Farming News Review - January 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

It is expected that 2007 could see a big shake up to the administration of the Common Agricultural Policy and, if accepted by agriculture ministers, proposals could be in place for 2008. It is thought that committees will be streamlined and a single marketing approach will be introduced for all commodities.
The Rural Payments Agency has had its 2007/08 budget cut by £21 millions to £225 millions.

CAP (etc.) support details/payments

The RPA has announced that nearly 20,000 businesses were penalised under the 2005 Single Payment Scheme a total of over £15 millions. The bulk of the deductions were as a result of claims on invalid areas of land.
Latest figures show that 480 claimants have still to receive any 2005 Single Farm Payment while 1,254 claimants are awaiting a balance figure.
All Fruit, Vegetable and Potato entitlement allocations should be published in the first few days of this month. All claims based on 2003 should receive a full allocation, claims based on 2004 cropping will be scaled back while there will be no allocation based on 2005 production.
Environmental Stewardship schemes will remain open to new applicants despite continued uncertainty over funding levels.
Hill Farm Allowances are to continue until 2009 but farmers in Disadvantaged Areas will cease to receive any payments from 2008. In 2010 HFAs will be replaced by the Upland Entry Level Stewardship scheme.

Grants/regulations/legislation/environment

A new Bioenergy Capital Grant scheme has been launched. The scheme will last for 5 years and will support the installation of biomass-fuelled heat and combined heat and power projects. The application window only lasts 10 weeks.
The Environment Food and Rural Affairs committee, a cross party group of MPs, has heavily criticised the government’s vision for the role of bioenergy claiming it lacked ambition.
The Renewable Energy Foundation has claimed it is unrealistic for the government to expect 75 per cent of the 2010 bioenergy target to be supplied by wind power.
The Nuffield Farming Scholarships Trust is offering a bursary of £5,000 towards the cost of research to generate a study on farming’s relationship to climate change.
The upper limit for material awaiting composting in Scotland under the Waste Management Licensing system has been raised from 400 tonnes to 1,000 tonnes at any one time.
Defra has invited applications for funding for projects to deliver farm health planning in the cattle sector as part of its Animal Health and Welfare Strategy in Great Britain. Funding is available for initiatives which deliver training and advice to farmers and their advisers.
Hall Hunter Partnership has lost its appeal against Waverley Borough Council’s enforcement notice for the removal of Spanish polytunnels from its farm in Surrey. Despite comments from government ministers that polytunnels were “vital to the success of strawberry growers”, much concern has been expressed as to the implications for the soft fruit industry.
Defra has published “Maximising Outcomes, Minimising Burdens”, a plan to cut the burden of regulation by 30 per cent by 2010. It is estimated this could save the farming industry £158 millions. The plan includes endeavouring to persuade the EU to agree to the removal of Fruit, Vegetable and Potato authorisations.
Friends of the Earth wants the Competition Commission to introduce strict rules to govern the way supermarkets deal with their suppliers under the supervision of an independent regulator.
Research published by the University of Newcastle suggests that countryside bird species would benefit if agri-environment schemes were tailored to the specific needs of each region.
The Good Farming, Better Environment report was published last month by the Environment Agency, NFU, NFU Cymru and Farmers Union of Wales. It shows that serious water pollution incidents caused by farming have fallen by 92 per cent since 1990 and greenhouse gases have fallen by 12 per cent since 1996. While over 4 million hectares have been put into agri-environment schemes, soil erosion is costing UK farmers £8 millions per year even though 75 per cent of farmers think they do not have a soil erosion problem. The report is available on www.environment-agency.gov.uk

Other matters of farm finance and tenure

The Transport and General Workers Union has reached agreement with S & A Produce, the UK’s largest strawberry grower, resulting in the union being allowed access to the company’s sites and to assist in negotiating collectively on the working conditions of migrant workers.
The first auction sale of Welsh entitlements resulted in Entitlements reaching 2.26 times the value of the 2006 Single Payment.
According to Savills, just over 174,000 acres was marketed across the UK in 2006, almost identical to 2005 and much lower than expected. Average prices rose by 14 per cent, fuelled partly by 40 per cent of land sales being to “lifestyle” buyers.

Product prices

A. Crops

Following the restrictive measures introduced by Ukraine, Croatia and China in previous months, and the market’s absorption of this information, the market has relaxed slightly. Recent market attention has been focused on 2007 harvest plantings; forecasting an approximate 9 per cent increase in area put down to grain and suggesting another year of fluctuating grain prices, with risk of lower price levels compared with those seen this year. Wheat prices have dropped back marginally in the month, whilst the milling wheat premium has moved slightly over the same period, dipping below £10 early on, but closing the month at £10.50. Barley prices remained quite steady, but dropping slightly by the end of the month. Pea and bean prices followed the same trend, as did oilseed rape prices. Average prices in late December (£/tonne ex-farm): feed wheat 90, milling wheat 98; feed barley 87; oilseed rape 171; feed peas and beans 89.
Annual festivities have not had a strong effect on the potato market as most packers and processors have planned their throughput well in advance. The average market price at the Christmas shutdown finished £13 above November’s closing level and £40 above the market at the same time in 2005. Tuber size is still defining the top end of the market with premiums for samples with high baker content. Overall trade remains good as packers and processors call in contracts, but prices are showing signs of weakening as many producers are cashing in on current price levels. King Edwards are achieving between £170 and £200/tonne for quality samples; best graded samples achieving £250/tonne, whilst top grade Maris Piper samples continue to achieve £230/tonne. Top quality baking samples are achieving between £250 and £300/tonne.

B. Livestock

Market estimates for the amount of beef on the Christmas table were clearly too low as a last-minute demand for animals saw the average steer price jump from the November close of 111p/kg lw up to 120p/kg lw. Prices dropped back as more animals came to market, finishing at 113p/kg lw as the markets closed.
Lamb prices continued to fluctuate around 100p/kg lw, peaking at the beginning of the month at 104p/kg lw but finishing back at 100p/kg lw. The frequency of reports of Bluetongue outbreaks continued to tail off over the course of the month; the most recent outbreaks occurring in western Germany.
The average pig price held steady at the start of the month at 107.5p/kg dw and started to move back up in the latter half to finish at the Christmas close just below 108p/kg dw; still some 6p/kg higher than the same time last year. Concerns of a ban on the import of EU animal products into Russia, which would have the most marked affect on the pig market, were laid to rest as agreement was reached just before Christmas.
This month it was published in a report by the Institut de l'Elevage that UK dairy farmers have one of the lowest ‘average cost of production per litre’ figures for milk in the EU. Whilst complementary to the efficiency of UK dairy producers this report will not add any strength to the farmers’ ongoing “fair pricing” battle with processors and supermarkets. Milk quota values held steady at 1.97ppl for 4 per cent butterfat as Christmas took hold and interest in the market waned. The possibility of cross-border trading of quota could lead to a more volatile quota market in 2007, but until such time as trades are permitted the market is unlikely to move considerably.

Other crop news

Initial estimates show the EU wheat area for 2006/07 as having increased by one per cent following larger sowings in Germany, Italy and the Czech Republic. The winter barley area is unchanged but the rapeseed area may be up by 10 per cent as a result of biodiesel demand. In the UK winter wheat plantings are up by about 3 per cent.
The European Commission has announced that maize intervention will end in 2007.
Onion prices are at their highest levels for 8 years, mainly the effect of last summer’s weather on production. The UK crop is estimated to be down 55,000 tonnes on 2005 while across Northern Europe production is estimated to be down 1 million tonnes.
The British Potato Council has refused to support UK trials of genetically modified potatoes until the general public has a better understanding of the technologies involved.
Sainsbury’s is proposing to have a sole supplier of leeks, Rustler Produce of Chatteris.
An attempt by the EU Commission to force Austria to lift a unilateral ban on the use and sale of two genetically modified maizes within its territory has been blocked by EU environment ministers.
The limit of organic manure which can be applied to arable land in Nitrate Vulnerable Zones decreased on 19 December 2006 from 210 kg/ha a year to 170 kg/ha.
The Organic Growers Alliance has been formed by producers who feel an independent organic body is needed to represent their interests which has not been the case since the Organic Growers Association was absorbed into the Soil Association.
GrainCo, the north of England’s largest grain trading and marketing firm, reported profits up 83 per cent to £344,000 in the year to June 2006.

Other livestock news

The latest figures published by the NFU show that English and Welsh dairy farmers lost a total of £270 millions in the year to September 2006, an average of 2.52 pence per litre.
Dairy Crest and Arla have both started talks with retailers with a view to price increases. It is widely expected there will be a 2 pence per litre increase for organic producers.
Milk output in November was 27 million litres below profile, increasing the shortfall for the milk year to date to 388 million litres.
It is estimated that more than 500,000 families will be eligible for free milk under Healthy Start, a government sponsored health scheme.
A group of 100 west Wales milk producers is to bid for the Dansco dairy at Newcastle Emlyn, Carmarthenshire.
The president of Genus Americas, Ian Biggs, has forecast a 67 per cent increase in global meat consumption over the next 25 years with lamb increasing by 64 per cent, pork 57 per cent, beef 48 per cent and chicken the largest increase at 108 per cent.
Beef sales in Wales rose by 8 per cent in the 12 months to October 2006 compared with a rise of only 1 per cent nationally. Lamb sales in Wales rose by 17 per cent, only 3 per cent nationally.
The EU’s sheep forecasting group estimates production in 2006 will be, at just over one billion tonnes, one per cent less than in 2005 as a result of falling production in the UK, Ireland, France and Spain. In 2007 a 4 per cent fall is forecast despite the EU only being 80 per cent self sufficient.
Independent pig consultant, Peter Crichton, believes 2007 could be a good year for UK pig producers but remains concerned about imported pigmeat given that prices on the Continent are well below those in the UK. Over 80 per cent of UK production is now contracted to processors.
The Caernarfon-based abattoir which collapsed in 2004 with debts of over £3 millions is expected to reopen under the management of Cig Cibyn.
Glenrath Farms, Scotland’s largest egg producer, is planning a new £8 million facility at Blythbank.
Madron Meat Colmpany of Penzance, Cornwall’s only Older Cattle Disposal Scheme licenced abattoir, has closed as a result of rising regulation and red tape. The nearest approved abattoir is now in Langport, over 150 miles away.
Defra has suspended the OTM licence of the West Devon Meats abattoir at Hatherleigh following the discovery of irregularities in the sampling and labelling of brain stems.
A 12 week consultation period began at the start of December concerning the labelling of food with information concerning the welfare conditions of the animal from which it was produced. The Animal Welfare Delivery Strategy has been published by Defra to “increase society’s understanding and expertise in caring for animals, and to improve welfare beyond the baseline standards set by law”.
Defra has launched a consultation document on the principles of sharing the costs of future animal disease outbreaks with the farming industry.
The Ram Genotyping Scheme is under review as the government considers it is no longer serving its purpose as a human health protection measure.
Just under 24,000 premises in England, Scotland and Wales have registered more than 258 million birds since the Great Britain Poultry Register was introduced a year ago to help reduce the impact of an avian influenza outbreak. Registration is mandatory for farms with more than 50 birds.
The Food Standards Agency has announced the deregulation of butcher’s licensing fees, saving the red meat industry £13 millions per year.
A former government veterinary surgeon who now works for the Veterinary Association for Wildlife Management, John Gallagher, believes the UK badger population now exceeds one million and that as many as 250,000 could be affected with bovine tuberculosis.
The England Implementation Group has published a report, Building a Better Future for England’s Kept Animals, on Defra’s strategy towards tackling bovine tuberculosis. The report is highly critical of Defra’s prevarication.
Meanwhile outbreaks of bovine tuberculosis increased by 10 per cent in October making the overall increase in 2006 up by 13 per cent over 2005.

Inputs/Supply businesses

Kemira GrowHow has launched Loris, a new service to better target nitrogen dressings, claiming consistent yield benefits of over 10 per cent.

Marketing

Defra economists claim that moves by supermarkets and the food service sector to source more food from abroad are good for society! It argues that trends in self-sufficiency are a misleading indicator of food security and that sourcing food from abroad reduces the risks posed by harvest failure, animal disease outbreaks or natural disaster.
The East of England Development Agency is to launch a campaign called Eat East – Nearer Fresher Better, to help producers meet demand for local produce. A steering group of 12 farmers and food producers from the region is being formed to ensure the £120,000 committed to the campaign is invested in projects which benefit the sector.
A report produced by Rabobank, the Dutch agri-bank, predicts that China will overtake Holland and become the world’s biggest fresh-produce exporter within 3 years.
The Cornish food economy has increased by 50 per cent since 2003, substantially above the national average, according to a report The UK Food Market.
Fresh Direct has been awarded a contract to supply catering and facilities management services provider Sodescko with all its fruit and vegetables.

Miscellaneous

The NFU has launched a 15 month campaign “Why Farming Matters”. It aims to highlight to the public the positive contribution that UK food production makes to the nation and the implications of increased imports.
Robert Balicki has been appointed chief executive officer of Worldwide Fruit. At the same time the company announced an investment of £5 millions into a new ripening and packing facility in Spalding.
Fresh Produce giant Fyffes has demerged into Fyffes, which will concentrate on bananas, pineapples and melons while Total Produce will supply a full range of fresh produce.
The McCormick tractor plant in Doncaster is to be closed by The Argo Group with the loss of 350 jobs. Production will be transferred to Italy.