Farming News Review - July 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

The EU Council of Ministers has accepted proposals from the European Commission designed to “improve and simplify” the cross-compliance system. Changes include a reduction in the 10 month reference period; greater tolerance levels for minor noncompliance; greater checks where a “significant degree” of non-compliance is found; the issue of control reports within three months of inspection; harmonisation of control rate and inspections across the EU.
The Rural Development Programme for England for 2007-2013 has been presented by Defra to the European Commission but its introduction cannot commence until approval is given.
The latest Doha Development Round of world trade talks held at Potsdam, near Berlin has collapsed. Calls had been made for the EU to offer more access to its agricultural markets in return for US concessions on its domestic support but India and Brazil walked out claiming no progress was being made on agriculture.
From 2008 the European Commission has ruled that “organic” products can carry an organic logo provided the ingredients are more than 95 per cent organic. Member states will be entitled to impose higher standards than the basic EU level.
In the Cabinet reshuffle following Gordon Brown’s accession to Prime Minister, Hilary Benn has replaced David Miliband as Defra Secretary of State.
Mariann Fischer Boel, European Union Agriculture Commissioner, has confirmed that dairy export refunds and intervention support will cease by 2013 and quotas by 2015.

CAP (etc.) support details/payments

EU ministers have given approval to fruit and vegetable growers being full members of the Single Payment Scheme. All existing support for processed fruit and vegetables will be decoupled and about £541 millions will be transferred to the Single Payment Scheme. Individual growers will be encouraged to join producer organisations. Defra has until the end of November to decide how to implement the reforms, the NFU is calling for a quick decision.
The Welsh Assembly’s Sustainability and Rural Development Minister, Jane Davidson, has announced that voluntary modulation in Wales will rise to 6.5 per cent by 2011, lower than anywhere within the UK and well short of the maximum permitted 20 per cent. The Northern Ireland Agriculture Minister, Michelle Gildernew, has announced a rate of 4.5 per cent for 2007 rising to 9 per cent in 2012, while in Scotland the rate will rise from 5 per cent in 2007 to 9 per cent in 2012.
The Rural Payments Agency is embarking on a major re-mapping exercise, updating its system to bring it into line with changes made to the Ordnance Survey’s mapping systems. The exercise has led to fears that the Single Payment system could be plunged back into chaos in 2008.
The Rural Payments Agency will avoid any fines in respect of the 2006 Single Payment having reached its target of 96.14 per cent of the total sum before the end of June.
A target of 75 per cent of 2007 Single Payments by value by the end of March 2008 and 90 per cent by May 2008 has been set the Rural Payments Agency by Food and Farming Minister, Jeff Rooker. The target has been criticised by farming organisations with the NFU calling for a target of 80 per cent by December 2007.

Grants/regulations/legislation/environment

The Food Standards Agency has announced that only 2 per cent of Red Tractor-assured farms will face statutory inspections as compared to 20 per cent of non-assured farms.
With effect from this month, no duty will be payable on a business’ annual biofuel production up to 2,500 litres.
The “2006 Report of Indicators” published by the Pesticides Forum indicates that there was an 8 per cent reduction by volume of pesticides sold to agriculture and horticulture. However, 8 per cent of pesticide samples were above the Maximum Allowable Concentration set by the EC Drinking Water Directive compared with 5 per cent in 2004.
The latest quarterly report from the Pesticide Residues Committee has revealed that more than one-third of routine food tests contained traces of pesticides. However, there were no residues found in milk, bacon, cheese or cauliflower samples.
Research into Europe’s farmland birds with information collected from 20 national breeding bird surveys confirms that farmland birds have declined by almost half in the past 25 years. The most rapidly widespread declining species are the grey partridge, corn bunting and turtle dove.
The EU has set up a working party to consider whether it is fair that small-scale cider growers are exempt from duty. Growers are currently exempt if they produce less than 1,500 gallons of cider a year.
Defra has launched a calculator which enables farmers to work out their carbon footprint using government-recognised data and calculations. The Act on CO2 calculator can be found at www.direct.gov.uk/actonco2
A Scottish Agricultural College has launched an energy auditing service designed to cut power costs on farms by 10-15 per cent.
Natural England is making available grants of up to £10,000 to fund projects which encourage and support sustainability in the North Wessex Downs AONB.
HGCA has awarded grain enterprise grants to Cargill to fund a project to introduce a lowfibre animal feed derived from rapeseed meal and to use UK wheat in the production of Traffordgold animal feed instead of French maize and to Grain Harvesters to launch a range of steam-flaked pet food products into Europe.
A £70,000 grant has been awarded by the Horticultural Development Council to Lancaster University to examine ways of growing crops such as peas and lettuce under dry conditions without losing crop yield by the use of bacteria.
A new biofuel plant is to be built near Hull by Associated British Foods, BP and Du Pont. It is expected to cost £200 millions and produce 330,000 tonnes of bioethanol each year. Frontier Grain will source the one million tonnes of wheat required annually.

Other matters of farm finance and tenure

The Treasury has admitted that the abolition of the Agricultural Buildings Allowance will cost farmers more than £5 millions each year from 2010-11 onwards.
While still Environment Secretary, David Miliband called for the whole of England’s coastline to be opened up to the public, allowing walkers to go on land that has previously been restricted.
Soft fruit grower Neil Cockburn has been selected to front the industry’s case in the judicial review of Herefordshire County Council’s decision to subject all polytunnels to planning permission.
The latest financial survey of fruit and vegetable growers from Pimsoll Publishing reveals that over 25 per cent are in danger of failing. It suggests that 30 per cent are strong; 10 per cent reasonable; 15 per cent mediocre and 19 per cent are in a “caution category”.
Farmers in the UK are more confident as regards their future profitability than at any time in the past 3 years but, surprise surprise, they are still the gloomiest in Europe. More than 50 per cent of UK farmers view the economic future for the industry as “bad” or “very bad”, compared with just 14 per cent in Germany.

Product prices

A. Crops

With wheat harvest underway in parts of USA and Eastern Europe, the predicted weaker yields are being confirmed. The effects of hot and dry conditions in mainland Europe, particularly in Ukraine, Russia, Romania and Hungary, are still not fully known but estimated yields are constantly being revised (mainly downward). Ukraine is expected to introduce export restrictions for the second year in succession. US crop yields remain hard to estimate, as high disease levels are reported to be following the recent rains. In brief, a further month of erratic weather across the globe means the 2007 growing season is still highly unpredictable; prices have reflected this with the marked increases seen this month; expect new crop prices be fluctuate in the coming months. Average prices in late June (£/tonne ex-farm): feed wheat 104, milling wheat 123; feed barley 97; oilseed rape 167; feed peas and beans 125.
Average potato prices, after an initial increase of £5/t, dropped mid-month to £143 and then again at the end of the month, to close at £129/tonne. The current price, down £32 from May’s close, is now at the same level as prices in May 2006. Overall trade remains steady for packing and processing, with contracted tonnages being the main source. The free market is suffering further with supply outweighing demand as more growers release their stores to the market. As harvest of the 2007 crop is now underway the demand for 2006 crop is dropping sharply. In late June King Edwards were achieving between £100 and £140/tonne. Prices for Desiree have fallen further to between £130 to £150/tonne for quality. Maris Piper demand has switched to 2007 crop, 2006 wholecrop is achieving between £120 to £170/tonne, whilst good samples of Estima are now priced between £100 and £140/tonne.

B. Livestock

The average steer price rose 1p/kg to 112p/kg lw following the trend in late May. Over the latter half of the month the price slackened to end June just below 112p/kg lw, still 1p/kg below the price at the same time in 2006.
UK lamb prices disappointed producers further this month; as the volume of New Zealand lamb in continental Europe remained high, prices strengthened early on from the opening position of 120p/kg lw, reaching 125p/kg lw, but by the end of June the prices had dropped to 115p/kg lw, 25p/kg below June 2006.
The average pig price continued to follow the expected seasonal trend, gaining a further 2p/kg. Prices opened at 108p/kg dw and closed at just above 110p/kg dw. Prices remain 5p/kg higher than at the same time in 2006.
The most recent reports of average milk prices show that May prices held relatively steady over the month, to close at 17.75 ppl, in the face of seasonal reductions. Dairy Farmers of Britain and First Milk have both announced milk price increases for July of 0.25ppl and 0.5ppl respectively. Milk quota prices dropped back considerably over the month as higher volumes of clean quota came on the market. Clean, 4% butterfat holdings were changing hands at 1.79 ppl in late June; a decrease of 0.97 ppl compared to prices in late May.

Other crop news

The June rains has left crops in parts of the UK in a sorry state but not as bad as many had feared. Winter oats have been worst hit and there has been quite a lot of lodging in winter wheat. Liftings of potatoes and carrots have been delayed by waterlogging and blight threatens.
Sales of so-called “superfoods” have boomed in the past couple of years. Blueberry sales increased by 132 per cent between 2005 and 2007; spinach sales increased by over 25 per cent with 800,000 more households buying the crop; tomato sales increased by 16 per cent.
The British Society of Plant Breeders and the NFU have announced new arrangements for the declaration of older, previously zero-rated varieties as farm-saved seed to take effect from this autumn. The arrangements are designed to reduce the evasion of royalty payments while maintaining in investment in UK-based plant breeding.
The Soil Association has launched a consultation process to determine whether or not organic air-freighted produce should retain the right to use the term “organic” in view of the impact of carbon dioxide emissions during transit.
Further evidence of the impact of climate change and imports is the announcement from Defra of a finding of angular leaf spot on strawberries. The disease is listed in EC plant health legislation and involves plants grown in the Netherlands.
Research carried out by the Scottish Crop Research Institute has revealed that blackcurrants are the most nutritious fruit containing high levels of antioxidants and vitamin C.
Angus Soft Fruits has launched a premium range of strawberries and raspberries grown without the use of artificial pesticides.
Major crusher ADM, based in Kent, has rejected the new high oleic/low linolenic oilseed rape variety V141OL as levels of linolenic acid are not low enough.
Defra has confirmed it will no longer be inspecting UK vineyards to ensure they comply with EU regulations.
“New Crop Opportunities”, the electronic farm management aid developed by British Crop Production Council, is now available on-line. The service helps farmers in the decision making process concerning the growing of traditional crops for new users or alternative crops.
Fengrain, the East Anglian grain cooperative, has launched Fenactive, a new on-line service, which will allow members to see farm samples, store intake, contract details, weights and other information relevant to their farm on a daily basis.

Other livestock news

The Independent Scientific Group on bovine TB has concluded that badger culling cannot reduce bovine TB in cattle “to any meaningful extent”. If Ministers accept the recommendations of the Group, farmers will face tighter controls on cattle such as banning the movement of animals from “high risk” to “low risk” areas; more rigorous premovement testing in high risk areas; greater use of the gamma interferon test in premovement testing; whole herd culling in the case of persistent outbreaks and more frequent testing in low risk areas.
The chairman of Meat and Wool New Zealand has refused to accept that his producers are under-cutting their UK counterparts and has blamed the UK lamb price crisis on “global market factors”. He claims that prices are also at unsustainable levels in New Zealand with variable costs barely being covered.
Given the flaws in the UK batch system identified in a draft Food and Veterinary Office report, the European Commission has indicated it is unlikely to recommend an extension of double tagging derogation. However, it is being suggested that Defra is prepared to concede double tagging in return for a delay in the introduction of compulsory Electronic Identification for the sheep industry. Defra has indicated it will implement the EU rules at the bare minimum level.
Sales of English lamb have increased by 6 per cent in the past year. Beef sales remained static but increased in value by 4 per cent, according to figures released by Eblex.
A report by the European Food Standards Agency has concluded that 33 months is the likely cut-off point for BSE infectivity in the spinal column. This has provoked a call for the age limit for removal of the vertebral column in cattle to be raised from 24 to 30 months.
The Soil Association has warned that a new strain of the superbug MRSA could spread to the UK. The problem has developed among intensively farmed poultry and livestock on the Continent and can transfer to humans. It is believed that 40 per cent of Dutch pigs and 50 per cent of Dutch pig farmers carry the farm-animal MRSA while 20 per cent of pork, 21 per cent of chicken and 3 per cent of beef on sale to the public carries the infection.
The European Union’s Economic and Social Committee has called for a review of the ban on the use of animal remains in farmfeed which has been in place since 2000.
Scientists commissioned by “Tonight with Trevor McDonald” have revealed that organic chickens sold in the big four supermarkets are more likely to contain the food poisoning bug campylobacter than intensively reared poultry.
Milk Link has announced that its producers no longer need cover production with quota in the light of published milk production statistics.
The European Commission management committee has set butter and cheese export subsidies at zero reflecting the tight supply situation both domestically and globally.
Milk Link and Cornwall Quality Livestock Producers, supported by the English Food and Farming Partnership, have formed a joint venture to market cull cows.
The National Beef Association has warned that Irish beef poses a far greater threat to the UK beef industry than Brazilian imports. It estimates that Irish beef accounts for 60 per cent of imports, the bulk of which is sold through supermarkets.
Asda has claimed that by 2008, its beef sales will have increased by 37 per cent over the previous years with 61 per cent of carcases being British and 90 per cent of beef sold in Scotland being Scottish reared.

Inputs/Supply businesses

It is now accepted that it will be 2009 before RB209, the UK’s new benchmark fertilizer recommendations, will be available in view of restrictions on Defra’s budget.

Marketing

A supermarket price war is threatening the income of farmers according to NFU president Peter Kendall despite claims by the supermarkets that all price-cutting is self-funded and does not impact on producers.
A recent report from the Organisation for Economic Co-operation and Development has revealed that food prices in the UK rose by 6 per cent over the past year. This is the fastest rate for 6 years and twice the European average.
NFU Scotland has launched a new campaign highlighting the positive aspects of Scottish farming and aiming to back Scotland by persuading consumers to buy Scottish food and drink.
A survey from the dunnhumby Academy of Consumer Research has found that year-onyear volume growth of sales of fresh-cut herbs is running at over 16 per cent with an increased sales value of 24 per cent. However, the equivalent figures for growing herbs were falls of 10 per cent and 5 per cent respectively.
Figures published by Defra reveal that UK consumption of cauliflowers is down by over 65,000 tonnes in the past 10 years, a fall of 20 per cent. Despite the fall, imports are up by 45,000 tonnes.
The Business in the Community Award for Cause Related Marketing has been won by Noble Foods’ Woodland Egg brand, sold exclusively at Sainsburys.

Miscellaneous

The Organic Growers Alliance has been formed to offer support to organic growers and to make representations to the Soil Association, Defra and the Advisory Committee on Organic Standards.
Bomfords, the vegetable and salads grower, has gone into administration. The company owns Gerber Fresh Produce, JJ Barker and W Bailey.
Harper Adams University College and Management Development Services are launching a post-graduate certificate in food and fresh produce management.
Keelings has agreed to buy the fresh produce business of IVG White (Sales) Ltd, based in Burton Latimer, Northamptonshire.
Awards in the Queen’s Birthday Honours list include KB: Meuric Rees, for services to agriculture in Wales; CBE: Stewart Houston, chairman of British Pig Executive; OBE: Richard Campbell, former chairman of Assured British Pigs; Adam Muggoch, formerly deputy chairman, Scotbeef Ltd; MBE: Alexander Brown, services to Scottish dairy industry.
Confidential talks are taking place between the NFU and FWAG concerning some form of alliance.
Graham Martyn, partner in Wright Manley, has been elected president of the Central Association of Agricultural Valuers.