Farming News Review - May 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

Delays and confusions over the Single Payment Scheme application process have been heavily featured in the agricultural press in recent weeks. (The deadline is 16th May). The Rural Payments Agency has had to increase its staffing substantially and to have produced updated guidance notes on completing the required SP5 form. Some farmers had not even received the form by the end of April. The application process seems to have been proceeding much more smoothly in Scotland.
According to NFU economist Carmen Suarez cuts in the single farm payments could be as much as 40% within a few years. This depends, however, on a whole range of factors as yet unresolved, including the possible accession of Bulgaria and Romania into the EU as early as January 2007 (both signed an accession treaty in late April); they would be the EU’s poorest member countries).
The legal challenge to the way Defra has implemented the dairy reform in England (namely by including the dairy premium in the single farm payment, which will gradually be reallocated as the regional area payment) was defeated in Brussels. Two weeks after the case was lodged the EC passed a regulation which allowed member states to do what Defra has done.
Little space has been devoted to agriculture in the manifestoes of the political parties for the forthcoming General Election, on 5th May. It has barely been mentioned in the speeches of and arguments between the politicians featured on television and in the national newspapers, despite the fact that three-quarters of the most marginal seats are in mainly rural areas.
The official review of the first five years of the Food Standards Agency, carried out by Baroness Dean, was generally complimentary but felt it had “deviated from its normal stance of making statements based solely on scientific evidence” when “speaking against organic food and for GM food”. Dame Deirdre Hutton is to succeed Sir John Krebs as the FSA’s chair in July.

CAP (etc.) support details/payments

Scottish and Welsh deer farmers are aggravated by their exclusion from the farm aid systems offered in other EU countries, including England, under the CAP reform.

Grants/regulations/legislation/environment

The Environment, Food & Rural Affairs Committee of the House of Commons has produced a report on its recent investigation into the first four years’ operation of the Voluntary Initiative (VI) measures to minimise the impact of pesticides on the environment. It concludes that some of the targets “are insufficiently challenging” and should be strengthened. It says there was currently little firm evidence of the environmental benefits of the VI. Nevertheless the Committee calls for the VI’s renewal after its current programme ends in March 2006; it wants its remit to be re-focused on water catchment-sensitive farming and other water issues.
According to Defra data the continual decline in the number of farmland birds since 1966 has now halted and species such as greenfinches and stockdoves are slowly increasing in numbers. The RSPB has greeted this information with “cautious optimism”.
The 2005 Hill Farm Allowances for England should have been received by now. They are (per ha): £11.26 for moorland and common land, £16.10 for other disadvantaged areas and £29.78 for severely disadvantaged areas. These levels are lower than those for 2004 (£14.44, £20.62 and £38.14 respectively). Payments for 2006 have been sent to the EC for approval: they are expected to be the same or a little higher than this year.
The Welsh Assembly has proposed considerable reductions in the Tir Gofal agri-environmental scheme and its Tir Cymen predecessor; they have yet to be ratified by the EC. Farmers and industry organisations have expressed horror and anger at the extent of these cuts.
An inquiry has opened into the proposed erection of 27 giant wind turbines on moorland in Cumbria, between Tebay and Shap. The development has had considerable coverage in the national media. As would be expected, farmers and tourist organisations are generally strongly opposed, as are many others.
James Money-Kyrle, the chief executive of FWAG, has stepped down after two-and-a-half years in the post. Scottish director Steve Hunt will take over until a successor is appointed.

Other matters of farm finance and tenure

According to the latest Forestry Market Report by Tilhill and Savills the average price for plantation woodland rose by 14% last year to £1,817/ha (£735/acre), with the value of mature woods over 30 years old increasing for the first time for six years. Small woodlands averaged £7,400/ha (£3,000/acre) in England and Wales: £10,300/ha (£4,170/acre) in South East England.
Defra is consulting on two additional proposals to its reform of the Agricultural Holdings Act 1986. One is an amendment to the proposal to simplify succession on retirement. The other is a new proposal on variation of rent.
NatWest has restructured its agricultural lending operation. It has grouped its 75 agricultural managers under national agricultural manager Ian Burrow. They will work from seven trading regions in England.
Insurance broker La Playa has launched the La Playa Farms & Estates Division “to integrate insurance provision with risk management”.
The sterling value of the euro averaged approximately 68.25p during April, falling from 68.6p at the start of the month to 67.6p at the end, with erratic fluctuations in between.

Product prices

A. Crops

Cereal and oilseed prices were several pounds a tonne lower towards the end of April than a month earlier. EU wheat stocks remain plentiful, with very large amounts in intervention, particularly in the new member states, and a record world wheat crop is predicted by the USDA; EU export refunds have continued but been cut. UK exports have faded. Nevertheless, a few UK farmers may just get £75/tonne for feed wheat at the end of the season: ex-farm prices at harvest are currently at £58-£60/tonne in central England and £62 near ports.
Average prices in late April (£/tonne, ex-farm): feed wheat 63.50, milling 85.50; feed barley 63.50; oilseed rape 124; feed peas and beans 90; potatoes 92 (spot prices about 86).
Notwithstanding the current low oilseed rape prices, with large amounts remaining in store, Springdale Crop Synergies is offering contracts with a guaranteed delivered price of £150/tonne, plus a bonus for an oil content over 40%, for up to 405 ha of spring and 20,250 ha of winter rape across the UK to supply electricity generators in Yorkshire. The crops would also qualify for the EU’s 45 euros/ha energy crop payment.

B. Livestock

Finished steer prices rose during April to finish the month close to 106p/kg lw.
Finished lamb prices continue well below last year’s levels. The average rose to a peak of 124p/kg lw in early-mid April but fell back to 119p by the end of the month.
The average pig price rose to just over 106p/kg lw during April but a decline is forecast because of falling prices on the Continent. Cull sow prices have slumped.
Arla Foods UK raised its March milk price by 0.75ppl and Robert Wiseman Dairies added 0.9ppl for its direct suppliers. Having announced an 0.3ppl increase Milk Link raised its capital account contribution by 0.25ppl (to 1ppl) from April and are deducting another 0.12ppl till 28th February 2006 to cover a £1.8 million shortfall in expected profits for the 2004-05 milk year. Dairy Crest is to hold its prices until May.

Other crop news

In most of the UK autumn sown crops are looking well and spring drilling has proceeded satisfactorily. Rainfall has continued low in southern and south-east England during April; (a hosepipe ban has been enforced in west Kent for the first time for 13 years, following the third driest winter in 120 years). However, some areas have suffered severe spells of weather, such as in north-east England in mid-month.

Referring back to the very heavy snowfall in parts of Kent between 20th February and 5th March, the total amount recorded for the Met Office in that period in one area of the North Downs in mid-Kent (which happened to be very close to the author’s home ….) was 82.5 cm, i.e. 32.5 inches. Almost beyond belief, but true.
NIAB is to spend more than £400,000 over the next four years on part EU-funded research into the viability of growing GM crops alongside conventional ones. This is part of the CO-EXTRA programme, which will involve 51 partners throughout the EU examining the steps needed for both types to co-exist, keeping their produce separate and crop rotation systems.
The Argent Energy £15 million plant at Motherwell in Scotland has started commercial biodiesel production, using rendering by-products and used cooking oils.
Romney Marsh farmer Andrew Martin has received a £20,000 grant from the South East England Development Agency to examine how farmers could co-operate in producing biodiesel from oilseed rape.
The government’s GM advisory body set up in 2000, the Agriculture and Environment Biotechnology Commission, was closed at the end of April, following an independent review late last year.
Prof. Peter Gregory, professor of soil science at Reading since 1994 and its current pro-vice chancellor for enterprise, is the new director of the Scottish Crop Research Institute, succeeding Prof. John Hillman.
The John Innes centre in Norwich is having to shed up to 10% of its 350 staff to compensate for some losses of funding and increased costs.
French wine growers have used dynamite to blow up two of the government’s department of agriculture offices and an official vehicle in the south of France because of an income crisis. Similar activities in the UK are definitely not to be recommended.

Other livestock news

Milk production exceeded quota in March; it was only the second month in the 2004-05 milk year that this happened. Production for the whole year was therefore well below quota. Quota (4% BF) is currently 2.6ppl to lease, 8.7ppl to buy.
The number of cattle confirmed with bovine TB in Great Britain rose by 17.5% during the first eight weeks of 2005 compared with the same period in 2004, though this is partially attributed to a 15% increase in the number of animals tested. In Scotland an entire herd of 95 beef cattle had to be slaughtered in Dumfriesshire: the first time a whole herd in Scotland has had to have been culled (owing to the high proportion of animals infected) since 2003.
Livestock industry representatives are to review the performance of the National Fallen Stock Company over the next two months with the aim of identifying the causes of its serious failings, finding ways to overcome them and thereby improving the service.
EU agriculture commissioner Fischer Boel has staunchly defended the live export trade.
The Institute of Animal Health has opened a new 550-cow dairy research unit at its site in Compton, Berkshire.
According to a small-scale study in the US and Japan meat and milk from cloned animals is safe to eat.
It is estimated that 25 farming businesses and corporates account for 50% of Britain’s pig breeding herd. Largest is the Tulip/Danish Crown owned BQP, with an estimated 25,000 sows; second is Malcolm Easey, whose latest deal with Larkhall Farming near King’s Lynn takes his total to 17,000.
A £10 million plan by Banham Poultry to build a renewable power plant near Attleborough in Norfolk using dried poultry by-products has been approved by the Environment Agency. Now Norfolk County Council has to give its approval.

Inputs/Supply businesses

In the US, several hundred tonnes of Bt 10 maize seed (unapproved in the EU) has been accidentally sold as Bt 11 seed (approved in the EU). The EC therefore effectively halted imports from the US of maize gluten and meal, unless accompanied by a certificate that it is free from all traces of Bt 10. The US reacted angrily. However, it seems now that a new test for the presence of Bt 10 has been developed by GeneScan, thus solving the problem.
Fuel costs having risen by some 60% in the past three months supporters of Farmers For Action have initiated protest activities at oil refinery sites.
UK AN fertiliser prices are a little lower at present than had been expected earlier in the year. Nevertheless, the average price for the coming season is likely to open at £130/tonne, delivered merchant in July, which is the highest level since 1996.
Yara is working to improve agriculture and nutrition in Africa, as part of a commitment to mark 100 years since its predecessors began manufacturing nitrate fertiliser in Norway.
The international shipping, grain and feed trading business Peter Cremer has bought the majority shareholding in Prime Molasses, so as to increase its presence in the UK market.
The EC ban on the feeding of fishmeal to ruminants could be lifted this summer. The EC has confirmed that all the conditions for lifting the ban have been met, but a committee of European Parliament members has to report on the issue before a final decision can be made.
Mole Valley Farmers has launched an agrochemical advisory and application service aimed at livestock farmers in mid-Devon and west Somerset.

Marketing

The “little red tractor” logo has been relaunched as the “Red Tractor”. It now includes a Union flag and “British Farm Standard” has been changed to “Assured Food Standards”.
Tesco has announced a £2.03 billion annual profit, a record level for a UK retailer. The reaction of some farmers and farming organisations was predictable.
The Office of Fair Trading has invited the NFU to submit evidence of alleged breaches of the Supermarket Code of Practice experienced by its members. The deadline for submissions is 16th May.
Sainsbury’s has dropped its demands concerning longer payment terms for its suppliers; (ref. April issue, IX.2).
A deal reportedly worth £20 million has been struck between Asda and Leeds-based Fuller Foods to supply vegetables for freezing. Some 80 growers will have long-term contracts to supply broccoli, cauliflowers and peas at fixed prices.
Asda is reported to be preparing to make a bid for Somerfield. If the two were to link it would comprise the second largest supermarket in the UK, next to Tesco.
The proposed Arla-Campina dairy co-ops merger (first reported last December) has been called off; talks have been abandoned. The merger would have created the world’s largest dairy co-operative.
Dairy Farmers of Britain has acquired the Lincolnshire Co-operative Society for £5.5 million. It includes the Boulton Park Dairy in Lincoln and eight distribution depots in Lincs. and Cambs., plus the Clarey’s luxury ice-cream brand. The new business adds £23 million to DFB’s annual turnover, mainly through the sales of the Dairybrand brand liquid milk.
Dairy Farmers of Britain is to close the Llangardog creamery in Carmarthenshire this summer; it bought the creamery, which has been making heavy losses, only last August as part of its acquisition of Associated Co-operative Creameries. Most of the milk from the 200 farms supplying the creamery will be diverted to DFB’s other sites at Cardiff and Llandyrnog.
The proposed £44 million Cheddar Cheese factory at Workington in West Cumbria has now received planning permission. Construction should begin in a few months’ time.
Grampian Country Foods is to close its pig processing plant in Buckie, Aberdeenshire, with the loss of 330 jobs. Its capacity will be transferred to the firm’s Broxburn plant near Edinburgh, which will create 200 new jobs there.
The Forum of Private Businesses, a lobby group which represents 25,000 small businesses, has taken the cause of small abattoir owners to Brussels, arguing that the UK government’s interpretation of EC regulations governing abattoirs, especially as regards building modifications, is too stringent for small abattoirs to be able to afford.
Two north-west England auction marts, Kendal & District and Lancaster Farmers, are to merge and become L & K Group plc.
The Institute of Grocery Distribution has produced a free guide to help farmers and small producers explore opportunities in the foodservice sector.

Miscellaneous

The new organisers of the Royal Show, Haymarket Land Events, have decided to concentrate on making it an agricultural show. All non-agricultural related activities and general public advertising will be dropped.
The firm is also to revamp the Smithfield Show. It will be reduced to three days and livestock will be split off after 2006.