall was 28 to 1,143.
In the year to March 2008, less than 4,000 dairy farmers produced 57 per cent of total production. 84 farmers produced more than 4 million litres each.
The Jersey Cattle Society has reported a 14 per cent increase in the number of UK-born animals registered in 2008. Semen sales increased by 37 per cent.
The Welsh Assembly Government has outlined plans to overhaul bovine TB payments by linking compensation pay-outs to good farming practices and disease control measures.
Total export volumes of beef and sheep meat for the first 10 months of 2008 were 30 per cent up on the equivalent period for 2007.
A consultation document prepared by Hybu Cig Cymru proposes a major revamp of the Welsh red meat industry. It suggests there is huge potential for Welsh lamb and beef.
MPs from the specialist Environment, Food and Rural Affairs committee have advised Defra to set up a Pig Industry Task Force to tackle supply chain issues, public procurement, productivity, funding into pig diseases and to ensure clear and unambiguous labelling.
The RSPCA has launched a campaign to persuade supermarkets to enter into a voluntary labelling agreement on pork products.
The Co-operative Group has signed up 300 British pig farms so as to source its entire range of own-brand bacon, gammon and fresh pork in the UK.
The Scottish Agricultural College is to conduct research into testing animals for groups of related genes rather than individual genes to determine genetic signs which influence health and welfare.
A research project has been launched at Bangor University to investigate the immunity levels of farmers and abattoir workers to E.coli 0157.
The Royal Smithfield Club is to move its Primstock competitions and livestock show to Stoneleigh Park.

Inputs/Supply businesses

As expected MEPs voted to adopt controversial proposals to restrict pesticide usage. The Plant Protection Products Directive 91/414/EEC will introduce cut-off criteria and substitution of crop protection products on a risk-based approach. 22 crop protection substances will be banned over the next decade.
Bayer CropScience has launched Fungicide Rudis which is licensed for use on cabbages and leeks. The company claims the fungicide will increase marketable yield from 58 per cent on untreated crops to 96 per cent.
The first cargo of phosphate to dock in the UK since September is expected to reduce prices by around £200 per tonne on average blends.
The Co-operative supermarket has prohibited the use of neonicotinoid – based pesticides on its own-brand fresh produce as part of a 10 point strategy designed to help the decline in the bee population.
The Crop Protection Association has published a new booklet “An introduction to Plant Protection Products”, designed to explain to the public the need for crop protection in food production.
DowAgroSciences is to establish a new UK research base on the Warwick Enterprise Park at Wellesbourne, closing its existing research farm at Marcham, Oxfordshire.
The 22nd issue of The UK Pesticide Guide has been published.

Marketing

The Agriculture and Horticulture Development Board has agreed to provide £500,000 to promote a cross-industry scheme in support of the Red Tractor Logo. However, only Bpex, DairyCo, Eblex and HGCA have agreed to contribute funds, HDC is yet to decide while the Potato Council has refused.
A poll commissioned by Traidcraft has revealed that 8 out of 10 shoppers want a watchdog appointed to monitor and penalise supermarkets that treat suppliers unfairly.
Tesco has reported its slowest Christmas period since the early 1990s. The supermarket reported that sales increased by 2.5 per cent in the 7 weeks to January 10. Asda sales rose by 1.2 per cent in December. Marks & Spencer is to close 27 stores after its sales fell by 7.1 per cent in the 13 weeks to December 27.
Scottish potato merchant William Law & Son (Potatoes) Ltd has gone into liquidation.
Total Produce is in discussion with the 40 staff at its Norwich depot with a view to
closure.

Miscellaneous

The Royal Bath & West England Society is to spend £120 millions to create a new exhibition and conference centre, hotels, a business park, holiday homes, an activity centre and retail park on the Somerset showground.
In 2008 registrations of tractors over 50hp increased by 10 per cent when compared to 2007. John Deere took 29.3 per cent of the tractor market in 2007 compared to 25.8 per cent in 2006. New Holland took 22.4 per cent followed by Massey Ferguson and Claas. McCormick slipped only taking 4.9 per cent of the market.
Vion Food Group, which took over Grampian Country Foods last year, is set to cut 470 jobs at its Haverhill site in Suffolk, 200 at Malton, North Yorkshire and 150 at Cambuslang, Scotland.
The New Year’s Honours list included a CBE for Professor Colin Dennis, director general at Campden BRI and an OBE for Professor Wynne Jones, principal of Harper Adams.