Farming News Review - January 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

An agreement between the French EU presidency and the European Parliament could result in between 14 and 23 per cent of crop protection products being banned. The“compromise text” will be voted on by MEP’s on January 12. The proposals include the banning of highly toxic chemicals which are genotoxic, carcinogenic or toxic to reproduction; developmental neurotoxic, immunotoxic and endocrine-disrupting substances will be banned if they are deemed to pose a significant risk; products containing hazardous substances are to be replaced if safer alternatives are shown to exist; aerial crop spraying will be banned; individual member states will have the power to ban specific products.

CAP (etc.) support details/payments

Defra is due to meet farming unions and conservation groups this month with the aim of the reintroduction of compulsory set-aside. Defra would like to see a rate of 5-6 per cent but it is expected that the strongest case will be for a rate of 2-4 per cent.
An Uplands Entry Level Stewardship scheme is to replace the Hill Farm Allowance in July 2010. Farmers who meet a points threshold by carrying out a range of land management practices will receive an extra £15 per hectare in the moorland SDA and £32 per hectare in the rest of the SDA in addition to Entry Level Stewardship payments.
Defra is making £31 millions available to meet the cost of the scheme. Defra has been criticised for wasting £60,000 to administer 82 single farm payment claims totalling £6.09 between 2005 and 2007. It is estimated to cost £750 to administer each claim.

Grants/regulations/legislation/environment

The Turner Committee on Climate Change has suggested there is scope for “significant emissions cuts in agriculture” through a range of measures surrounding livestock and soil. In 2006 agriculture emissions accounted for 7 per cent of UK greenhouse gas emissions; agriculture accounted for 45 per cent of all non-CO2 emissions – mostly methane and nitrous oxide; the main non-CO2 emissions came from fertilizer (54 per cent) and livestock (37 per cent); agricultural non-CO2 emissions have fallen 18 per cent between 1990 and 2006 but government projections suggest they will only fall by a further 1 per cent by 2020.
The European Parliament has voted in favour of ending the UK’s opt out of the 48-hour working week. The UK has until May to present its case for an extension to the opt out. The move is fiercely opposed by the NFU and NFU Scotland.
The Government is to provide 5,000 extra work permits for Bulgarians and Romanians to work in the agriculture sector.
The Environment Agency has reclassified anaerobic digestate produced from on-farm products such as manure, slurry and crops from being “waste” to being a viable fertilizer. As such, farmers treating matter in anaerobic digestion plants no longer need waste permits to spread digestate on their fields but this will not be the case if any mixing takes place with waste feedstocks.
The Scottish Government is set to present its Crofting Bill to the Scottish Parliament. The proposed legislation is intended to encourage the creation of new crofts, especially on public land and consolidate crofting law.
The European Parliament has introduced mandatory targets to increase the amount of renewable fuel used in energy and transport. By 2020 at least 20 per cent of energy use and 10 per cent of transport fuel must be from renewable sources.
Defra is to spend £7.7 millions on a flood forecasting centre which will be run by the Met Office and the Environment Agency.
The Food Standards Agency is expected to introduce legislation which would exempt as many as 40 small slaughterhouses from the requirement to have refrigerated facilities and livestock vehicle cleansing and disinfection facilities.
McCain Foods is creating three new scholarships, two at the Royal Agricultural College and one at Askham Bryan College, York. The scholarships will focus on farming and crop production.

Other matters of farm finance and tenure

A report from Andersons, farm business consultants, suggests that farm incomes in 2008 could be up by as much as a third on 2007 taking total income from farming to £3.5 billions, the highest level of return since 1997. However, TIFF is then expected to fall to below £3 billions in 2009 and then fall a further 5-10 per cent in 2010.
Capital growth of 125 to 150 per cent has been achieved by investors in woodland over the past 5 years. Average plantation prices have risen by more than 100 per cent and by 10 to 20 per cent in 2008.

Product prices

A. Crops

Strategie Grains released their 2009 crop estimates shortly before Christmas, forecasting that the EU plantings for cereals are 2% lower than the 2008 season. This news, added to an expected reduction in the US 2009 wheat harvest, US crop concerns from frost damage and a comparatively weak dollar, has led to the UK market strengthening slightly. Furthermore, low urea prices are also now being seen to apply downward pressure on the fertilizer market in general. LIFFE wheat futures have improved in the lead up to Christmas, largely on the back of the weak sterling rate against the Euro but helped by the low crude oil price. At the end of December, futures for delivery in July and November 2009 and November 2010 were £115, £121 and £125 respectively. Average prices in late December (£/tonne ex-farm): feed wheat 90, milling wheat 135; feed barley 83; oilseed rape 233; feed peas and beans 99.
Average potato prices, with some mid-month volatility, increased overall to above
£120/tonne. High Christmas demand, in line with expectation, led to increased activity
from packers and to a lesser extent processors. Growers continue to retain much of the better samples for the latter part of the vending season. Festive deals from the supermarkets during the month have led to movement of higher tonnages, but have held the price back somewhat. Opening at £109/tonne, the average price by late December was up to £121/tonne (£35/tonne lower than in December 2007). The free market price sat £10 below the average price at £111/tonne, £55 below the price a year earlier. In late December, King Edward were selling for £120 - 135/tonne; Estima were achieving £75 to £105/tonne for secondary packing material and up to £160 for bakergrade. Desiree prices ranged from £100 to £150/tonne and Maris Piper were selling at between £110 and £160/tonne for grade 1.

B. Livestock

The average steer price, opening at 144p/kg lw, improved substantially this month in the lead up to the Christmas period. In late December, prices were up to 158p/kg lw; 35p/kg higher than those a year earlier. Heifers lost their premium status over steers this month; by the end of the month prices were 10p/kg below steer prices.
UK average lamb prices demonstrated recovery from the downward trend present since May. Starting the month at 117p/kg lw, prices improved over the course of the month to reach 136p/kg lw by late December; sitting 46p/kg above prices a year earlier.
The average pig price continued last month’s downward trend throughout December. The average price in late December was 130p/kg dw; down 2p on October’s close and now sitting 20p/kg above levels twelve months earlier.
The average farmgate milk price for October (reported in December) demonstrated further improvement on September levels, gaining 0.30ppl to sit at 27.31ppl, 0.80ppl above prices in October 2007; the expected reductions during October did not materialise. It is thought that prices have fallen back in November and December as processors are reported to have reduced stock levels for cash flow purposes. The news that milk quota levels will increase over the next five years took full effect on prices in November; prices have subsequently held steady at 0.20ppl for clean holdings (4% butterfat) but with few transfers taking place.

Other crop news

The International Grains Council estimates that world wheat plantings for this year’s harvest will be 1.6 per cent below 2008. The EU wheat area is down by 400,000 hectares and the CIS down by 5 per cent.
EU Ministers have decided to retain the production tax on European sugar beet.
Results from the Maltsters Association of Great Britain indicate that 2.5 per cent of all malting barley delivered to end users from the 2007 harvest was rejected, mainly due to poor germination capacity.
HGCA has published a new Barley Disease Management Guide.
A three year study seeking to understand how taste and health-related compounds are affected in potato tubers when ethylene is used in storage is to be undertaken by Cranfield University and Sutton Bridge Experimental Unit.
Genetically modified plants have been found in a trial crop of oilseed rape on a site in Somerset. The GM seed was of a type which is approved for import and animal feed use but not for cultivation.
Branston Ltd is to invest a further £2.6 millions in its site at Branston, Lincolnshire with the construction of a new factory to produce prepared potato products.
Kettle Produce, one of the UK’s biggest suppliers of fresh vegetables based at Cupar, Fife, is to shed 100 of its 950 employees.

Other livestock news

Further cases of bluetongue in imported cattle have been confirmed. A batch of 12 animals on a farm near Crewe, imported from France, has tested positive to BTV8.
The EU animal health committee has agreed to allow new “vaccination zones” where animals can be vaccinated but where the zones do not have to accept animals from infected areas elsewhere in the EU. The move would enable the UK to declare a BTV1 vaccination zone even if no disease is circulating while simultaneously restricting imports from areas where BTV1 is circulating.
Defra has confirmed it will not be issuing a tender for more supplies of bluetongue vaccine. Only half of last year’s order was taken up by farmers leaving a surplus of 12
million doses.
With effect from March, any inconclusive reactors to bovine TB in Wales will be removed following a 60-day retest that remains inconclusive or shows it to be a reactor. The Welsh Assembly claim that the presence of inconclusive reactors is associated with an increased likelihood of future herd breakdown. The question of whether the policy will be adopted in England will be considered by the TB Eradication Group which met for the first time last month.
The NFU has abandoned it plans to pursue a High Court judicial review of Defra’s decision not to allow licensed culling of badgers.
The Food Standards Agency has launched a consultation process regarding the introduction of a new system of calculating meat inspection charges based on the timecost of the inspection process and increasing overall charges by up to 9 per cent so as to recover a greater share of the cost of official controls.
The National Fallen Stock Company has confirmed that the necessary infrastructure for collecting fallen stock for BSE testing will not be in place by the January 12 start date. The aim is to have 50 to 60 approved sampling sites across the UK but, to date, only 12 have approval.
The latest BCMS figures suggest a significant gap in beef supplies in the latter part of this year. The period June to October 2008 saw an 8.5 per cent uplift in the number of purebred dairy calves compared with the same period in 2007. It also saw a 10.4 per cent fall in cross-bred British blue calves and a 9.5 per cent fall in cross-bred Limousins. This points to a fall in domestic beef output of 15 to 18 per cent in the autumn.
Dairy Farmers of Britain has announced a restructuring plan which will result in the creation of two separate divisions and the loss of almost one-third of its 2,200 employees. The liquid milk and milk supply and cheese divisions will be managed autonomously. Fole dairy in Staffordshire and Portsmouth dairy in Hampshire will be closed. Producers have been angered by a backdated 2ppl cut in milk price.
The Scottish Partnership for Animal Science has been formed by the Universities of Aberdeen, Edinburgh, Glasgow, St Andrews and Stirling together with the Scottish Agricultural College and Moredun and Rowett institutes. The aim is to create world class research facilities and a pool of new scientific positions to attract more young people into animal science.
Sainsbury’s has announced a scheme to source Welsh lamb exclusively from young farmers, paying a premium for the product and stocking it throughout its Welsh stores.
The Farm Animal Welfare Council, a Government advisory panel, has recommended that animal welfare labels should be introduced across all meat and dairy products to help improve standards on the farm.
An undercover investigation carried out by Compassion in World Farming has found that pig welfare standards are higher in the UK than in most other European countries.
The Royal Agricultural Society and ABN have combined to create “Alternative Pig and Poultry Live” at the National Agricultural Centre, Stoneleigh on May 13.

Inputs/Supply businesses

Growhow UK has suspended manufacture of ammonia at its Billingham site in response to the global downturn in both agricultural and other industrial markets.

Marketing

Food price inflation fell for the third month running in November, down to 7.1 per cent from a peak of 10 per cent in August.
With effect from this month, Waitrose will source all its pork, chicken and beef products from the UK. Only lamb is sourced from New Zealand when Welsh lamb is unavailable.
Sainsbury’s has announced that, by the end of this month, it will source all its meat used in prepared meals from the UK.

Miscellaneous

Kutin has paid £107.3 millions for the Kvernaland baler operation based at the Geldrop plant in Holland.