Farming News Review - November 2009

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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

A draft European Commission document apparently circulating in Brussels suggests that EU spending on agriculture is to be “significantly” reduced after 2013. A reduced farm budget will be allocated more towards environmental measures and tackling climate change. EU officials also plan to delegate a greater element of Common Agricultural Spending to member states, a move which would be likely to work against UK farmers.
In a response to the investigation carried out by the Environment, Food and Rural Affairs committee into securing food supplies to 2050, the Government has said that a reliance on home-produced food would leave the country vulnerable to freak events such as crop failure, disease outbreaks and severe flooding.
The Government’s position on reform of the Common Agricultural Policy “Vision for the CAP”, which proposes the abolition of production subsidies alongside a big reduction in import tariffs, has been attacked by an impact assessment led by Belfast’s Food and Agricultural Policy Research Institute. The assessment concludes that the plan would reduce UK beef production by 12 per cent and sheep meat production by 18 per cent. Further, cuts in import tariffs would treble EU beef imports, mainly from South America, by 2 million tonnes by 2018, resulting in a 26 per cent increase in the beef price. Sheep imports would increase by 60 per cent. Suckler cow numbers across the UK would fall by up to 29 per cent and ewe numbers by 17 per cent.
The Royal Society has called for £200 millions to be spent in each of the next 10 years on the “Grand Challenge” to tackle global food security and has stated that GM technology is a top priority. The Society wants British farmers to have access to technology such as drought resistant maize, blight resistant potatoes and nitrogen fixing wheat.
The UN’s Food and Agriculture Organisation has called on governments across the world to increase aid to agriculture from the present £4.94 billions per year to £27.5 billions per year as an aid towards increasing productivity by 70 per cent by 2050.

CAP (etc.) support details/payments

The Rural Payments Agency has announced the values for the 2009 Single Payment Scheme in England - £168.49 per hectare for non-Severely Disadvantaged Areas; £141.93 for upland Severely Disadvantaged Areas other than moorland; £24.89 for upland Severely Disadvantaged Areas moorland. Apart from the beneficial effect of the exchange rate, the flat rate element of Single Payment Scheme entitlements has increased from 45 per cent in 2008 to 60 per cent in 2009. The historic element falls to 40 per cent.
A report by the National Audit Office has heavily criticised the way Defra and the Rural Payments Agency have administered the Single Payment Scheme. It claims that £680 millions has been wasted in implementing the scheme which costs £1,743 per claim in England compared to just £285 per claim in Scotland. The report focused on the decision by Defra to opt for the “dynamic hybrid” payment system in England, described by the NAO as “the most complex model available.”
The Rural Payments Agency has been accused of having mislaid computer data containing the bank details, addresses, passwords and security questions of more than 100,000 farmers.

Grants/regulations/legislation/environment

The Department for Business, Innovative and Skills is to invest £13 millions in research and development funding to help growers deal with new and existing EU regulations on pesticide approval and use. It will cover horticulture, grass, biofuel and arable crops. Applications for grant funded projects, which can last for up to 5 years, will open in January.
The Biotechnology and Biological Sciences Research Council has awarded funding of £1 million to scientists at Rothamsted Research and Warwick University to research the decline of honeybees.
Up to £10,000 grant aid per business is available to help farmers “manage resources more efficiently” as part of the Agricultural Resource Management strand of the Rural Development Plan for England. It is aimed at projects to improve the management of energy, water and waste on farms.
The Environment, Food & Rural Affairs Committee of MPs has criticised the Government’s Flood and Water Management Bill referring to it as “a confusing mix of measures, many of them poorly drafted”. The Committee said the Government has not adequately thought through the needs of farmers and growers.
The Biotechnology and Biological Sciences Research Council and Yara UK are to fund a project at the University of Nottingham to research into bio-fortifying brassicas to boost dietary intakes of calcium and magnesium.
The Tenant Farmers Association has accused Natural England of “destroying upland farming” through its Environmental Stewardship Schemes as it has warned that stocking densities in some upland areas could fall by 75 per cent under Higher Level Stewardship.
The Country Land and Business Association has warned the Government that £50 millions of taxpayers’ money is being wasted on proposals for a statutory right of access to the English coastline.

Other matters of farm finance and tenure

The latest Smiths Gore survey reports that the value of bare agricultural land in England rose by 2 per cent in the third quarter of the year to an average of £4,900 per acre. The survey suggests that bare land values have risen by 7 per cent since mid-1008 while the values of equipped farms have fallen by 24 per cent in the same period.
A report published by Lantra, the Sector Skills Council for the UK’s environmental and land-based industries, has found that 31 per cent of job vacancies in agriculture are difficult to fill because of skills shortages. Lantra estimates that 60,000 new entrants are needed into agriculture in the next decade just to stand still
Strutt & Parker has forecast that the area of farmland marketed in 2010 could fall to less than 100,000 acres compared to 190,000 acres in 2008 as a result of a fall in values.
S&A has been granted planning approval by Herefordshire Council for polytunnels, seasonal workers’ accommodation and associated facilities at is Brierley site.

Product prices

A. Crops

Cereals, oilseeds and pulses alike had a better month in October, with improvements across the board. Market indicators suggest that the weakening of the dollar against other major currencies, most importantly sterling, and a far higher level of speculative commodity trading are the biggest factors in the buoyant market. Wet weather for the maize harvest in the US, dry weather in the Ukraine and increased crude oil prices (knocking on to ethanol production) are also contributing. Despite these positive factors, the fact that UK growers are holding on to a high level of 2009 crop may mean that volatile times lay ahead. The European view of the wheat market has improved vastly from that of a month ago, best demonstrated by the LIFFE wheat futures at the end of October: deliveries in November 2009, 2010 and 2011 respectively were £103 (£5 up on prices at the end of September), £115 (up £5) and £120 (up £8). Average spot prices in late October (£/tonne ex-farm): feed wheat 94, milling wheat 113; feed barley 79; oilseed rape 225; feed peas 120; feed beans 120.
Potato prices continue to disappoint. From last month’s close of £108 per tonne, prices dropped early on to a low of £97 per tonne; they then strengthened gently, reaching £104 per tonne, only to drop back further in the latter stages of the month. The October close stood at £92 per tonne; 10 per cent below prices a year earlier which sat at £103/tonne. The free market is also suffering, following a similar trend to the average. The low point of £73 per tonne was also the closing position; 24% below the September 2008 price of £97/tonne. The market has been set by the high volumes of crop available which, paired with insufficient storage, is resulting in a flooded market place. At the end of October Estima were obtaining between £45 and £80/tonne and King Edward were achieving between £90 and £130/ tonne. Melody were making between £50 and £85/tonne for wholecrop, whilst Romano prices stood between £70 and £110/tonne. Maris Piper were achieving from £70, for poor samples, up to £160/tonne for best quality, whilst Desiree were achieving between £70 and £120/tonne; £130/tonne for exceptional quality.

B. Livestock

Average steer prices dropped back marginally in October, losing 2p/kg from the starting position of 149p/kg, but recovering slightly to close at 148p/kg lw (less than one per cent down). The average heifer price also fell, by a further penny, to close the month at 153p/kg lw, bringing the premium over steers back to 5p/kg. The average price for dairy cows in late September stood at £1,188 per head; back 8.5 per cent on September.
Lamb prices weakened early on in the month, reaching a low of 136p/kg lw, but rallied in the latter stages. By the end of the month the average UK lamb price was 138p/kg lw (less than a per cent below the September average). Prices in late October 2008 were 21 per cent lower at 114p/kg lw.
The average pig price, still in line with the seasonal trend set over previous years, continued to drop back further this month, a little harder than the 2008 season. By late October the price stood at 144.1p/kg lw (a 3.6 per cent reduction compared to last month; and now only 6 per cent above the average price a year ago).
The average farmgate milk price for August (reported in October) increased further on the back of July’s improvement; up by a quarter of a penny to 23.26ppl. The average price in August last year was 3.03ppl (13 per cent) higher. Milk quota prices weakened again this month, albeit to a lesser extent, this month to close at an average of 0.45ppl for clean 4% butterfat holdings. Leased quota (4%) still stands at 0.10ppl.

Other crop news

Jorgen Ole Haslestad, chief executive of Yara International, has claimed that world wheat yields are not increasing sufficiently to meet the projected demand for food in 2030. He has advised that extrapolating the 45-year wheat trend from 1961 indicated an average yield of 3.4 tonnes per hectare by 2030. This is about 20 per cent higher than the 2007 yield whereas the need by 2030 is for an increase in yield of 50 per cent.
The first harvest estimates from Scotland show a 202,000 tonnes drop in wheat production and a fall in oilseed rape production of 11,000 tonnes. Wheat yields fell by 3 per cent and, while oilseed rape yields rose, the increase was insufficient to counter a 13 per cent reduction in cropping area.
A review carried out by the International Energy Agency’s Task 39 bioenergy network has found that in 2008 biofuel production totalled 10.9 billion litres of biodiesel and 66.6 billion litres of bioethanol. Just 5 countries provide 84 per cent of biodiesel production while the United States and Brazil account for 91 per cent of bioethanol production.
British Sugar has agreed to pay £26 per tonne on all tonnage contracted for the 2010/11 beet season but has not agreed to pay an additional £1 per tonne transport allowance until it has reached a long-term agreement with growers.
A report prepared by Sean Rickard of Cranfield University has proposed changes to the Horticultural Development Company levy. It suggests lowering the turnover threshold to £20,000 thereby creating additional revenue of 10-18 per cent and an end to the system of permissible deductions which would reduce the cost of administering and collecting the levy.
The Watercress Growers Association is seeking an EU ruling to ensure that land-grown cress cannot be sold as traditionally grown watercress.
Warwick University’s Horticultural Research Institute has confirmed that Tenderstem broccoli is the most tender variety currently available.
UK tomato growers have been warned about the spread of Tuta absoluta and Nesidiocoris tenius which can cause losses greater than £300,000 per hectare.
Marks & Spencer is to sell a cream coloured carrot, “Creme de Lite”, an organic variety supplied by Scottish farmer Steven Jack.
English wine producers are forecasting a bumper harvest with production expecting to be about 3 million bottles compared to an average of 2 million bottles.
The National Institute of Agricultural Botany and The Arable Group have merged.

Other livestock news

UK Ministers and MEPs have criticised EU plans to set up a £255 millions emergency support package for dairy farmers. Farming Minister Jim Fitzpatrick said: “We want to see a viable and competitive dairy sector in Europe but will not support anything that takes us backwards to a regime of heavy market support for inefficient dairy producers at the expense of taxpayers and consumers.”
In the year to March, 28 per cent of dairy farms accounted for 59 per cent of the British milk supply, each producing in excess of one million litres. However the number of large producers has fallen by 384, a 10 per cent drop in one year.
Defra figures show that liquid milk imports amounted to 87.7 million litres in 2007 but then rose in 2008 to 134 million litres.
The number of dairy producers fell by 0.5 per cent between August and September, in England and Wales, down to 11,632 compared to 12,050 in September 2008.
UK milk production in September increased by 20 million litres compared to a year ago, the first increase in production since July 2008. The annual rolling production is 1,852 million litres below quota.
In its report “Opinion of Dairy Cow Welfare” the Farm Animal Welfare Council has called for further improvements citing that dairy cows are now living longer with an average lifespan of 6 years and an average of 3.6 lactations.
EU Agriculture Ministers have approved extending intervention buying of butter and skimmed milk powder to February 2010.
The EU’s Standing Committee on the Food Chain and Animal Health has agreed to the UK’s bovine TB eradication plan and has agreed a £9 millions funding package to help implement it.
England’s TB Eradication Group has advised that, such is the scale of the disease, it could take at least two decades to deliver any significant downturn in the spread of bovine TB.
The attempts by the Welsh Assembly to legalise a bovine TB badger cull have suffered a setback with the lodging of a motion to annul the proposal by two Assembly members.
The Eblex annual Business Pointers costings for the year to March have shown that beef and sheep producers’ net margins remain negative despite considerable improvements. Lowland suckler herds achieved an average net margin of minus £259 per cow with fixed costs accounting for £265 per cow of total costs. However, the top third of extensive beef finishers achieved a positive net margin of £50 per cow compared to an average negative figure of £200 per cow.
The Licensed Animal Slaughterer’s and Salvage Association claims that farmers’ charges for the collection of over-48 month cattle which have died on-farm will have to rise as some members who are authorised to take brain stem samples are deeply dissatisfied with the £5 they are paid by Defra for the work.
The National Fallen Stock Company has claimed that data from its 110 collectors on the numbers of fallen stock being collected are “below those that would be normally expected given population numbers and mortality statistics” leading to suggestions that some livestock farmers are flouting the fallen stock burial ban.
Defra has confirmed that, when the EID rules come into force next year, farmers moving sheep to temporary grazing will not be forced to use individual recording.
In its latest report looking at farm animal welfare development over the past 45 years, the Farm Animal Welfare Council has called for a major re-think. It recommends an education programme about food and farming and a new system of welfare labelling on meat products.
Representatives of Scotland’s livestock bodies have agreed a managed introduction of live imports from bluetongue infected areas of continental Europe during the lower risk Transitional Free Period which runs from November to April.
The RSPCA has agreed to increase the maximum number of hens allowed outdoors under the Freedom Food scheme from 1,000 birds per hectare to 2,000 birds. However, farmers who wish to take advantage of the increase will be required to provide “increased enrichment and more provision of natural cover.”
A new Food Standards Agency survey has found the campylobacter bacteria in 65 per cent of chicken on sale in the UK whereas salmonella levels have fallen to 6 per cent. Campylobacter bacteria is responsible for about 55,000 cases of food poisoning in the UK each year.
Hereford Council has approved a new £7.1 millions livestock market.

Inputs/Supply businesses

SOLA approval has been given for Guillotine, a residual and contact acting herbicide for use on winter oats.
SOLA approval has been given for the horticultural fungicide Kindred to control powdery mildew on apple, pear, crab apple and quince crops.
SOLA approval has been given for Switch, a horticultural fungicide for the control of Alternaria and Sclerotinia in particular on crops such as beetroot, carrot, horseradish, parsley root and parsnip.

Marketing

A 20-strong working group has been set up by Defra to boost the consumption of fruit and vegetables. The group will include growers, wholesale representatives, retailers, consumers and researchers. Its aim will be to develop an action plan to increase production and consumption.
A report from the University of Exeter has found that consumers expectations of organic food go “significantly beyond” the standards set for producers. The Defra commissioned report found that organic shoppers believe that organic fruit and vegetables are completely free of pesticides and are locally produced. It calls for improved education to inform consumers of the realities of organic production.
A working group comprising The National Farmers’ Retail & Markets Association, the Food Standards Agency, the Local Government Association, the National Association of British Market Authorities, the National Market Traders Association and the Association of Town Centre Managers will assist Defra in evaluating the increasing success of street, covered and farmers’ markets.
Oxford University’s Institute for the Future of Humanity has forecast that a standard loaf of bread will cost £6.48 within 20 years rather than £1.44 with normal inflation as a consequence of the effects of climate change on wheat yields.
Tesco has introduced a “buy one get one free – later” (BOGOFL) measure in an attempt to reduce food waste on perishables.

Miscellaneous

The Scottish Crop Research Institute and the Macaulay Land Use Research Institute have agreed in principle to merge.
Kevin Roberts is to be the next director general of the National Farmers’ Union, succeeding Richard Macdonald.