Farming News Review - September 2009

<< back

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

Other crop news Other livestock news Inputs Marketing Miscellaneous

Policy issues

Defra Secretary Hilary Benn has launched the first UK Food Security Assessment. The report has identified the main challenges will be to ensure the sustainability of the UK’s food supply, reduce greenhouse gas emissions and adapt to a changing climate as well as focus on the availability and effective use of water. The report shows that self-sufficiency has fallen 9 per cent to 74 per cent; the trade gap in food and drink has risen by 50 per cent in real terms; the area used to grow fresh vegetables has fallen by 25 per cent and there has been a 50 per cent reduction in orchard area.
The Competition Commission has formally recommended the establishment of a grocery ombudsman to the Department for Business, Innovation and Skills.

CAP (etc.) support details/payments

The Rural Payments Agency has said it still plans to send Rural Land Register maps to farmers by the end of October but that it expects all maps to be processed in time for the 2010 Single Payment Scheme applications.
Natural England is to relax rules whereby farmers are penalised for failing to meet the full requirements of their management options. In future points will be deducted on a more proportionate basis.
An ADAS Farmers Voice survey suggests that 23 per cent of farmers are unlikely to renew their Entry Level Stewardship schemes when they expire in the next two years.

Grants/regulations/legislation/environment

Chris Bass of Rothampsted’s Centre for Sustainable Pest & Disease Management has been awarded an Institute Career Path Fellowship along with funding of £800,000 for insecticide resistance research.
Nearly £10 millions of funding has been awarded to 77 local authorities to help them tackle surface water flooding and a further £5 millions is being made available to other authorities.
Yorkshire Forward has approved a £1 million Rural Development Programme investment in Cockerills, a potato marketing company in York.
The Flintshire Agricultural Diversification Project has secured funding of £100,000 to pay for pilot projects to enable farmers to create renewable energy.

Other matters of farm finance and tenure

The Scottish Agricultural Wages Board has announced pay increases of between 1.2 per cent and 1.9 per cent along with a statutory minimum wage level for apprentices.
The National Farm Research Unit has revealed increased optimism among UK farmers. Its latest survey of 6,532 farmers shows nearly a third of farmers are more optimistic than a year ago; 40 per cent of sheep farmers and 35 per cent of beef producers are more optimistic but only 16 per cent of dairy farmers are so while 37 per cent are pessimistic. Arable farmers remain optimistic, 30 per cent being so compared to 21 per cent who are pessimistic.
Agricultural borrowing has increased by 6 per cent on 2008.

Product prices

A. Crops

The near-completion of harvest in Europe and good progress across the Northern Hemisphere in general means that the expected quality and yields for cereals and oilseeds are being based on ever growing proportions of real data; and the results are good. This has lead to further downward pressure on average prices. The margin for milling wheat has taken the biggest hit due to the greater availability of samples that meet milling specification. Many farmers are reluctant to sell produce at these levels, so trading remains slow. Some overall uncertainty does remain: the US harvest is slightly behind; also the Australian and Argentinean wheat-belts are reporting dry conditions, but these seem to have little effect. The realisation of a good European harvest is pushing down the EU futures market too. LIFFE wheat futures at the end of August recorded prices for deliveries in November 2009, 2010 and 2011 respectively as £100 (down £6 on late July prices), £114 (down £2) and £120 (down £5).
Average spot prices in late August (£/tonne ex-farm): feed wheat 88, milling wheat 109; feed barley 75; oilseed rape 219; feed peas 103; feed beans 107.
Average potato prices (2009 crop) closed July with a very late (but material) fall from £151/tonne to £132. In August prices proceeded to drop back further to a mid-month low of £121, but the market seemed to settle slightly as the month progressed and prices came back to £129 later in the month. Prices a year earlier told a different story, sitting 17 per cent higher at £151/tonne. The corresponding free market remains under additional pressure; the price dropping from £109 to a low of £95, but closing marginally improved at £96 – 34% below the £145/tonne seen in late August 2008. Much of the trade continues to be moving via contract and overall the market remains contract driven. At the end of August set-skin samples of King Edward were achieving between £150 and £170/ tonne, whilst good quality samples of Estima were obtaining only £80 to £100/tonne. Marfona and Carlita were also changing hands for between £80 and £100/tonne. Even Maris Piper prices were under pressure this month, achieving from £150 to £170/tonne for quality samples with good skin set.

B. Livestock

Average steer prices bounced back from July’s downward trend, starting at 146p/kg and gaining 9p/kg, to close at 155p/kg lw. This represents a 6 per cent gain over the course of the month. By comparison, average heifer prices improved at a higher rate, closing the month at 162p/kg lw, increasing the premium over steers to 7p/kg. Dairy cows in late August were achieving an average price of £1,291 per head, marginally up on July levels.
Lamb prices improved slightly in the month, albeit not to the same extent as beef. As the volatility of animal numbers reaching the market settled, prices did the same. By the end of the month the average UK lamb price was up to 145p/kg lw (5 per cent higher than July). Prices in August 2008 were 11 per cent lower at 129p/kg lw.
The average pig price, following a similar seasonal trend to 2008 and in furtherance of July’s indications of a turning price, dropped back this month. By late August prices stood at 152p/kg lw (2per cent down on July 2009 but still 11 per cent above August 2008 prices).
The average farmgate milk price for June (reported in August) remained steady at the same level as May, being 22.50ppl. The average price a year earlier was 2.50ppl (10 per cent) higher. Milk quota prices have strengthened considerably this month, with demand far outstripping supply. Actual trades have ranged from 0.40ppl to almost 2ppl. The average price stood at 0.90ppl for clean 4% butterfat holdings.

Other crop news

Talks between the NFU and British Sugar regarding 2010 sugar beet prices have collapsed.
The US Department of Agriculture is predicting its the second largest corn crop in history which, when added to carry over from 2008, will create the largest stock ever.
A report “Pesticide Availability for Potatoes Following Revision of Directive 91/414/EEC : Impact Assessments and Identification of Research Priorities”, compiled by ADAS for the Potato Council, has revealed that potato growers face a fall of at least one-third in gross margins as a result of measures brought in by Europe’s Water Framework Directive. It also reveals that the EU pesticide directive could reduce margins by a further 15 per cent by affecting blight, aphids and viruses, potato cyst mematodes, slugs and weed control measures.
The Potato Council has launched an online “benchmark business model”.
Scientists from the Scottish Crop Research Institute have discovered a genetic “motif” which shows how potato blight enters potato cells.
The Sarvari Trust, based at Bangor, has launched four new potato varieties. Sarpo Una is a second early variety while Sarpo Shona, Blue Danube and Kifli are all maincrops. All the varieties, based on breeding material from the Sarpo family in Hungary, are blightresistant, have weed- smothering foliage, deep roots and tolerance to drought.
The Dutch onion crop is expected to be down by between 6-10 per cent on 2008.
Marshalls has launched a new variety of broccoli, Bellaverde.
“The Implementation Guide for Traceability of Fresh Fruit and Vegetables” has been produced by GS1 and the International Federation for Produce Standards. It provides a global standard, based on the GS1 Global Traceability standard, for supply chain management.
The British Beekeepers Association has reported that 20 per cent of the UK’s honeybee colonies died last winter, double “acceptable” levels. The highest losses were in the north of England at 32 per cent, the lowest in eastern England at 13 per cent.
The British Carrot Growers Association is to hold its Carrot Variety Demonstration on 1 October in Nottinghamshire.
Figures released at the Prognos fruit conference in Maastricht suggest the EU apple crop is forecast to decline 7 per cent in 2009 compared to 2008. Poland, the largest EU producer, is expecting a fall of 19 per cent, Italy are forecasting a fall of 2 per cent but France is forecasting an increase of 5 per cent and the UK an increase of 6 per cent. The EU pear crop is expected to be up 16 per cent with the UK crop up by over 30 per cent.
Despite a bumper crop, plum growers are struggling to find markets as supermarkets are favouring imported produce offering higher profit margins. Some growers have not even bothered to pick.
Thatchers Cider is planting 6.5 hectares of new orchards in Sandford, Somerset to meet growing demand for its traditional English ciders.
S & A Produce is to reduce the area of polytunnels on its site at Brierley in Herefordshire from 67 to 35 hectares. This will bring the total area in Herefordshire operated by the company to 71 hectares, down from 350 hectares in 2007.
Nigel Bardsley has been appointed chairman of Mid Kent Growers in succession to Philip Charlton.

Other livestock news

A joint report from Defra and the Food Standards Agency has revealed that British livestock farmers are almost wholly dependent on soya imports from Brazil and Argentina for animal protein. As a consequence, if the EU retains its “zero tolerance” stance towards GM crops, the cost of feed could increase by 300 per cent. In the worst case scenario, the report suggests that pig and poultry produce could fall by 29 per cent and 68 per cent respectively.
The National Beef Association has warned of a major shortfall in beef supply with very low abattoir stocks. A 7 per cent reduction is forecast in 2010 due to a fall in the numbers of dairy cross beef cattle born in the year to March 2009 and additional supply falls are expected for 2012 and 2013 because of the drop in suckler cow and dairy herd numbers.
The Institute for Animal Health, in association with Laboratoire Service International, has developed a single test which can identify and distinguish seven of the European bluetongue virus types.
A government worker at the Food and Environment Research Agency laboratory in Gloucestershire has contracted bovine TB from an infected badger and a further 30 staff are being tested for the disease.
Government expenditure on bovine TB reached £100 millions in 2008 with the number of cases increasing by 19 per cent.
The Scottish Government is to apply to the European Commission for Officially Tuberculosis Free status.
Eblex has forecast that the 5 per cent year-on-year fall in the UK breeding flock will reduce the current season’s lamb crop by 4.5 per cent resulting in optimistic views of prices.
Deronvale Perfection has broken the world record at £231,000 when he was bought at the Scottish national texel sale at Lanark Market. It has been suggested the buyer was fleeced, just one of numerous light-hearted comments.
A report published by receivers Pricewaterhouse Coopers has stated that Dairy Farmers of Britain failed because its liquids division was unable to deliver sustainable profits. It cites a catalogue of under-performing sectors, expensive purchases and poor returns. The receivers and bankers have agreed not to pursue the member guarantees.
Waitrose has announced that it will only use home-produced dairy ingredients for its ownbrand yoghurts, dairy ice-cream, milk, cheddar, cream and butter.
In the year to July 2009 the number of dairy producers leaving the industry fell to 3.8 per cent compared to an average of 6.4 per cent over the past 6 years.
A European Commission report “Competitiveness of the EU Dairy Industry” has put the UK ahead of the USA and New Zealand in terms of product innovation. Dairy Crest was the top ranked UK company and was ranked seventh in the world.
New EU rules, which will increase the minimum stocking densities for poultry, have been attacked by animal welfare campaigners.

Inputs/Supply businesses

The European Food Safety Authority has launched a public consultation covering guidance on risk assessment associated with pesticides to workers, bystanders and residents.
The herbicide Totril, produced by Bayer, has been approved for use on leeks, onions, garlic and shallots.
Fertilizer prices have remained steady this summer with prices of all fertilizer compounds being about 50 per cent lower than the levels of a year ago.

Marketing

Food inflation in July was 3.8 per cent, its lowest level since December 2007. Tesco is to print carbon footprint labels on all its milk packaging.
The latest Food Standards Agency survey of consumer attitudes shows a decline in consumer concern over GM foods, down from 43 per cent in 2001 to 27 per cent in 2008.
Research from IGD has shown that 55 per cent of shoppers are interested in the environmental issues related to their food while 40 per cent are concerned about packaging. These views are having an impact on supermarket policy. Sainsbury’s is aiming to reduce packaging weight by 33 per cent between 2009 and 2015; the Cooperative is cutting packaging by 15 per cent by the end of 2010; Tesco and Asda intend to divert all waste from landfill sites by the end of 2010.
3663 First for Foodservice has replaced its depots in Edenbridge and Sevenoaks with a new £18 million depot at Paddock Wood.
AMS – Well Pict European has gone into administration.

Miscellaneous

Rothampsted Research, the country’s oldest agricultural research station, has merged with North Wyke Research.
Tractor registrations over 50 hp rose 0.5 per cent to 9,244 units in the first 6 months of this year with average horsepower rising sharply to 140 hp.
David Gregory has been appointed chairman of Assured Food Standards.