Farming News Review - March 2005

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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

Single Payment Scheme news:-

i) Farmers in Scotland and Wales who were disadvantaged by the allocation of SFP entitlements need to submit claims to the national reserve by 14th March for most categories; for two categories however (dairy farmers’ hardship and transfer of leased land), the deadline is 16th May.

ii) Farmers in Scotland, Wales and Northern Ireland have been promised that their SFPs will arrive in December, unlike farmers in England, on which point Margaret Beckett has expressed her anger. Both she and EU commissioner Fischer Boel have strongly hinted at the possibility of an advance, or two-tier, payment.

iii) Auborn/Savills have published a detailed analysis of the values of entitlements. Their capital values are based on the income stream provided, with allowance made for the risk factor, which is based primarily on the expected life of the SFP regime.

iv) Growers of fruit, vegetables and potatoes are being urged to secure authorisations on SFP entitlements as soon as possible, as they might otherwise lose their SFPs on areas planted with those crops.
Of the 60,000 farm businesses in England reckoned by Defra to be of significant size, 48% have diversified (i.e. have a non-agricultural activity which uses farm resources) and 24% have off-farm or self-employment by the farmer or spouse; farming is the sole source of income on 23%. Most diversified enterprises are small, comprising only 5% of total farm output; nearly half the diversification output is from renting out farm buildings (average £11,400 per farm). There is more diversification in the south and east then elsewhere.
In the last ten years UK self-sufficiency in indigenous-type foods has fallen from 86% to 74%. The government appears to be unconcerned.
The total EU expenditure on the CAP in 2004 was £31.3 billion, about £1.4 billion under budget. This year the amount of grain intervention and wheat export subsidies means it will be difficult to avoid exceeding the budget.
On average British consumers spend 11.2% of their income on food. 50 years ago the figure was 24%.
The Centre for Policy Studies has produced a report, “The Essential Guide to British Quangos 2005”, which questions the value of Britain’s 529 quangos. It includes the British Potato Council, the Milk Development Council and the Agricultural Wages Committees/Boards among the nine it considers to be most useless.

CAP (etc.) support details/payments

Included in I. above.

Grants/regulations/legislation/environment

The Entry Level Scheme was launched on 3rd March. The first five year agreements will start on 1st May. Farmers on a Farm Business Tenancy will be able to join the scheme without their landlord’s consent as long as they have at least five years of their tenancy left to run.
The Hunting Act, banning hunting with dogs in England and Wales, came into force on 18th February.
The New Forest became a national park (England’s smallest) on 1st March.
ADAS has launched a new initiative that aims to provide land managers and their advisers with free advice on how to benefit from environment-sensitive farming.
The Waitrose Centre for Sustainable Agriculture has been opened, at Lancaster University. This £25 million facility is housed in the Lancaster Environment Centre. An M.Sc. in Sustainable Food Production will be offered.
Paul Christensen has been appointed chairman of the Rural Development Service. Its current head, John Adams, has been appointed as chief executive designate.
The Asbo case against the Norfolk farmer whose pigs kept escaping has been dropped (ref. January issue, III.5).

Other matters of farm finance and tenure

The RICS rural land survey recorded a weighted average price of farmland of £9,950/ha (£4,027/acre) in the last quarter of 2004, with bare land averaging £7,391/ha (£2,991/acre). The farmland price rose by 25% in 2004 compared with 7% in 2003. Non-farmer buyers fell from 51% to 41%; the successive interest rate rises were thought to be the main reason why the demand for mainly residential farms slowed down.
In the last quarter of 2004 bank lending to UK residents for agriculture, hunting and forestry rose above £8 billion for the first time. While this makes for a striking headline the level is only 2.8% (£228 million) above that in the same quarter of 2003, perhaps a surprisingly small amount when one compares 2004 harvest prices with those of 2003.
The sterling value of the euro stayed close to 69p throughout February.

Product prices

A. Crops

The level of EU export refunds appeared to be too small to have any significant effect on grain prices. However, by mid-February prospects for further UK exports were sufficiently high to boost futures by a three or four pounds a tonne, even leading to some fears by buyers of tight supplies in the run-up to harvest, especially as Defra has lowered its estimate of the exportable surplus and home demand has risen, particularly for feed.
Average prices in late February (£/tonne): feed wheat 65, milling 83; feed barley 65; oilseed rape 124; feed peas and beans 84.
Potato prices have fallen during February, with excessive supplies available, ending the month at an average £83/tonne.

B. Livestock

Finished cattle prices continued to average around 102.5p/kg lw: a few pounds above a year ago.
Finished lamb prices disappointed in February, averaging around 113p/kg lw: nearly 20p (15%) below a year ago.
The average pig price rose above 101p/kg dw, despite falling prices on the Continent.
The much-publicised and anticipated increase in ex-farm milk prices again failed to materialise during February.

Other crop news

It has been a dry winter to date, which is beginning to cause concern with regard to water availability in the coming summer. It has been a cold February, with plentiful snow in many areas in the last week of the month. Autumn-sown crops are generally looking well.
Defra minister Elliot Morley has said the supply, distribution and quality of water in the UK will become increasingly affected by climate change; summers are expected to become drier. With more irrigation demand expected restrictions on water abstraction licences are likely to be imposed in some regions in the future. The government wants more on-farm reservoirs to be built, to store winter rainfall.
More cases of ring rot in potatoes have been confirmed in The Netherlands. The government is tightening controls: growers importing Dutch seed must now give Defra prior notification.
British Sugar has easily achieved its target to purchase 160,000 tonnes of contract beet entitlement from growers (ref. February issue, VI.5). The scheme was heavily oversubscribed.
The area of GM crops planted worldwide grew by 20% in 2004, compared with a 15% increase in 2003. A new report says there are now 81 million hectares of GM crops, grown in 17 countries by 8.25 million farmers. The USA accounts for 59% and Argentina 20%.
The NIAB is to join with the Henry Doubleday Research Association to extend organic vegetable and potato trials across the UK, funded by Defra.
Researchers at Newcastle University say a carrot a day cuts the risk of cancer by a third.
South Lincolnshire farmer and vegetable processor Tony Worth has succeeded Robert Campbell as chairman of LEAF.

Other livestock news

As in every month of the current milk year January deliveries were below quota. With only two months to go the cumulative deficit is about 215 million litres, six days’ supply. At the start of February quota values (4% BF) had fallen to 5.25ppl to lease, 10.5ppl to buy. They bounced back in mid-February, however, rising to 6.3ppl to lease, 11.9ppl to buy towards the end of the month.
The National Audit Office has warned Defra that it must do more to ensure readiness for any new foot-and-mouth outbreak, with continued vigilance essential. It says the cost of the 2001 outbreak was significantly higher than necessary. As previously reported, the EC has refused to meet 60% of the government’s £960 million claim.
In its latest (fourth) report the Independent Scientific Group on bovine TB has called on Defra to introduce tougher cattle controls to reduce the risk of cattle-to-cattle transmission. More than 350 vets have written “in despair” to Margaret Beckett calling for a cull on badgers in badly affected areas. A new government strategy is expected to be announced shortly, but it is thought unlikely to include badger culling.
The government has confirmed that it has no plans to remove the remaining organophosphate (OP) sheep dips from the market, claiming there is no evidence that they have affected the health of sheep farmers. This is in response to calls for all OP dips to be removed (ref. February issue, VIII.4).
A record £2 billion was spent on beef and lamb by UK consumers in 2004.

Inputs/Supply businesses

The government consultation period on the use of red diesel on public roads ends on 2nd March (ref. January issue, III.3). The NFU warns that the government may apply radical new rules.
A sub-committee of the Commons’ Environment, Food and Rural Affairs select committee is investigating the progress of the Voluntary Initiative (VI) series of measures to minimise the environmental impact of pesticides.
The Pesticides Safety Directorate has issued for public consultation a 36-page draft national strategy for the sustainable use of pesticides covering all industries using plant protection products. Tighter restrictions and more stringent risk assessments are proposed.
Monsanto has reinvested in seeds. It has bought Seminis, a leading global vegetable and seeds business, for some £700 million.
Cargill is to rebrand and streamline its UK feed materials business and return it to full company ownership.
Clark and Butcher, the Soham, Cambs. feed manufacturer, is to cease production after a number of years of losses; its Lion Mills has been operating for over a century. BOCM Pauls has bought its 8,000 tonne game ration business and transferred the extra tonnage to its specialist Bury St. Edmunds mill.
Mole Valley Farmers have acquired the southern ruminant compound feed business of Pye Bibby Agriculture, which includes three west country mills. This will double MVF’s feed production to 350,000 tonnes a year.
Parent company ConAgra UK has sold its Cambridge-based adjuvant producer Loveland Industries to the major French spray supplier De Sangosse.
DLF-Perryfields, the UK’s largest grass seed supplier, is changing its name to that of its parent company, the Danish farmer-owned seeds business DLF Trifolium.

Marketing

In a new report British Agricultural Marketing accuses Defra of undermining the marketing and promotion of British food through over-zealous enforcement of EU state aid rules. It recommends a strategy that promotes all British producers in major urban areas, backed by core government funding.
Supermarket Somerfield has rejected a £1.03 billion acquisition offer from the Icelandic group Baugur, which only recently bought Iceland’s parent company The Big Food Group, for £326 million. Somerfield has struck a deal to buy 140 Texaco petrol stations, planning to triple the size of their shops.
Tesco has increased its share of the grocery market to 29.1%. Asda has 17.1%, Sainsbury’s 16.0% and Morrisons/Safeway 12.4%. Tesco’s share rose by 2.3% during the past year and Sainsbury’s share has risen for the fifth consecutive month.
Dairy Crest has won a 30,000 cheese contract with Asda; most of this cheese will come from its Aspatria plant in Cumbria. The main loser will be The Cheese Company, owned by Milk Link and Glanbia.
Organic Milk Suppliers Co-operative (OMSCo) has launched its first branded product: “Altogether Better”. It will be stocked initially in 200 Sainsbury’s stores.
Countrywide Farmers is to source at least 80,000 tonnes of ex-farm combinable crop raw materials annually for its feed manufacturing division through Centaur Grain. This collaboration is called The Countrywide Centaur Farmers in Partnership. They claim that this deal with lead to considerable reductions in haulage costs.
Centaur Grain has secured a contract to supply Wherry & Sons, of Bourne, Lincs, with 5,000 tonnes of marrowfat peas from the 2005 harvest.
The English Beef and Lamb Executive (EBLEX) launched a £4.5 million promotion on 1st March. Animated TV adverts will encourage consumers to look out for new Quality Standard Marks for beef and lamb.
Morrisons has bought the Buchan meat processing plant at Turriff, Aberdeenshire, from the Irish-owned processor Keepak.
Tesco has ended its contract with the Romney Marsh Potato Company, in New Romney, Kent. The family-run firm, founded in 1950, has supplied Tesco since 1959. 81 workers are to lose their jobs.
ABNA has formed a new consultancy and training business, called Abnatech Global. It will cover a range of feed and food industry safety issues.
The Welsh Food Fraud Co-ordination Unit has been formed, the first organisation in the UK set up specifically to tackle food fraud.
The Advertising Standards Authority has approved a range of statements companies can use to promote the benefits they claim for organic food and farming.

Miscellaneous

Defra has published a report entitled “Impacts of Climate Change on the Agricultural Industry”, a review of research programmes on the subject.
NFU Cymru has officially opened its new £0.5 million headquarters on the Royal Welsh Showground at Builth Wells. It will replace its offices at Swansea and Ruthin.