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Farming News Review - October 2013

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Policy issues

  1. The European Commission’s agriculture and health directorates are proposing new legislation on the provision of food information to consumers. The proposals include, where rearing and slaughter take place in the same member state or third country, origin can be indicated as reared and slaughtered in that country even though the animal may have been born in another country; where several cuts of meat in the same pack come from animals reared and slaughtered in different countries, the list of those countries should be provided.
  2. Syngenta has published an ambitious “Good Growth Plan” to “address critical challenges for the planet and its people.” The plan sets measurable targets covering an increase in average productivity of the world’s crops by 20 per cent by 2020 without using more land, water or crops; an improvement in the fertility of 10 million hectares of farmland on the brink of degradation; an enhancement of biodiversity on 5 million hectares of farmland; enabling 20 million smallholders to increase productivity by 50 per cent; training 20 million farm workers on safety; attaining fair labour conditions for every worker throughout the supply chain network.

CAP (etc.) support details/payments

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  1. The reform process plods on. Further draft regulations have been published but final versions are not now expected before December. It is also expected that the delegated and implementing regulations could take a couple of years. However, the European Parliament, the EU Council of Ministers and the European Commission have reached agreement whereby member states will have the option of transferring up to 15 per cent of direct payments to a rural development envelope and co-funding will not be required; up to 15 per cent of Pillar Two payments can be transferred to Pillar One; degressivity will be compulsory such that all payments in excess of €150,000, excluding the greening element, will be reduced by at least 5 per cent; capping will be voluntary.
  2. The Welsh Government is to accelerate the payment of Single Farm Payments to 16 October to 3,300 farmers in parts of Wales to ease cash-flow problems.

Grants/regulations/legislation/environment

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  1. In an article in the Ecologist, Professor Robert Oswald of Cornwall University has called upon UK authorities to suspend fracking procedures until further research has been undertaken into the safety of farm animals and crops.
  2. The Prince’s Countryside Fund has donated £50,000 to The Royal Agricultural University to help fund a 3-year programme of professional courses in traditional skills for up to 90 young people from the surrounding area.
  3. A further case of American Foulbrood, a disease affecting colonies of honeybees, has been found in an apiary near Inverness.
  4. The Prince’s Countryside Fund has awarded £50,000 to the Derbyshire Federation of Young Farmer’s Clubs to create a new training project.

Other matters of farm finance and tenure

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  1. Scottish Government figures show that Scottish farming debt increased in 2012 by 3 per cent to £1.72 billions.
  2. Co-operative Farms is to recruit 45 new apprentices over the next 3 years. The scheme will run for 4 years and involve training up to NVQ level 4 in farming.
  3. Foxwell, of Lye, near Stourbridge, has lost its gangmaster’s licence as a result of numerous licence breaches including passing off Romanian workers as Hungarian nationals.

Product prices

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A. Crops

  1. The grains and oilseeds markets have continued their weakening trend this month, albeit with the glimpse of a recovery at the end of the month. The dominant market drivers have been: good expectations of maize supply from Brazil and the US and improved growing conditions in the CIS, countered by increasing demand from China. Feed wheat prices in late September sat approximately £40 below prices a year earlier, whilst oilseed rape prices sat £90 lower. On the positive side, pulse prices, particularly feed beans, have had a material resurgence as the delays in the latter part of the 2013 harvest have led to a limited supply. In its late September report, the International Grains Council increased its world estimate for the 2012/13 harvest ‘total grains’ production to 1,791 million tonnes (up 5 million tonnes), whilst its estimate for consumption was increased by 2 million tonnes to 1,824 million tonnes; the predicted 2012/13 net deficit is therefore 33 million tonnes. The estimate of the 2013/14 harvest production was increased by a further 1 million tonnes to 1,930 million tonnes, whilst expected consumption was held steady at 1,893 million tonnes – a predicted net surplus of 38 million tonnes. LIFFE feed wheat futures, after a small amount of fluctuation, closed below last month’s equivalent. In late September, deliveries for November 2013, 2014 and 2015 stood at £156/tonne (down £1), £154/tonne (down £1) and £152/tonne (down £4) respectively; still a relatively flat market profile.
    Average spot prices in late September (£/tonne ex-farm): feed wheat 148 (-5); milling wheat 159 (-4); feed barley 128 (-6); oilseed rape 287 (-18); feed peas 206 (+11); feed beans 220 (+15).
  2. The average potato price has been volatile this month but the movements have been relatively small. Opening at £172/tonne, the market dropped to £161, recovered to £166, but then dropped back to a late September closing price of £161 (£33 below the average a year earlier). The free-buy market, by comparison, had a material stepchange. It continued to weaken from last month’s closing of £148/tonne to a low of £143, before a mid-month jump of £22/tonne brought the average up to £165; eventually closing at £163/tonne (£89/tonne lower than the price at the end of September 2012). According to the Potato Council, UK potato growers had lifted 32,000ha by 21 September; progress was 3,000 ha behind the 2012 harvest at the same date (which itself was a very delayed harvest year) but, by comparison, the 2011 harvest had at the same date lifted just short of double this year’s figure (63,000ha). Yields, size and quality are variable with reports of scab affecting many samples in Eastern and Southern regions.
    2013 crop prices for grade 1 samples: Marfona remained weak at between £100 and £120 per tonne; Maris Piper dropped back further to between £125 and £170 per tonne; Desiree with good skin set have dropped back to between £140 and £200 per tonne; King Edwards also weakened to between £170 and £250 per tonne.

B. Livestock

  1. The average steer price steadily dropped back throughout the month, weakening from an opening position of 212p/kg to a closing average of 202p/kg lw; down 10p/kg in the month to sit 13p/kg above the price a year earlier. The average heifer price plotted a simpler profile, dropping from 221p/kg lw to close at 210p/kg lw; down 11p in the month to sit 13p/kg above prices in late September 2012. The average dairy cow price reached £1,510 in the month, but closed considerably lower at £1,319 (£1,141 in September 2012).
  2. The average finished lamb price continued to weaken over the course of the month, in line with market expectation at this time of the year, when the number of animal coming to market is high. However, the end of the month saw a slight recovery clawing back 2p of the month’s losses, despite the expectation that supply will continue to be forthcoming. The average price at the end of September was 165p/kg lw; down 12p/kg from the opening position and 3p/kg above the average a year earlier.
  3. The average pig price regained its momentum this month, strengthening steadily over the course of the month. Having opened at 167.7p/kg lw, the average price at the end of September stood 2.8p/kg lower at 170.5p/kg lw, 17.0p/kg above the average price a year earlier.
  4. The UK average milk price for August (published in September) was further improved at 32.00ppl (another record high), a 0.63ppl improvement over the July average. The average price a year earlier was 5.42ppl (17%) lower at 26.58ppl. By the end of September, milk quota prices for clean, 4% butterfat holdings were 0.20ppl at auction, 0.06ppl down from last month and 0.02ppl above the average seen a year earlier (0.18ppl).

Other crop news

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  1. Latest harvest figures indicate an average wheat yield in England of 7.8 tonnes per hectare, up 16 per cent on the 2012 harvest and up 1 per cent on the 5-year average. However, as the planted area was 17 per cent down on the 5-year average and 19 per cent down on 2011/12, the total tonnage will be well down.
  2. The average yields of 2013 HGCA Recommended List spring barley trials is 7.12 tonnes per hectare compared to the 5-year average of 7.05 tonnes per hectare.
  3. ADAS figures in respect of harvest reports to the end of August show good quality. Wheat specific weights have averaged 77.8 kg/hl against a 3-year average of 75.1 kg/hl; Hagberg Falling Numbers are 334 compared to a 3-year average of 259; protein has averaged 12.4 per cent compared to an average of 12.1 per cent for the past 3 years; moisture is 14.8 per cent compared to 15.2 per cent.
  4. Research from a HGCA project has found that trailing a spiked rotary harrow when carrying out autumn field work increased infiltration and reduced losses of sediment and phosphorus from tramline wheelings.
  5. The Horticultural Development Company and Stockbridge Technology Centre have developed the Automated Field Margin tool which identifies suitable seed mixtures to encourage natural pest enemies as well as farmland birds and pollinators.
  6. A survey of over 1,500 British and German growers undertaken by the Kleffman Group and Independent Business Resource has revealed that 60 per cent and 52 per cent respectively believe the ban on neonicotinoids will influence their choice of oilseed rape variety.
  7. The Potato Council has estimated the lifting of potatoes on 32,000 hectares by 21 September, 3,000 hectares less than in 2012 and 31,000 hectares less than 2011.
  8. The 2013 Scottish growing crop survey shows that, of 671 samples tested, the dickeyi blackleg pathogen has not been detected.
  9. Agreement has been reached between the NFU and British Sugar on the 2014 beet price. Growers will be paid £31.67 per tonne rising to £34.08 per tonne for beet delivered after 10 February and £35 per tonne if delivered after February.
  10. Latest reports from English Apples & Pears indicate the dessert apple crop will be 25 per cent down on 2011 levels but a third up on last year.
  11. A report published in Scientific Reports has revealed that climate change is reducing the hardness and acidity of apples but increasing the sweetness following a 40-year study of Japanese orchards.
  12. People & Gardens of St Austell has produce the first commercial UK crops of “cucamelons” which look like tiny melons but taste of cucumber.

Other livestock news

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  1. The Animal Health and Veterinary Laboratories Agency has developed a Bacillus Calmette-Guérin vaccine against bovine TB and an accompanying diagnostic test to Differentiate Infected from Vaccinated Animals. But commercial production could be ten years away.
  2. The Labour Party has pledged to abandon the badger cull policy if elected to government and replace it with the development of an oral badger vaccine.
  3. A joint Department of Health and Defra report, “Antimicrobial Resistance Strategy 2013- 2018 states that resistance to all antimicrobials is increasing with the greatest concern surrounding the “rapid development of bacterial resistance to antibiotics.” However, it stresses the “increasing scientific evidence” suggests usage of human medicine as the main cause of resistance in humans rather than the use of antibiotics in animals.
  4. A Defra survey has revealed that the beef breeding herd in England was down 3 per cent in the year to June indicating a reduction of 40,000 head in the past 2 years. Conversely the sheep flock was up 2 per cent and the breeding flock up 4 per cent.
  5. Vets at Scotland’s Rural College disease surveillance centre have indicated an increase in the incidence of Blackleg disease caused by the bacterium clostridium chauvoei in the soil.
  6. Arla Foods amba has raised its liquid milk price by 0.74 ppl to 33.05 ppl.
  7. UK wholesale milk deliveries in August totalled 1,114.8 million litres compared to 1,062.7 million litres in August 2012.
  8. First Milk has raised the price paid to its manufacturing and liquid pools by 1ppl to 32 ppl.
  9. Dairy Crest is to build a dedicated “innovation centre” at Harper Adams with the aim of achieving 10 per cent year-on-year growth from new product development.
  10. Dairy Crest has increased the price on its standard liquid and Davidstow contracts by 1 ppl to 32.5 ppl and 33.25 ppl respectively.
  11. Scientists at the Institute of Biological, Environmental and Rural Sciences have discovered the molecules which give cut grass its “green odour” kill off bacteria which convert healthy omega-3 fats into saturated fats in a cow’s gut.
  12. Meadow Foods has increased its standard price by 1 ppl to 32.25 ppl.
  13. Trials conducted by the University of Guelph, Canada have shown that supplementing dairy cows fed an acidosis-inducing diet with an active live yeast improved dry matter intake, milk yield and rumen pH.
  14. Glanbia Cheese has raised its standard price by 1 ppl to 32.6 ppl.
  15. Arla Foods amba has announced its “road map” towards full cooperative status for a further 1,600 of its UK dairy producers. It will require a 7.5 ppl investment from producers and, if approved, will result in the Arla Foods Milk Partnership being renamed Milk Partnership Limited which would become a full corporate member of Arla Foods amba from January.
  16. Zoetis and the Roslin Institute are to jointly conduct research into salmonella in cattle.
  17. Muller Wiseman has acquired Shropshire-based yoghurt producer Nom Dairy UK and has expressed its intention to become the “biggest and best dairy company in the UK.” It also announced an increase in its formula price contract to 34.55 ppl.
  18. Sainsbury’s has increased its liquid milk price by 1.97 ppl to 34.15 ppl.
  19. Scientists at the University of East Anglia have identified key stages in the poultry trade which can lead to infectious diseases such as bird flu, swine flu and SARS being transmitted to other birds, animals and humans.

Inputs/Supply businesses

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  1. Defra has reported “there is not an unacceptable risk to pollinators from the present uses of neonicotinoids. We therefore regard sweeping restrictions on neonicotinoids and the resultant costs as unjustified.”
  2. The European Food Safety Authority has published a document issuing guidance on the “risk assessment of plant protection products on bees.” The document proposes a “tiered risk assessment scheme to ensure the appropriate level of protection is achieved.”
  3. The Chemicals Regulation Directorate has put forward proposals to help reduce the threat of crop protection products being withdrawn because they pose a threat to aquatic life if they enter the water system. The proposals include authorising use of low drift nozzles together with buffer zones of variable widths to provide “acceptable risk mitigation.”
  4. Research at Warwick Crop Centre has suggested that brassicas such as brown mustard are potentially effective bio-fumigants capable of killing soil-borne fungal pathogens such as Schlerotinia and Pythium.
  5. The Potato Industry CIPC Stewardship Group has advised of changes appearing imminently on all CIPC product labels. These will include the fact that CIPC must be applied within 3 weeks of harvest, or at the earliest occasion thereafter, even in the absence of breaking dormancy; in cold stores CIPC should be applied only once before temperatures fall below 7 deg C; fans should re-circulate store air for at least 6 hours before CIPC application without cooling.

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Marketing

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  1. Food and Drink Federation data has revealed that vegetable exports were down 6.5 per cent in the first half of the year at £145 millions. The export of leguminous vegetables fell by 17.4 per cent in the same period.
  2. The Beltex Sheep Society has renewed its export marketing arrangement with Dunbia for a year-round supply of up to 5,000 lambs to the Belgian market.
  3. The Potato Council and the Scottish Government have negotiated the export of seed potatoes to Vietnam for the first time.
  4. Sainsbury’s has been forced to recall bagged salads containing watercress due to a possible association with an outbeak of E.coli 0157 although the Foods Standards Agency subsequently advised that no trace had been detected.

Miscellaneous

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  1. Michelin has launched an on-line tyre pressure calculator to optimise tyre pressures for tractors, combine harvesters, sprayers and trailers – but only if you use Michelin tyres!
  2. Engineers from KWH and Wageningen University have developed a self-steering, driverless tractor capable of spraying, hoeing and mowing in orchards.
  3. Suffolk, Norfolk, Cambridgeshire and Lincolnshire police forces have launched Operation Galileo to tackle hare coursing.
  4. Askham Bryan college in Yorkshire is to invest £34 millions over the next 3 years in a new animal management centre, new residential facilities for staff and students and a doubling of the size of the equine facility.
  5. The University of Bristol’s School of Veterinary Sciences has opened a new £2 millions dairy farm at Langford.

Chavereys Chartered Accountants