Farming News Review - October 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

EU farm commissioner Mariann Fischer Boel has said again that further reform of the CAP before 2013 is out of the question. However, the legislation does provide for a review two years after the last member state has implemented it, i.e. in 2008 or 2009. With CAP spending set to account for just 0.35% of EU national income by 2013 she considered the amounts involved were relatively small. She opposed the co-financing concept (ref. MFU August issue, I.3).
According to a survey of some 26,000 larger UK farmers by The National Farm Research Unit, 82% anticipate making no major change to their farm businesses over the next few years.
The Over Thirty Months Scheme (OTMS) will be officially lifted on 7th November, to be replaced by a BSE testing regime, following advice from the Food Standards Agency. However, the OTMS will remain in place initially, as an alternative to farmers unable to obtain an acceptable price for their older cattle. An estimated 635,000 OTM cattle (185,000 tonnes of meat) will enter the food chain in the first year after the lifting. Changes to the Date-based Export Scheme, allowing the UK to export beef on the same basis as the rest of the EU, will follow but are unlikely to come into effect until early 2006: EU vets have produced a favourable report on the UK's BSE controls but further discussions and action within the EU have to take place before final approval is given.
Defra has launched its "Whole Farm Approach" initiative, to come on-line early next year after completing evaluation trials. This computerised system will enable farmers to update information on their holdings regularly, thereby cutting paperwork and providing other benefits and services. It will apply only in England, but similar systems may be developed later in Scotland, Wales and Northern Ireland.
A free market think-tank, The Globalisation Institute, has described the Common Agricultural Policy as a disaster for the countryside, taxpayers and consumers and says the country would be better off following Prince Charles's lead in producing high value organic food, etc. The response was predictable.
The WTO has begun its further consideration of the EU's ban on imported US hormone-raised meat. The hearings are being held in public.
The EC has opened a formal investigation into potentially illegal state aid granted by France in the fruit and vegetable sector between 1991 and 2002. It intends to take a final decision within 18 months ...

CAP (etc.) support details/payments

The sterling value of the euro on 30th September, which determines the precise value of the single (farm) payment, was 68.195p. It fortunately rose from a low of 67.0 on 12th September.
The Rural Payments Agency has at last announced that the set-aside rate in England in 2006 will be the same as the current rate, i.e. 8%.
The financial difficulties that will face many farmers in England because of the late receipt of the single payment (i.e. until the end of March or possibly even later) are frequently publicised. They include the problem for tenants over the payment of rents. SEERAD has indicated that in Scotland 60% of the payment will be made in December and the rest in April to June, instead of all in December as said previously; problems in England are apparently affecting Scotland also.
The 17,000 farmers in England who applied to the national reserve are being sent a new form by the Rural Payments Agency to complete and return by 4th November.

Grants/regulations/legislation/environment

The independent Royal Commission on Environmental Pollution has published a 176-page report, "Crop Spraying and the Health of Residents and Bystanders", which received widespread national publicity. It said no hard scientific evidence could be found that human health was directly affected by pesticide spraying but that a link was "plausible" and therefore a precautionary approach was advisable until further research had been carried out. It made 34 recommendations, including no spraying within five metres of where anyone lived or worked, taking reported illnesses more seriously, farmers having to keep spray records available for public scrutiny, annual testing of sprayers and, inevitably, further research.
The Rural Development Service has made a major change to the rules on Entry Level Stewardship applications, in order to boost the number of forms being submitted. It said any land not yet on the Rural Land Register could be added later, or submitted on a separate application.
The Environment Agency has reminded farmers in Nitrate Vulnerable Zones in England and Wales that they need to keep records of the nitrogen fertilisers applied or run the risk of losing some of their single payment.
Defra has published for consultation new regulations aimed at stopping farmers undertaking large-scale restructuring projects - which could include fencing or hedging - without obtaining permission from the Rural Development Service.
Proposals have been published for consultation to modernise the process for applying to the Environment Agency for licences to abstract and impound water.
Defra has published a consultation paper asking for suggestions on how to simplify and improve the Code of Practice governing heather and grass burning.
LEAF's self-assessment "health-check" audit is to be updated in line with the CAP reform. New questions and statements relating to cross-compliance and the Entry Level Scheme will be included.
The Soil Association has claimed that fruit and vegetables supplied to school children contain more pesticide residues that those on general sale. This has been strongly refuted by the Department of Health.
Defra is providing financial support for a new body, the Association of Commons Registration, which will advise members and local and national governments on the management of common land.

Other matters of farm finance and tenure

The Scottish Agricultural Wages Board has made proposals to raise most minimum hourly rates by 4% as from 1st January 2006.
The NFU has questioned the justification for a 40% increase in application fees for the Workers Registration Scheme and, furthermore, the need for such a scheme at all.
The latest report from English Food and Farming Partnership (EFFP) recommends changes to the taxation and capital restrictions governing farmer-controlled businesses.

Product prices

A. Crops

Cereal and oilseed rape prices rose slightly during September; there seems little prospect of any significant increase to come in at least the next few months. The pressure of plentiful Eastern European supplies and intervention stocks are likely to keep wheat prices down. As regards malting barley, the world malt market too is oversupplied. The demand for oilseed rape is promisingly high, principally from the expanding EU biodiesel sector, and EU production is down by some 7% this year, but again there appear to be ample stocks.
Average prices in late September (£/tonne ex-farm): feed wheat 62, milling 75; feed barley 62.50; oilseed rape 140; feed peas 81, feed beans 79. Potatoes: down to just under £100.

B. Livestock

Average finished steer prices fell still further during September, to 93p/kg lw in England and Wales (but around 107.5p in Scotland), which has caused alarm and frustration amongst farmers and farming leaders, with great concern over the possible effect on future UK supplies, especially with no headage payments. Supermarkets and processors blame additional supplies, with farmers finishing animals earlier, reduced demand and say manufacturers are holding back until OTM beef comes on the market. Farmers blame imports, but some authorities say these are no higher than usual at this time of year.
Finished lamb prices, too, are well below last year's September level. The average fell to 97p/kg lw at one point, rising to 99p by the end of the month.
The average pig price has fallen to below 104p/kg dw. Domestic supply is said to be strong and there is industrial action at Grampian Foods' abattoir in Suffolk.
Robert Wiseman Dairies cut its September milk price by 0.35ppl and Arla Foods reduced its milk price again by the same amount. First Milk is reducing its price by 0.2ppl from 1st October (its first cut for 18 months). Protests have inevitably continued. Most EU dairy farmers have received a decreasing proportion of the retail price for liquid milk over the last decade, but UK farmers have had the sharpest fall. RABDF chairman Tim Brigstocke has renewed a call for the government to introduce a milk regulator to ensure producers receive "a fair and sustainable milk price".

Other crop news

In most areas fairly kind weather in the first half of September enabled harvest to be completed without excessive need for drying. In Scotland wheat yields were mainly slightly up on last year and of reasonable quality; spring barley yields were on average poor, because of bad conditions at drilling time. Conditions for autumn cultivations and drilling have been generally good and even very good across much of the UK.
Revisions by Defra to its December 2004 survey of estimated wheat and barley areas in England have been heavily criticised. As a consequence this year's estimated harvest wheat crop was reduced by between 500,000 and 600,000 tonnes, to just over 15 million, which lowered the exportable surplus by about 20%. Unfortunately this news had minimal impact on ex-farm prices.
Scotland's cereal area this harvest fell to a 30-year low: wheat was down 5.5%, winter barley down 8% and spring barley down 5.4%.
The British Potato Council has increased its estimated plantings area by 1,811 ha to 125,911 ha, which is still 3.8% down on last year. Despite an 11.5% drop in area Maris Piper still accounts for close to a third of maincrop and a fifth of total plantings.
In a report on renewable energy MPs from the Public Accounts Committee have criticised the government for failing to support the UK market for biomass adequately.
Defra has unveiled a new plant health strategy, bringing together existing policies on plant diseases.
One of Europe's largest greenhouses, situated in Teesside, is to supply tomatoes all year round, following co-operation between a grower and a fertiliser manufacturer.
According to recent forecasts UK apple production will be some 12% above both last year's level and the 2001/04 average: Cox is 30% up on last year, 13% above the 2001-04 average, Gala is 60% up and Braeburn nearly double; Bramley is 5% down on last year but 8% up on the 4-year average. UK pear production is forecast to be 21% down on last year, similarly below the 2001/04 average.
Erratum: September issue, VI.7 (promoting education in horticulture) should of course have referred to the Worshipful Company of Fruiterers, not Farmers.

Other livestock news

Milk production in August was again below profile but this time by only a little: a much smaller shortfall than in recent months. Quota values have recovered slightly: to 1ppl to lease, 6.2ppl to buy (both for 4% BF).
The Milk Development Council (MDC) has launched two new schemes: Business Improvement in the Dairy Sector (Bids) and Dairy Foresight (DF). Both are aimed at helping dairy farmers identify and address their business needs, emphasising the necessity to meet the requirements of a changing market. Bids is set up in conjunction with three large dairy co-ops and DF with Dairy UK and milk producers.
Dairy processors say there could be a shortage of organic milk this winter, with a soaring demand likely to exceed available supplies. Producer spokesmen say an increase in supply will only come about if the farm price rises significantly; (it currently averages around 25ppl).
Junior Defra minister Lord Bach has publicly pledged his support for the dairy industry and promised to help improve its prospects.
National Milk Laboratories, based in Wolverhampton, has won Defra's contract for the statutory testing of brucellosis and enzootic bovine leucosis in dairy cows.
Beef production has been well in the news: see I.3 re the lifting of the OTMS and V.B1 re the slump in ex-farm prices.
Assured British Meat is working with meat industry partners to encourage dairy and suckler beef producers to maximise the value of their older stock through beef assurance, by means of an "Adding Value" campaign.
In Scotland a cattle improvement scheme has been extended by a further year; it involves improving the quality of cattle in crofting areas.
A High Court judge has ordered Defra to pay £10 million, plus 12% interest, to a Lancashire-based plant hire firm for work digging pits on farms during the 2001 foot-and-mouth crisis; it must also pay legal costs exceeding £1 million. Because Defra had refused to pay the firm had initiated legal proceedings, with the support of the Forum of Private Business; it has been a four-year campaign. Several other contractors could follow suit.
A scientist has claimed that the first cases of BSE may have been caused by imports from India of meat and bonemeal contaminated by human carcasses infected with vCJD. The national media (of course) latched onto this story but it quickly faded, with other scientists expressing huge doubts; fortunately no impact on beef sales was detected.
The CLA has followed the NFU and many others in describing the government's attempts to tackle bovine TB as a failure and has put forward its own recommendations.
The Johne's Disease Awareness Initiative has been launched: a joint industry/government project, funded by Defra. The dangers and potential costs of this disease will be highlighted, aiming at prevention and ultimate eradication.
It is hoped that a vaccine to reduce losses from post weaning multi systemic wasting syndrome (PMWS) in pigs may be developed by the end of this year. Trials are proceeding in France and Germany. Losses from this disease have been considerable over many years now.

Inputs/Supply businesses

The total liabilities of Pye Bibby, which went into receivership in July, were £25.7 million when it stopped trading; this was reduced to £10.7 million by the sale of primary assets to Carr's Billington Agriculture.
Volac International has acquired the equipment range from Poole-based British Denkavit, which went into administration early in September following the withdrawal of its licence from the Dutch business Denkavit International. Trouw Nutrition UK has acquired the sole rights to distribute Denkavit milk replacers in the UK.
Defra has proposed a ban on the use of strychnine hydrochloride in pest control from September 2006. The CLA has joined others in opposing the ban or at least seeking an exemption. The poison is widely regarded as the most effective and inexpensive substance for eradicating moles; molehills can lead to soil contamination in silage.
The National Association of Agricultural Contractors has launched an assurance scheme covering livestock feeds prepared on farm using mobile mixers.
The UK is to delay by a year the implementation of an EU regulation halving the maximum level of iodine in cattle and poultry rations.
A Lancashire agricultural engineer and trader has been jailed for six months for selling prescription-only medicines and importing unauthorised veterinary medicines. He has had two previous convictions for similar offences, resulting in large fines. It is the first jail sentence for such offences.

Marketing

Arla Foods UK has won an appeal against the Office of Fair Trading's decision in 2002 to close its investigation into alleged abuse by Robert Wiseman of a dominant position in the Scottish milk market. This followed a two-year investigation referred to the Competition Commission in 2000, after complaints by Express Dairies (now part of Arla Foods UK) in 1999. Arla will now be making submissions to the OFT and reclaiming costs from both the OFT and Wiseman.
Milk Marque has obtained the required 60% of eligible votes concerning its becoming a private company. Virtually 100% of voters supported the change. (Ref. Sept. issue, IX.6).
Milk Link is to streamline its corporate structure. It has appointed a new chairman, Ronnie Bell, former president of Kraft Foods Europe, to replace Jeremy Pope, who is retiring.
The NFU has produced "A Vision for the Dairy Industry", with its emphasis on improvements in marketing; its many recommendations include a fundamental review of raw milk contracts.
The Food Chain Centre has published a report, "Cutting Costs: Adding Value to Dairy", stressing the need for teamwork across the supply chain to cut costs and add value.
Scotland's largest independent family-owned dairy, Graham's Dairies, based at Bridge of Allan, Stirling, has secured a deal to sell organic milk into 24 Sainsbury's stores in Scotland and six in the north of England.
Cadedonian Organics has linked with Greig Farms to form an organic marketing group to supply retailers with 1,000 lambs and 50 cattle a week.
Tesco has unveiled a package of measures intended to support British beef, including fixed price contracts for its organic and premium brands and clearer labelling.
Seven companies marketing British pork have won grants totalling £125,000 from the British Pig Executive Supply Chain Grant Scheme and the same number of read meat businesses have won some £220,000 in total under an English Beef and Lamb Executive grant scheme.
Members of the Camgrain central storage business are parting company with marketing agent Fengrain, following the latter's decision not to merge with Centaur Grain. Fengrain is soon to launch a range of new marketing contracts.
The Rural Payment Agency (RPA) has announced that certain EU agricultural products could receive part funding for promotions from the EC. 31st October is the deadline for submissions to the RPA.
The British Egg Products Association has launched a campaign to promote consumption of British eggs, emphasising their higher guaranteed health standards compared with imports, which have doubled since 2001.
Devon merchanting business J Pickard & Co is to merge formally with Badcock and Evered, which it has been managing for the last 40 years.
Sylvia (Lady) Day has been appointed chair of Food From Britain, as from 1st January, replacing Gordon Summerfield.

Miscellaneous

NFU president Tim Bennett is the new vice president of COPA, the EU organisation encompassing member states' farmer associations.