Farming News Review - May 2008

<< back

Policy issues CAP (etc.) support details/payments Grants Farm finance Product prices

Other crop news Other livestock news Inputs Marketing Miscellaneous

Policy issues

French Farming Minister, Michel Barnier, has called for the Common Agricultural Policy to be retained and for other economic blocks around the world to adopt its principles.
A report by the International Assessment of Agricultural Science and Technology for Development has called for more investment in biotechnology but does not consider that GM technology is the answer to solving global food shortages.
While European ministers look set to agree to legislation which will drastically cut the number of authorised pesticides for use in Europe, leading scientists from seven countries, including the UK, are concerned the proposed legislation could exacerbate the current food crisis. The group claim that policy makers have overlooked the threat of pest resistance which could lead to decreased crop yields and fuel food inflation.
Mandatory use of quarantine release certificates for imported produce has been delayed by Defra as a result of concerted lobbying by the Fresh Produce Consortium.

CAP (etc.) support details/payments

In its submission to the European Commission’s CAP ‘health check’ consultation, Defra has called for all farm payments to be fully decoupled from production and has come out against limits on higher levels of farm payments.
More than 90 per cent of claimants have received their Single Farm Payments but more than 10,000 farmers have yet to receive anything.
75 per cent of cross compliance failures in England in 2007 were related to cattle and sheep identification. The most common failures were failure to report movement of an animal; failure to report the death of an animal; movement details incorrectly recorded on the Cattle Tracing System; lost tags not replaced.
The Welsh Assembly is being urged by the Farmers Union of Wales to take urgent action to prevent farmers being penalised for making genuine errors on their IACS forms due to confusion regarding common land.
Natural England is reviewing 1,600 Organic Entry Level Stewardship conversion agreements after having found that some farmers have been overpaid by up to £25,000.

Grants/regulations/legislation/environment

Defra has launched a consultation, Soil Strategy, aimed at halting the loss of carbon in soils, supporting habitats and biodiversity and ensuring England’s soils are able to support increased food production.
The England Catchment Sensitive Farming Delivery Initiative is to operate a new Capital Grant Scheme which will offer up to £10,000 towards capital works to cut water pollution.
The Local Food Scheme, funded by the Big Lottery Fund, is to make £50 millions available to help farmers make locally-grown food more accessible to the public.
The Milk Road Map has been published, setting out environmental targets for the entire milk supply chain over the next 12 years. Targets include increased participation in agrienvironment schemes, greater use of renewable energy including anaerobic digestion, reduced water usage and higher levels of recycling.
Initial findings of the Waste & Resource Action Programme have revealed that 4.4 million apples, 5.1 million potatoes, 1.6 million bananas, 2.8 million tomatoes and 1.2 million oranges are thrown away untouched every day from homes throughout the UK and that fresh fruit and vegetables make up 40 per cent of the 6.7 million tonnes of food waste generated by homes every year.

Other matters of farm finance and tenure

The Anglia Farmers Agricultural Inflation Index has shown an increase of 16.65 per cent since last September and over an 18 month period is expected to reach 24 per cent.
Latest figures from Defra indicate that agricultural wages have increased by an average of 6.7 per cent over the past year.
Farmland prices have risen by 12 per cent in 2008, the largest quarterly increase on record. The average is approaching £5,000 per acre while good arable land is regularly achieving over £6,000 per acre. According to Knight Frank demand has grown by 19 per cent but supply is flat. Farmers and agricultural businesses accounted for almost 60 per cent of purchases.
A Red Tape survey completed by 200 NFU members has found that 77 per cent of participants felt red tape was more demanding than last year and 95 per cent said regulation was not easy to deal with.
Tenon Recovery has been appointed administrator of Fruit Fast Ltd.

Product prices

A. Crops

April saw the grain market demonstrate less volatility than seen in recent months. Price changes were negative for wheat and oilseeds overall, with futures prices for both commodities, on all the main markets, showing a downward trend. The Euro exchange rates reached record levels this month against both the sterling and the US dollar, fuelling exports from UK to Europe, but hampering those from Europe to the United States. Market news contributing to the price movements included: the International Grains Council reducing their estimate of the 2008 world wheat yield; reports of higher than expected plantings from Canada, Russia, Ukraine; relaxing of Ukrainian export restrictions; the US Department of Agriculture revising its figures for the 2008 harvest higher by 0.3%. The combination of these diverse influences saw cereal, pulse and oilseed prices drop back across the board. Average prices in late April (£/tonne ex-farm): feed wheat 156, milling wheat 185; feed barley 149; oilseed rape 317; feed peas and beans 197.
Average potato prices strengthened over the course of April, largely driven by demand for premium quality crop. Average and poor quality samples are reportedly becoming hard to market. Reducing supplies of quality UK crop and comparatively low levels of imported crop are partly responsible for the shift, whilst delayed plantings and early frosts, expected to delay the 2008 harvest, are also pressuring demand for current crop. Average prices in late April sat just below £174/tonne, up £16/tonne on prices in late March. Demand for clean, high quality samples continues to rise. The free market premium at the end of April was up to £10/tonne. Average prices a year earlier sat £2 higher whilst the average free market price was £11 higher. In late April, Estima prices continued to be the most variable, obtaining between £140 and £260/tonne, with high baker content samples reaching £300/tonne, dependent on the quality and relative baker content. Maris Piper were selling at between £140 and £200/tonne, with good quality graded samples achieving as much as £270/tonne. King Edwards were obtaining between £280 and £3000/tonne, with quality samples making£320/tonne; Desiree prices continue to hold steady at £150 to £180/tonne; £220/tonne for top quality.

B. Livestock

The price of beef continued to climb throughout April; the fourth month in a row. The average steer price rose steadily at the start of the month from its starting position of 136p/kg lw, increasing the rate of gain as the month progressed to close at 148p/kg lw. Average prices at the end of April sat 12p/kg up on those in March; 30p/kg higher than prices a year earlier. World demand for beef remains high.
UK average lamb prices, having reached a high point of 145p/kg lw at the start of the month relaxed over the remainder of the month as the improved price levels drew more animals to market. Prices by the end of the month sat at 141p/kg lw; 40p/kg above prices in late April 2007.
The average pig price continued to climb during April, with prices closing the month at 119p/kg dw. The market for the pig sector is still not as buoyant as that of the red meat sector and whilst the strong Euro is stressing the market for producers in Europe, UK farms are still under pressure from feed price. Prices in a year ago sat at 107p/kg.
The average farmgate milk price for February (reported in April) showed further reductions, dropping 0.40ppl to give an average of 25.62ppl. This remains 7.8ppl above prices in April 2007. News from New Zealand that milk powder may be traded via the internet has led to suggestions that a milk futures market could emerge. Milk quota prices have regained some of the recent losses, in the face of their impending demise. Clean, 4% butterfat holdings were being traded in late April for 1.00ppl, 0.13ppl up on March prices.

Other crop news

The latest forecast from the UN’s Food and Agriculture Organisation suggests a 2.6 per cent increase in cereal production to a record 2,164 million tonnes, largely fuelled by an increase in wheat.
Following on behind Russia and Ukraine, Kazakhstan has imposed a block on export of wheat until September.
According to Grainfarmers, the market share of group 3 wheat varieties is likely to slip back from 19 per cent in 2007/08 to 16 per cent in 2008/09.
Bioethanol production in the European Union grew by only 11 per cent in 2007 compared to growth rates of over 70 per cent in each of the previous two years.
BASF, the German chemical company, has accused the European Union of making a mockery of its genetic approval system after stalling for over five years on a decision to allow cultivation of the Amflora GM potato. BASF argues the potato uses less energy and water than conventional starch potatoes and that amylopectin potatoes can create added value of at least £80 millions per year for the European starch industry.
Sugar production in the European Union is expected to fall in 2008 by 5 per cent to less than 17 million tonnes.
Seven varieties of sugar beet have been added to the Recommended List for 2009 increasing the total to 23. Carissima, Sophia and Levi are rhizomania-resistant varieties, the others are Mandella, Topper, Tempest and Belize.
A team of researchers at Harper Adams University College in association with BioNem has made a breakthrough in pest control in potatoes by proving a naturally occurring fungus can be used to combat potato cyst nematode. The scientists believe the natural method of pest control could reduce the use of chemical pesticides and boost the availability of organic potatoes.
Scientists in Holland have found that a form of genetically modified potato that contains the T4-lysozyme, which combats harmful fungi and bacteria, does not disrupt the microflora in the soil.
The Cucumber Growers Association believes that growers will suffer heavy losses this year unless prices improve to absorb high energy costs. An increase of at least 4 pence per cucumber is needed just to stand still.
The Greenery UK has launched a thin-skinned cucumber which will be available in selected Sainsbury stores.
The 2007 English Braeburn crop was 82 per cent higher than in 2006 despite the planted area only being up 9 per cent.
Kent-based top fruit grower, AC Goatham & Son, has acquired the UK growing rights to two new apple varieties, Zari and Zonga. Both are early varieties developed for commercial fruit growers in Belgium.
Waitrose has become the first UK retailer to launch the Strasberry. The fruit has the genetic make-up of a strawberry but the appearance of a strawberry-raspberry hybrid.
Defra has launched a consultation on a proposed strategy to improve and protect honey bee health.
Defra has pulled out of attending the 2008 Cereals event citing funding and time constraints.

Other livestock news

The first batch of bluetongue virus vaccine has been delivered to vets. Three million doses have been delivered ahead of schedule.
The European Union has approved new livestock movement controls allowing member countries to tighten restrictions on non-vaccinated stock whereby strict import bans can be imposed on all susceptible livestock older than 90 days. Vaccinated stock and those animals shown to be immune to the disease will be free to move from bluetongue zones into bluetongue-free areas.
The Scottish Government is to introduce a compulsory bluetongue virus vaccination programme next winter and, once the vaccine is available, farmers will be required by law to vaccinate livestock or face a fine or jail sentence.
A Dutch vet has warned that bluetongue virus will spread wider and far quicker than in 2007 and could devastate farm businesses unless farmers vaccinate as soon as possible.
The Welsh Assembly has announced a £27 millions, three year bovine TB eradication programme. The Badger Trust has initiated legal action against the decision.
A high court judge has ruled that Defra’s policy on the culling of animals that tested positive to the gamma interferon test was lawful.
The European Union has agreed a £9 millions compensation scheme for sheep farmers in the less favoured areas of Wales to address the effects of last year’s foot-and-mouth disease outbreak in England. The package will equate to about £2 per sheep.
The Government’s Animal Health agency has launched an investigation into how a wheat product containing banned wheat and bonemeal has been mistakenly distributed throughout the country for use in animal feed. The material was a low grade wheat product imported from Sweden for use in the energy industry.
Representatives from the UK meat industry are to present scientific evidence to the European Commission in a bid to halt a European Union ban on mince being made from carcases that are more than six days old.
Following a three-month scrutiny period by the European Parliament, the European Commission has increased the age limit at which the spinal column must be removed from been from 24 to 30 months.
The National Pig Association has reported that 37,000 sows have been slaughtered in the first 3 months of 2008, 40 per cent up on 2007, a contraction of 8 per cent in the UK breeding herd.
The European Commission has warned that lamb production will continue to fall from now until 2014 by up to 6 per cent while consumption is set to fall by 4 per cent.
Figures released by Food From Britain show that beef exports increased by 80 per cent between January and September 2007 despite the foot-and-mouth outbreak.
The European Commission has forecast a fall of 1.6 per cent in European pig production in 2008 as a result of farmers being squeezed between poor prices and rising costs.
The British Cattle Movement Service has reported Limousin-sired animals as having 34 per cent of the UK cattle sector followed by Charolais (16 per cent) and Aberdeen Angus (12 per cent).
The UK dairy sector fell short of the national quota of 14.2 billion litres by over 800 million litres in 2007/08.
Milk producers for Dairy Crest’s Davidstow and Hartington plants are to receive price increases of 0.75 and 0.5 pence per litre respectively.
Research commissioned by DairyCo has concluded that the difference in margin between a herd of average genetic merit and a herd in the top 2 per cent equates on average to £286 per cow per year.
Dairy Farmers of Britain is to leave the Westbury Dairies joint venture leaving First Milk with a two-thirds shareholding and Milk Link one-third.
Liverpool University has invested £1 million in modernising and upgrading its Wood Park dairy unit, part of its Veterinary Field Station in the Wirral. The unit is to provide facilities for teaching farm animal veterinary medicine.
A survey carried out on behalf of Unison, the union which represents meat hygiene inspections, has found that 75 per cent of the public want meat inspection in slaughterhouses to remain a Government responsibility.
A two year review carried out by Defra has concluded that the British Wool Marketing Board continues to provide an effective mechanism for marketing wool in the UK.
The Sir John Hammond Prize for outstanding contribution to animal science has been awarded to Professor Richard Dewhurst of Lincoln University.

Inputs/Supply businesses

Phosphate prices have reached unprecedented levels and are expected to remain high at least until production increases feed into the system in 2009-2011.
Bayer CropScience has obtained regulatory approval for Escolta, a new sugar beet fungicide. The product is designed for use against rust, powdery mildew, ramularia and cercospora.

Marketing

The Competition Commission has announced “not all is well” in the UK groceries industry and has recommended a list of measures to protect competition. It has stated that action is needed to improve competition in local markets and to address relationships between retailers and their suppliers. It has recommended a competition test should be applied as part of the store planning process and intends to limit the ability of retailers to prevent land being used by competitors. UK supermarkets have criticised proposals for a new Groceries Supply Code of Practice and the formation of an ombudsman claiming it could cost the industry millions of pounds.
The Office of Fair Trading has been forced to pay Morrisons £100,000 after the watchdog accepted it had made no clear findings of the supermarket being involved in price-fixing.
A survey published by the Country Land and Business Association has found that only 2 per cent of food purchased by the public sector is produced locally. 100 public and private sector bodies were asked about their policies on purchasing food.
Tesco has included potatoes in its launch of a trial on carbon-labelling its own-brand products. The Carbon Reduction Label will inform customers of the amount of carbon dioxide and other greenhouse gases produced during the lifecycle of the product.
Local strawberries will be available in 300 Tesco stores across 11 counties following a successful trial with Kentish strawberries last season.
The Melton Mowbray pork pie is to be registered as a protected product under the European Commissions’ protected geographical status.
Organic home delivery firm Abel & Cole has opened a new depot in Aylesford, Kent.

Miscellaneous

Defra has launched a free national information and advice service for farmers thinking of converting to organic production methods. The service will be delivered by Natural England and the Organic Research Centre.
Branston Ltd has invested a further £1 million into its Abernethy site to enable potato output to increase by 25,000 tonnes a year to 80,000 tonnes.
JCB increased sales by 30 per cent in 2007 to more than 72,000 machines.
The Gangmasters Licensing Authority completed its first successful prosecution when Perth labour provider Fiona Clark was found guilty of operating as a gangmaster without a licence.
Suffolk labour provider, Goose Recruit Ltd, has had its licence revoked by the Gangmasters Licensing Authority. The company provided labour to the parsnip sector.
Plimsoll Publishing has reported that, of the UK’s top 1,200 companies in the fresh produce sector, 60 per cent have seen their margins fall and more than 25 per cent of these are running at a loss.
Hadlow College students are the first to graduate from the South East England Development Agency funded Fresh Start Academy programme which aims to encourage new recruits to the farming industry.
Florette UK, the prepared salad concern, has announced sales growth of 27.5 per cent in the first three months of 2008 compared to a sector growth of only 0.7 per cent.
Fresca Group has taken a 40 per cent stake in Wallings Nursery, one of the UK’s largest growers of glasshouse strawberries based in Manningtree, Essex.
Utopia UK Ltd is to open a 36,000 sq ft prepared fruit facility in Gosberton, Lincolnshire.