Farming News Review - January 2005

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

Other crop news Other livestock news Inputs Marketing Miscellaneous

Policy issues

Defra has published “a five-year strategy.” It includes pledges to cut red tape to reduce the administrative burden on producers. It is planning to simplify farm regulation through a strategy to be published in November (2005). Continued improvements to the environment and sustainability are stressed. Critics say the strategy contains little new as far as farming is concerned.
Included in the above strategy is the introduction of greater controls on waste disposal: a proposed new bill will give the government more powers to tackle problems such as fly tipping, litter and abandoned cars. A consultation paper (on the “Agricultural Waste Regulations”) has been published, to which the deadline for responses is 18th March. It could add as much as £65 million to farming costs.
Don (Sir Donald) Curry has unveiled an initiative, called “Fresh Start”, which aims to address long-term structural issues in the farming industry, including attracting new people into farming and helping producers who wish to retire. A booklet, a guide and an information pack have been produced. At least ten farming bodies have been involved in this development.
With regard to the concentration (“stacking”) of SFP entitlements (ref. December issue, I.2) the constraints listed referred only to Scotland. The full details regarding Wales have not yet been reported, but it is thought they will be similar. They do not of course relate to England, where the rules are substantially less restrictive.
Defra has produced a 52-page “Cross-Compliance Handbook for England”, setting out further details of requirements, inspection procedures and penalties for non-compliance. With regard to restrictions on mechanical operations on waterlogged soils (ref. December issue, I.3) it concedes that farmers will be permitted to harvest crops of vegetables or fruit to meet contractual deadlines or where they are in danger of deterioration if not lifted.
A campaign initiated by the Farm Consultancy Group and taken up by law firm Burges Salmon is aiming to challenge Defra over what is regarded as the unfairness of the CAP reform of the dairy sector in England compared with the other UK countries. The campaign has been well supported by English dairy farmers as regards funding.
Defra has decreed that all those who have grazing rights to common land will have access to the Single Farm Payment, whether or not they use them. This decision has been widely condemned, by the CLA and others.
Defra has provided further information on how awards will be calculated to farmers who apply to the National Reserve.
Six member states, including the UK, have called for EU spending on agriculture, including rural development, to be cut to 1% of gross national income post 2007 as compared with the 1.14% planned. This has been rejected by budget commissioner Grybauskaite.
EU heads of state have approved the accession of Romania and Bulgaria in 2007 and agreed to start accession talks with Turkey next October.
Defra has forecast that Total Income from Farming (TIFF) in the UK in 2004 will be 0.2% up on 2003 (at £3.24 billion), which means 2.6% lower in real terms. These are calendar year figures and of course cover all crop and livestock enterprises. Harvest year figures for mainly combinable cropping farms would obviously show a considerable drop.
The new United States agriculture secretary, replacing Anne Veneman, is Mike Johanns, governor of Nebraska, which is the fourth largest US agriculture exporting state and the fourth most heavily subsidised.
French farm minister Hervé Gaymard has been promoted to Finance Minister. He was the EU’s toughest farming minister as regards defending farmers’ interests and charmed the birds from the trees at the 2003 Oxford Farming Conference. His replacement is Dominique Bussereau, who has few agricultural connections, which is unusual for French farm ministers.

CAP (etc.) support details/payments

The definitive rates for the 2004 Arable Area Payment scalebacks for England and Scotland have now been set. All are lower than both the provisional estimates and last year’s levels. They are 0.31% for England (66.84% for maize) and 1.41% for Scotland. The final payments, after modulation (3.5%), are therefore as follows (£):

	England		Scotland non-LFA		Scotland LFA
	Per ha	Per acre	Per ha	Per acre	Per ha	Per acre
Cereals, Oilseeds,Linseed, Set-aside	236.79	95.83	225.47	91.25	207.18	83.84
Proteins	272.36	110.22	261.04	105.64	242.75	98.24
Maize	78.76	31.87	225.47	91.25	207.18	83.84
Durum Wheat	296.32	119.92	-	-	-	-
Energy Crops	28.80	11.66	28.80	11.66	28.80	11.66

There were no scalebacks in Wales and Northern Ireland. Their payments were given in the MFU August 2004 issue.

Grants/regulations/legislation/environment

The EC has as last agreed that the government can introduce the Entry Level Scheme (ELS) and a Higher Level Stewardship (HLS) in England next spring. The ELS will enable farmers to earn up to £30/ha (£12/acre) if they meet prescribed environmental standards and apply for larger amounts by delivering higher levels of environmental management.
A third region, Southern England, has been opened up under the Countryside and Rights of Way Act.
Customs and Excise and the Treasury have issued a joint consultation paper suggesting that ways need to be found to discourage “inappropriate road use by tractors.” It claims that misuse of red diesel on public roads is costing the Exchequer close to £0.5 billion a year.
The Environment Agency employs approximately 11,500 people and costs close to £850 million a year.
A Norfolk pig farmer has been served with an anti-social behaviour order (Asbo) because his free range pigs (he has a herd of 100) frequently get out into neighbours’ gardens and farms and create other hazards. His six geese were included in the order. This “animal Asbo” is unprecedented. The order was breached within hours of its being imposed, the pigs escaping twice despite the erection of a new fence. The farmer has demanded the right to have his case decided by a crown court jury and is considering mounting a legal challenge against the Asbo.
A Gloucestershire farmer has been fined over £2,000 for polluting the River Severn with slurry.

Other matters of farm finance and tenure

The Farm Business Advice Service, which was due to close in March, has been extended until at least September 2006.
Richard Lole, Barclays’ national agricultural policy director, has left the bank to take up an agricultural post in the Isle of Man. Euryn Jones Barclays’ agricultural specialist for the last six years, takes his place. Martin Redfearn takes over Euryn Jones’ vacated position.
FPD Savills has acquired the West Country firm Colvilles, which has offices in Exeter, Tavistock and Bodmin and concentrates on managing rural estates in the region. This follows Savills acquisition of Smith Woolley in October (ref. November issues, IV.5)
The sterling value of the euro was just over 69p during the first half of December, but then began to fall; the average value during December will determine the level of Single Farm Payments for 2005. Early in the month the dollar value of the pound rose above 1.95 for the first time since September 1992, but fell back later.

Product prices

A. Crops

In a very flat market the feed wheat price drifted downwards a little during the first half of December. The feed barley price stayed three or four pounds a tonne above feed wheat, partly because the supply situation for barley is tighter and partly because intervention has lifted the barley price. EU wheat export aid in the New Year looks to be a strong possibility. The ex-farm futures price for feed wheat is currently £63 at 2005 harvest time and £70 for February 2006.
Average prices in mid-December (£/tonne, ex-farm): feed wheat 61, milling 85; feed barley 64; oilseed rape 133; feed peas 80, feed beans 79; potatoes 84.
The poor August weather has caused a shortage of good quality straw and thus higher prices. At a recent sale in the midlands wheat straw averaged £52/tonne for small conventional bales (50 a tonne) and barley straw £56/tonne.

B. Livestock

Finished steer prices rose from an average 94p/kg lw to above 96p during the first half of December.
Finished lamb prices reached some 110p/kg lw in mid-December.
The average pig price stayed remarkably steady at a very close to 100p/kg dw.
No further changes in ex-farm milk prices were announced by major buyers during November. Dairy Farmers of Britain is to introduce new liquid and compositional milk prices from 1st October next year. The Office of Fair Trading is to investigate retail milk pricing initiatives implemented between 2000 and 2003 (notably the 2ppl rise in July 2003), to the great annoyance of farmers and their representatives.
Robert Wiseman Dairies announced that it will be forced to make a 0.5ppl price cut if Arla does not reinstate its cut. Asda has agreed to talks with Farmers For Action and Arla. The alliance of farming groups formed at the 2004 Royal Show is backing the setting up of a single milk selling agency, first proposed by Farmers For Action chairman David Handley.
The Milk Development Council has devised a new formula, the Milk for Cheese Value Equivalent, to give an indication of the value returned by processing milk into mild Cheddar and its by-products.

Other crop news

There were 16 consecutive days without significant rainfall over England and south-east Scotland prior to 14th December, which is exceptional for the time of year. By contrast it rained every day during this period in the Highlands and Islands of Scotland. Generally across the UK crops are looking well.
There has been a bumper sugar beet crop, with sugar content holding up well. Deliveries to the Allscott factory in Shropshire are again experiencing delays owing to further repairs taking place.
Winter wheat plantings have been very similar to last year; more Group 2 varieties have been sown, less Groups 1 and 3. The areas of winter barley and oats are well down, that of oilseed rape is up.
Grain storage problems (mould and pest infestations) are rising owing to insufficient drying on many farms following the wet harvest.
The four-year BRIGHT study of GM herbicide-tolerant oilseed rape and sugar beet, conducted by the NIAB (scientific co-ordinator: Dr Jeremy Sweet), has concluded that these crops offered growers cheaper, more flexible weed control with no apparent environmental downside effects.
The British Potato Council is proposing that levies stay the same as last season, which will require cost savings of 5%.
British Sugar plans to build a £25 million plant next to its Wissington factory in Norfolk to turn sugar beet into biofuel. Some 600,000 tonnes would be needed, to produce 55,000 tonnes of bioethanol a year.
The Guardian published an article by columnist George Monbiot attacking the growing of crops for renewable fuel, arguing that they would result in a humanitarian and environmental disaster, because forests would have to be destroyed to provide the required area of land; motorists, he says, obviously have greater purchasing power than starving people. His views have been swiftly rebutted.
LEAF is to launch a new scheme shortly aimed specifically at cereal growers to link them more closely with consumers. At Smithfield it launched its new online directory, listing details of all farms growing produce meeting its standards.

Other livestock news

UK milk production was again below profile in November, as it has been in all eight months of the current milk year. The cumulative, butterfat-adjusted deficit is now 195 million litres, nearly five days’ supply. The chances of reaching the yearly quota are thought to be virtually nil. The value of quota in mid-December was 6.9ppl to lease, 12.2ppl to buy (both at 4% BF).
The government has announced that the Over-30 Month Scheme (OTMS) will be phased out between July and September 2005 and replaced by BSE testing. The Date Based Export Scheme will follow suit in November. At the peak of the BSE epidemic, in 1992, 37,000 cattle were diagnosed with the disease; the number in 2003 was down to 610; in 2004 there were 266 cases up to 31st October.
The firm Class Law Solicitors is leading a £2 billion lawsuit against the government, alleging that the delays in handling the Foot-and-Mouth outbreak in 2001 amounted to gross negligence. It is acting on behalf of some 2,000 rural workers, including hoteliers and shopkeepers as well as farmers.
Standstill rules for farmers who bring new animals onto their holdings, which were introduced following the foot-and-mouth outbreak, have been relaxed in Northern Ireland.
Defra is proceeding with plans to turn the State Veterinary Service in Great Britain into an executive agency from 1st April 2005. Serious concerns about this move have been expressed by vets and industry leaders, but the government claims it received broad backing in its consultation on the issue.
Defra has launched a new internet site, “The Veterinary Surveillance Website”, which brings together animal disease surveillance information for the first time.
The results of the year-long, £500,000 study of the eating quality of Scottish meat (the Meat Eating Quality Project), led by SAC, have been reported. They endorse Scotland’s high reputation in quality meat production.
The 2004 British Grassland Society award has been won by Angus Golightly, who worked for ICI and Zeneca for 37 years until he retired in 1999, including being farm manager at Jealott’s Hill Research Station.

Inputs/Supply businesses

Cheshire-based NWF Agriculture, a subsidiary of the NWF Group, has acquired JGW Thomas & Sons, a major ruminant feed manufacturer based in Devon, for £3.6 million.

Marketing

Banks Cargill Agriculture and Allied Grain are to combine in a joint venture, making it the UK’s second largest grain buyer. The new company will be named Frontier, with 50% owned by each partner. It will buy around four million tonnes a year, with a turnover of 700 million and is expected to begin operating in March. The deal is subject to clearance from the Office of Fair Trading.
Arla Foods, Europe’s largest dairy processor and market leader in both Denmark and Sweden, and Campina, in the Netherlands, the second or third largest, are to merge. The combined business (“Campina Arla”) would have sales of £7 billion, employ 25,000 people and control 13% of Europe’s milk supply. The deal has been agreed but ratification will take some time. Both are co-operatives, with 21,000 combined shareholders, who have to approve, as do competition authorities and the EC.

Miscellaneous

A new booklet has been launched, “Farm, Food & Country”, to proclaim the case for British agriculture: its contribution to both wholesome food production and the countryside. Essex farmer Guy Smith has led the production of the booklet.