Farming News Review - October 2007

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

Other crop news Other livestock news Marketing Miscellaneous

Policy issues

EU Farm Ministers have approved the policy of zero set-aside for 2008. The move has been criticised by organisations linked to the environment such as RSPB and Natural England.
The Council of Ministers is being asked to accelerate import approval for new GM livestock feed products and endorse other measures which could reduce the impact on livestock farmers of increasing feed grain prices. EU Ministers are also to be asked to suspend the current import duty on maize and place a temporary export tax on EU cereals.
The conclusion of experts attending a bio-energy conference organised by the Renewable Energy Association is that if the UK is to meet its goal to reduce carbon dioxide emissions by more than a quarter from 1990 levels by 2020, it must set up a more coordinated energy strategy. While strategies for power generation and transport fuel were moving forward, that in respect of renewable heat had made little progress.

CAP (etc.) support details/payments

The European Commission is expected to publish its proposals for the CAP health check on November 21. The EU Farm Commissioner, Mariann Fischer Boel, wants to see the current basic rate of modulation of 5 per cent rise to 13 per cent by 2013.
The suspension of the waterlogged soils requirement under Cross Compliance has ended.

Grants/regulations/legislation/environment

A research paper published by the University of Edinburgh suggests that growing and burning biofuels may increase rather than reduce greenhouse gas emissions. Researchers found that growing some of the most commonly-used biofuel crops released twice the amount of nitrous oxide than previously thought.
Results from a study of over 20,000 farmers from Iowa and North Carolina found double the risk of adult-onset asthma and have linked the cause to the use of 16 different pesticides.
The Waste and Resources Evidence Strategy 2007-2011 has been published by Defra. It outlines key areas where research will be commissioned with the aim to meet the Government’s waste targets over the next 5 years.
An Environment Agency report “Putting the Brakes on Climate Change” has found that serious pollution incidents within the industry fell by 35 per cent to their lowest level in 2006.
A European Commission report believes that water savings of up to 50 per cent could be made in the agricultural sector by applying innovative changes to the irrigation infrastructure and technological investments.
To apply for a share of the £3.3 billions Rural Development Programme, woodland owners are being urged to register early with Defra for the English Woodlands Grants Scheme.
The Plunkett Foundation is using funding of £10 millions from the National Lottery’s Changing Spaces initiative to launch “Making Local Food Work”. The programme will support 650 sustainable community enterprises across England intended to increase access to local food.
Bical, from Somerset, has been awarded an HGCA grant towards trials of its fuel pellet containing UK grain, designed to compete with wood pellets.
Scottish organic vegetable producer Tio Ltd has received a grant of £266,000 from the Highlands and Islands Enterprise network towards a £2.5 millions investment in its operation at Forres.
Farmex has been awarded a grant of £100,000 to study ways of producing a wireless ventilation system in piggeries.

Other matters of farm finance and tenure

The Environment Agency has launched a consultation on changes to water abstraction licence charges.

Product prices

A. Crops

The early part of the month saw cereal prices continue to strengthen as a number of major importers placed orders, Australia further reduced its expected final yield figures and the reported world wheat crop was further reduced. These price increases were bolstered by futures traders’ interest worldwide. Feed wheat was seen to peak above £190/tonne whilst milling wheat premiums added another £30/tonne. The latter part of the month, mainly driven by traders selling to bank their profits, saw cereal prices finally drop back, but only slightly. The oilseed rape market, already riding high on the increasing popularity of biofuels, has been given additional buoyancy as a result of concerns about world vegetable oil supplies in general. Prices sit £75 above those of 2006.
Average prices in late September (£/tonne ex-farm): feed wheat 163, milling wheat 189; feed barley 160; oilseed rape 235; feed peas and beans 181.
Average 2007 potato crop prices, after a slight rise in week one, dropped back £10 overall to £110/tonne this month, as harvest progressed and non-storing growers sold on the free-trade market. Average prices sit £10 lower than the same time last year. Heavy rain during the growing season has left many growers with capped and cloddy soil, making tuber damage during harvest a major concern. This in turn is reducing storage potential and leading to more growers selling off field. Packing contract prices have eased this month, whilst processing contracts have held steady.
In late September, King Edwards for packing were achieving between £160 and £180/tonne, Desiree were achieving between £120 to £170/tonne, whilst good samples of Estima are commanding £140 to £150/tonne. Maris Piper are priced between £140 and £170/tonne for good samples.

B. Livestock
Restrictions from Foot-and-Mouth Disease have limited market information this month

Restricted trading and exporting of cattle has seen the average steer price drop from its opening position of 114p/kg lw albeit not to the extent expected. By late September the price was 109p/kg lw, but still dropping. In late September 2006 the price sat just above 116p/kg lw.
UK lamb prices started at 104p/kg lw and, with the ban on exports to Europe in place, the price continued to weaken over the course of the month to close at just above 83p/kg lw, a full 27p below prices a year earlier.
The average pig price dropped back marginally at the start of the month where it then remained for the duration. Prices by late September were 108.5p/kg dw; on a par with prices at the same time in 2006.
The average farmgate milk price for July (reported in September) showed further improvement of over 1.5ppl to 19.65 ppl (2.4ppl above July 2006). Dairies continue to announce price improvements with Arla committing to pay a further 2ppl from 16 September, bringing its MDC standard milk price to 21.88ppl. It is yet to be seen what effect the OFT investigation into supermarket price-fixing will have on farmgate prices. Milk quota prices continued to strengthen during the early part of the month, peaking at 5.1ppl. However, exceeding 5ppl brought some substantial holdings of quota to the market that in turn pushed the price back down. Clean, 4% butterfat holdings were changing hands for 4.0 ppl in late September.

Other crop news

The British Potato Council is reporting “horrendous” wastage levels from this year’s crop. Some fields are uneconomic to lift with 80-90 per cent growth cracks in a few cases but, on average, field wastage is 10-30 per cent. Yields on crops lifted to date are 25-35 tonnes per hectare in the west, 35-48 tonnes per hectare in the east and 40-52 tonnes per hectare in Scotland.
The Processors and Growers Research Association has reported dried pea yields are down by 25 per cent and yields of vining peas down by 35 per cent. However, yield loss was compensated by higher prices. Marrowfat peas are realising over £200/tonne while blue peas for micronising are achieving £175/tonne.
The British Potato Council has reported that results from this season’s Fight Against Blight and Blightwatch service reveal that 2007 has been an unprecedented year for the disease. There have been 301 confirmed outbreaks and double the average of Full Smith Periods were recorded.
NIAB mycotoxin tests have shown that levels of DON toxin are higher than usual this year with several wheat samples exceeding the EU threshold of 1,250 parts per billion. Over 90 per cent of wheat samples were infected with fusarium.
French analyst Strategie Grains has predicted an increase in EU maize imports of 2.5 million tonnes to 8.09 million tonnes during 2007/08.
A cut of 13.5 per cent of the UK sugar beet quota is expected under the latest round of EU sugar regime restructuring. The cut would remove 165,000 tonnes of sugar from the market.
A joint venture between Fresca Group and 3 Dutch salad crop growers will result in the UK’s largest ever glasshouse development in north Kent. The facility is expected to increase UK production levels of tomatoes, cucumbers and peppers by 15 per cent and create the largest salad growing and marketing company in the country.
The 2007 Bramley apple crop is expected to be on a par with 2006 at about 51,000 tonnes. Cox is likely to be 10 per cent higher, Gala up by 19 per cent and Braeburn up by 30 per cent. The Conference pear crop is forecast to be up on 2006 by 6 per cent but with a 20 per cent increase in Class 1 fruit. The Comice crop is expected to be 20 per cent down by volume with Concord at similar levels to last year.

Other livestock news

1 As if foot-and-mouth isn’t bad enough, bluetongue has now reached the UK. The deputy Chief Veterinary Officer has officially declared an outbreak of the virus and warned farmers to expect “significant numbers” of new cases. Fred Landeg confirmed the virus is “circulating” between livestock and midges and accepted that with no cure and no vaccination available farmers face months of disruption from livestock movement restrictions. A 20km control zone has been set up around four affected farms in Suffolk. Animals from within the zone are allowed to go to slaughter within a 150km protection zone. Animals within the protection zone can move within the zone, but not leave it.

Under International guidelines, no exports of susceptible animals are allowed from the affected areas for 120 days after the last recorded case. The ban on exports to countries free of bluetongue will remain for two years after the last case.

Discussions are taking place between Defra and farming organisations regarding possible schemes to compensate livestock farmers hit by the foot-and-mouth outbreak. Options include a welfare slaughter scheme or “light lamb” scheme as used in 2001, extra money to hill farmers and early payment of the Hill Farm Allowance and Single Payments. Both the NFU and NFU Scotland are threatening legal action against Defra.

It has now been confirmed that at the time the Government announced that foot-andmouth had been eradicated from Surrey on September 7 with all livestock movement restrictions being lifted the following day, the disease was present on two premises near Egham, Surrey where lesions on cattle had not been reported.

The UK has been divided into high and low risk areas for bluetongue and foot-and-mouth in an attempt to relieve animal welfare and economic
According to a major pig processing company in Scotland, 8 Scottish pig producers supplying around 11 per cent of the Scottish pig herd are to pull out of pig farming. This is despite the fact that a survey commissioned by Quality Meat Scotland indicates that consumers are concerned Scotland may soon be unable to meet demand for homeproduced pork.
Roger Kelsey of the London Retail Meat Traders Association has claimed that overseas husbandry standards and quality are improving and this could lead to butchers questioning whether it is worthwhile paying a premium for British meat.
The Milk Development council has reported that the number of milk producers in August 2007 was 6 per cent down on a year earlier.
A Defra report prepared by Agra CEAS Consulting has indicated that the British liquid milk market is not insulated from European trade and should not be treated as such.
A survey undertaken by Promar Farm Business Accounts has concluded that dairy farmers need a yearly milk price of 22 pence per litre just to survive.

Marketing

The report of the Office of Fair Trading into price-fixing alleges that supermarkets and dairy processors had “shared commercially sensitive information” in artificially fixing the price of dairy products between 2002 and 2003. However, the supermarkets claim price changes were designed to help British dairy farmers. Between 2001 and 2003 the farmgate price of milk fell from 19.3ppl to 18.02ppl, a reduction of 5.8 per cent while the retail price rose from 42.7ppl to 47.5ppl, an increase of 11.2 per cent.
The Milk Development Council has reported that the retail price of milk has increased by an average of 8.4 pence per litre since the beginning of September, significantly more than the increases which have been paid to producers.
According to the Milk Development Council, branded cheeses have enjoyed a 15 per cent growth in the past year, with the cheddar marketing having grown by over 3,000 tonnes.
The Organic Market Report published by the Soil Association has revealed that sales of organic food and drink increased by 22 per cent to over £2 billions. Supermarkets saw an increase of 21 per cent but the fastest growing outlet is box schemes were sales increased from £95 millions in 2005 to £146 millions.
The Welsh Assembly is setting aside £1 million for an overseas red meat promotional initiative.
HDRA and the Soil Association are calling for more input from growers into a joint project on organic vegetable price information.
UK consumption of herbs has increased by more than half in the past 5 years to be worth over £46 millions.

Miscellaneous

The Dairy Show, due to take place at the Bath and West Showground on October 3, has been postponed until January 30.
Stoneleigh, Warwickshire has been chosen as the new location for the new Agricultural and Horticultural Levy Board, incorporating its 6 sector companies.
The Scottish Government has appointed former NFU Scotland president John Kinnaird as chair of a new body which will review the agricultural subsidy appeals process and ensure its clarity.
NMR has bought UK livestock ear tag company Nordic Star.
Emmett UK Ltd is to buy brassica supplier TA Smith & Co.
The Poupart Group is to purchase Norton Folgate Marketing, the UK’s leading specialist cherry importer.