Farming News Review - March 2008

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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

439 Members of the European Parliament have signed a written declaration calling on the Commission’s competition watchdog to investigate the power of the supermarket chains over suppliers and smaller business in general. The paper requests an assessment of potential abuse of buying power and calls for measures to protect consumers, workers and producers.

CAP (etc.) support details/payments

Defra has finally approved the deal for a 13.5 per cent cut in UK sugar quota and the corresponding compensation payments. Growers have already seen the quota cut partly implemented via a 10 percent cut in their 2008 contracts; the remainder will be addressed in the 2009 and 2010 contracts. Compensation will broadly be £10/tonne for each year of the designated three-year reference period that they held quota; payment will come in two tranches in June 2009 and February 2010. Defra has not ruled out additional cuts, but further compensation is unlikely.
Defra has initiated a national public consultation concerning the reform of the Single Payment Scheme in respect of the EU fresh and processed fruit and vegetable regime and the EU wine regime. The consultation runs until 23 May 2008.
Members of European Parliament have criticised Mariann Fischer Boel’s proposal to increase modulation to free up more funds for rural development. The initial review document gave an example of payments above €100,000 (£72,000) being reduced by 10%; above €200,000 reduced by 25% and above €300,000 reduced by 45%, but these cuts have been rejected as being unjustifiably punitive to larger businesses. The agriculture committee has suggested a more diluted version with a maximum deduction of 4% on payments over €300,000, which will be put to vote in late March.
By the end of February, 85% of all applicants in England had received the 2007 Single Farm Payment in full; representing 76% of the £1.45 billion expected total payment.

Grants/regulations/legislation/environment

The UK has decided to delay issuing 2008 EU Carbon Allowances. Defra has attributed the delay to indecision on the European Commission’s part on setting the date that the carbon trading registry system will be brought on-line. Testing is still ongoing, but the registry system is expected to be in operation before November.
The National Fallen Stock Company is to fund research into reducing the cost of fallen stock on UK farms in conjunction with Harper Adams University College. Financial support from Defra is being sought.
The Economic and Social Research Council has released results from a research project indicating that farmers’ views of GM crops are shifting and that many are now viewing GM as the next logical step for plant breeding. The project emphasises that most interest still lies with the practical implications of growing GM produce.
Assured Produce chairman, Professor Mark Tatchell, has pledged to review his scheme’s audit procedure to reduce the burden of the annual audit on its members.

Other matters of farm finance and tenure

The Royal Institution of Chartered Surveyors has reported, in the results of its 2007 market survey, that average agricultural land values exceeded £10,000/ha in 2007 first time. Arable land prices approached £11,000/ha by the end of the year, attributed largely to the combined effects of the buoyant commodity prices and a perceived complete land sales before the 5 April 2008 when the new Capital Gains Tax regime commences.
Bank of England figures show that agricultural borrowing, after hitting a record £9.9 billion in the third quarter of 2007, dropped back by almost £240 million in quarter to December 2007.
The Gangmasters Licensing Authority has found nine of its licensed gangmasters Cornwall guilty of violating standards. The offences included paying below the agricultural minimum wage and grossly overcharging for provided transport.

Product prices

A. Crops

Having set records in January, oilseed rape prices continued to surprise traders by steadily increasing over the course of the month to close just below £360/tonne. The oilseed market, influenced largely by the high Chinese demand for soybeans and soy oil but also artificially lifted by commodity trading, shows no sign of stabilising. Cereal prices remained highly unpredictable this month, with futures on the US markets demonstrating previously inconceivable daily ranges. News of drought in Northern China and export restrictions in Kazakhstan and Russia are all contributing to the uncertainty in the marketplace. Milling wheat prices held steady early on, tailed off midmonth to a low of £190/tonne only to jump back above £200/tonne in the latter stages of the month. Feed barley prices have held steady throughout the month, still sitting £70/tonne above prices a year earlier. Average prices in late February (£/tonne ex-farm): feed wheat 181, milling wheat 200; feed barley 156; oilseed rape 358; feed peas and beans 213.
Average potato prices continued January’s downward trend, dropping back a further £8/tonne in early February. The market improved over the remainder of the month to close at just below £153/tonne. These price levels continue to be influenced strongly by the high volumes of “average” quality crop coming to market. Trade continues to be steady but demand for quality samples remains high. The free market premium at the end of February sat at just below £12/tonne, having fluctuated as high as £17/tonne. Average prices sat £3 higher than February 2007 whilst the average free market price was on a par. In late February, Maris Piper were trading at similar prices to January, between £160 and£190/tonne, with good quality graded samples achieving as much as £240/tonne. King Edward are calling for between £150 and £190/tonne for wholecrop; Desiree prices have weakened slightly, achieving £150 to £180/tonne; £200/tonne for best quality. Estima samples with high baker content were obtaining between £190 and £220/tonne, with the baker grade obtaining up to £300/tonne.

B. Livestock

The average steer price has continued to build on last month’s strength, gaining a further 10p/kg by the end of the month to close at 140p/kg lw. Largely attributed to the Brazilian beef ban, this improvement, however, only goes part-way to offsetting the soaring feed
costs. Prices in February 2007 were 106p/kg.
UK average lamb prices are continuing to follow a similar pattern to 2007, albeit at a slightly higher level, starting the month at 110p/kg lw, the market saw prices peak above 125p/kg mid-month but relax slightly later in the month to close at 122p/kg lw. Quality animals were achieving as much as 128p/kg lw.
The average pig price improved on its opening position of 110p/kg to close the month at 112p/kg dw. Prices in late February 2007 were 105p/kg, some 7p lower, but as with the other livestock sectors, feed cost one year on have increased at a higher rate.
The average farmgate milk price for December (reported in February) weakened slightly for the first time since May 2007, losing 0.65ppl (most of November’s improvement) averaging 26.60ppl. This is still 8ppl above prices a year earlier. Milk quota has continued to weaken on the back of the increased quota levels and the slim chance of exceeding 2008 UK production limits. Clean, 4% butterfat holdings were changing hands in late February for 0.95ppl, 0.34ppl down on January prices.

Other crop news

New Zealand-based Crop & Food Research, using a new method of gene-slicing, has produced a “tearless” onion.
Total UK arable acreage is up 6% compared with 2007 cropping, according to a Defra phone survey. Wheat area is up 12%; barley area is up 5% and 8% for winter and spring crops respectively, whilst oilseed rape acreage is down 3%.
The international Grains Council, in its latest market report, has forecast a record global wheat yield for 2008 of 646 million tonnes, 7% up on the 2007 harvest.
Demand for linseed is increasing greater than the available supply, seeing prices approach£400/tonne. Linseed is rich in Omega-3 oils, which are currently popular in diets and supplements and this is driving the market.

Other livestock news

The World Animal Health Organisation Scientific Commission has declared UK as “Foot and Mouth Disease free”, following a three month disease-free period.
Merial Animal Health has regained its Specified Animal Pathogens Order (SAPO) licence allowing it to once again use Foot and Mouth Disease and Bluetongue viruses for the production of vaccines. Renowned for its aleged responsibility for the Purbright Foot and Mouth outbreak, following which its SAPO licence was suspended, Merial has now passed both Defra and Heath and Safety Executive inspections
The well publicised merger-to-be of First Milk and Milk Link has been scrapped this month. Both organisations reported to their members that they could not support the merger on the grounds that neither could agree on the valuations of their respective businesses.
The Brazilian Government has admitted that the original list of 2,681 farms, that it claimed fully met EU rules on eligibility for export, was inaccurate. A new list of 600 farms has been submitted to the EU. EU Food and Veterinary Office inspectors have already visited some of the 600 farms and have approved over 100 of these; as such Brazilian imports are set to resume. Meanwhile Brazil has lodged a formal complaint to the World Trade Organisation over the EU ban.
A wild Canada goose in Dorset has tested positive for the H5N1 strain of Avian Influenza. Defra have set up a control area around the discovery site including the Isle of Portland and Weymouth.
Bluetongue restrictions already in place last month have this month been extended. The restriction zone now includes Devon, South-east Wales and has moved further into Bedfordshire, Buckinghamshire and Oxfordshire.
Movement restrictions on animals within the Bluetongue zones are to be reintroduced from 15 March due to an expected increase in midge activity.
Defra have admitted to the culling of “the wrong cow” when a German-sourced cow arriving on a farm near Middlesbrough in December tested positive for Bluetongue. The infected animal has subsequently been culled and the remaining herd have all tested negative for the disease.
The Handle with Care coalition, whose members include the RSPCA, Compassion in World Farming and the World Society for the Protection of Animals, has commenced a campaign to stop the long distance transport of farm animals for slaughter. The coalition has already set up a website dedicated to a petition to collect public support.
Members of the National Pig Association (NPA) are to demonstrate at Downing Street on 4 March, to draw attention to the UK pig industry’s plight. The NPA will also submit a petition of more than 10,000 signatories that calls for fairer prices for producers and warns that UK pig farming could very soon disappear for good.
Government sub-committee EFRA has published a report concluding that the current approach to bovine tuberculosis (surveillance-test-slaughter) is not achieving the desired results. The report does, however, suggest that badger culling is not the recommended solution.
Animal Health has launched a free news alert system to assist farmers in keeping up to date with developments concerning notifiable animal diseases.

Inputs/Supply businesses

Grainfarmers Group has recorded a profit before tax and interest of £2.1 million and an 11% increase in turnover for its financial year ended 31 July 2007. The marked improvement over the £2.6 million loss in 2006 is attributed to a successful restructuring programme and the current bullish grain market.
JSR Genetics is to reduce the size of its UK nucleus herd and will close three of its six sites in the UK within the next year. The decision is attributed to increasing demand from abroad combined with contracting demand from the UK market.

Marketing

The Competition Commission has publicly recommended the appointment of an ombudsman and the creation of a new Grocery Supply Code of Practice to enable effective mediation between the supermarkets and their suppliers. The announcement, in advance of the final report due in April, was made to allow stakeholders the opportunity to provide input before the report’s publication.
The Food Standards Agency has published its annual “Consumer Attitudes to Food” survey, in which it reports that 79 per cent of English consumers are aware they should be eating a minimum of 5 portions of fruit and vegetables per day and that 59 per cent actually do; both are improvements over the 2007 survey results.
East Malling Research (EMR) and licensing agent Meiosis Limited have ceased their long-term association. The move will create the opportunity for EMR to work with a new Strawberry Breeding Club with the aim to improve EMR’s access to world markets and increase its speed of variety development.
The English Beef and Lamb Executive, EBLEX, have undertaken a new £900,000 marketing campaign in conjunction with Interbev and Bord Bia, its Irish and French counterparts. The promotion – Agneau Presto – is aimed at getting lamb on the shopping lists of younger consumers across Europe.

Miscellaneous

From April 2008, the water vole will be “protected” under the Wildlife and Countryside act 1981.
Virgin Atlantic has flown a Boeing 747 from Heathrow to Amsterdam using a 20% biofuel mix in one of its four primary fuel tanks. The successful test, in conjunction with Boeing and GE Aviation, used a mix of coconut and babassu oil.
The Svalbard global Seed Vault, a series of three caverns cut deep into a mountain below the permafrost in the Arctic, was opened this week. The facility will store seeds provided by seed banks from around the world at –18 oC to preserve them against such things as natural disaster, climate change or war.
The National Trust gave its 4,800 staff and 49,000 volunteers 29 February, the leap-year day, off in order for them to make home improvements to reduce their respective carbon footprints.
Market research firm Mintel has published a report concluding that UK farmers are not meeting the demand for organic produce. The shortfall is attributed to the fast-increasing demand for biofuels, combined with a general reluctance to commit land to organic production.
John Torode, better known as the Australian presenter of Masterchef will be the next president of the Royal Agricultural Society of England.
Sarah Calcutt, fruit marketing development manager with Kentish firm Norman Collett, has been awarded a Nuffield Scholarship.