Information about NIG and FarmWeb joining RSA

Information about NIG and FarmWeb joining RSA

The RSA acquisition of NIG and FarmWeb is a transformational and exciting time for our business as we work towards offering you even better service, products, and pricing.

It is important that we keep you informed about the integration and ensure the transition is smooth for you and your customers.  We appreciate that you will have questions and we want to provide you with the answers as soon as we can. Rest assured we are absolutely committed to keeping you updated regularly via our respective e-mail newsletters and our front-line teams will be ready to talk to you about the latest developments.  If there are colleagues in your business who do not currently receive the e-mail newsletter, please forward it on to them.

If you have any immediate questions that we haven’t covered in our latest Q&A, please speak to your usual contact.

Summary of the deal:

This transformational journey enables us to develop a commercial lines operation in the UK that is geared to outperform, in terms of profitability and growth.  

It complements the existing distribution footprint of both companies and provides a core platform to improve service and deliver better products to brokers and customers in the future.  As a result, we’ll become the third largest commercial lines insurer in the UK with approximately 7% market share by annual GWP with a combined ratio in the low 90’s in the medium-term.

Principles of the integration:

We will integrate the businesses in the best way that ensures service continuity and protects your business during the transfer, whilst prioritising speed of delivery.  

To achieve our program principles and to provide a good experience for you and your customers, a ‘lift and shift’ approach will be used during integration, which means the first objective is to separate the NIG and FarmWeb broker businesses from Direct Line Group (DLG).  We are prioritising speed of delivery whilst ensuring service continuity and protecting your business during the transfer.  Our ambition is to bring to you a “best of both” so we’ll be merging our products, pricing, service, and value proposition into one.

In the coming weeks, we will announce the leadership team to take forward the combined entity, establishing clear accountability and direction as we begin integrating employees and customers during Q2 and Q3 of this year. 

Our colleagues are excited about the future, the opportunities it presents for our business, our customers and our colleagues and we’re keen to always hear from you.  We’ll provide regular updates on our Q&A page, so please let us know your questions and concerns so we can ensure you have the answers you need.

To read the latest Q&As, please click here and save this page to your favourites for future updates.

If you have any other questions, as always, your usual NIG contact is available to help.

FarmWeb News – 31/12/2019

A recent report by a soil scientist highlights the importance of maintaining a healthy soil to counteract the worst effects of flooding. It also highlights the episodes of flooding over the last few years cost the country, annually, £1.2bn due to erosion, compaction and loss of organic matter from the soil. An independent study shows that miscanthus, normally grown as a fuel crop, is particularly beneficial to water-logged and flood-prone soils.

The Government consultation on the future of General Licences, for the control of pest birds, is drawing to a close. Defra says it wants the consultation to deliver a robust system of licensing to manage the issues that arise between the protection of wild birds and the legitimate reasons people need to control them especially damage done to crops and young livestock (particularly lambs) by crows following the abrupt withdrawal of the licences earlier this year.

Waitrose has announced that, within eighteen months, all own label fresh and frozen lamb will be sourced in the UK. Waitrose currently source all fresh chicken, pork, beef, eggs and liquid milk from UK producers. The proportion of British meats on supermarket shelves varies enormously depending on the retailer and the product. Asda tends to lag behind with, for example, 53% of its fresh pork home produced compared with a sector average of 79%.

HMRC trade statistics show a growth in UK food and drink exports of 8.3% to £6.2bn in the third quarter 2019. Food and drink exports accounted for 6.4% of total UK exports, in the year to date. The growth was boosted by a rise of 13.1% to non-EU member states with notable increases in exports of meat products and spirits to China.

UK scientists have developed a new vaccine and complementary skin test to help combat TB in cattle. The vaccine is a variation of the BCG vaccine used to protect humans against TB. BCG is effective on cattle, but the skin test will show the animal as “positive” for TB leading to it being slaughtered. The new vaccine and skin test represent a major breakthrough and are undergoing further trials.

Over 92% of farmers in England and Wales received their Basic Payment Scheme money within two weeks of the scheme opening on 1st December. In addition, stewardship schemes payments have been speeded up. The Government has also announced £2.85bn in funding to top-up remaining EU support, over the next two years, as we leave the EU. The Government has promised a new annual support scheme better suited to the UK farming and national interests.

Whilst Europe is still the major market for Welsh lamb exports, new markets have been opened in Jordan, Qatar, Kuwait and other Middle East countries. Exports to the area have increased dramatically over the last two years.

FarmWeb News – 28/11/2019

Agricultural insurers are giving more advice to farmers and landowners about fly-tipping having estimated that two-thirds of farmers are affected with over one million incidents reported in the last year. Local councils will not normally clear rubbish from private land, free of charge, but they may investigate and take enforcement action. The Environment Agency investigates larger incidents or where hazardous materials are present or there is a link to criminal activities.

The Welsh Government has announced that it will continue the present Basic Payment Scheme, unchanged, until 2021 and not 2020 as previously advised. The extension is subject to sufficient funding being made available by the UK Government and is driven by the continued uncertainty over Brexit and any subsequent deal. The Scottish Government is considering extending the Scheme for five years after Brexit.

The Basic Payments Scheme rates have been set for this year. Under CAP rules, the rate is initially set in euros and converted to sterling with payments starting in December. The conversion rate and thus the final total will be almost the same as last year. As an example, a lowland farm in England will get £228.56 per hectare, a rise of 0.3% on 2018.

A survey of the 2019 harvest shows that yields in the UK were higher for all the main crops. Winter and spring sown wheat and barley were between 4% and 23% higher than 2018 and exceeded the five-year averages. Oilseed rape yields rose by 1% and suffered from adverse weather and pest damage. Pressure on prices means net profits are unlikely to increase.

Under the Seasonal Agricultural Workers Scheme 2018, 2,500 people from outside the EU can work on UK farms on a temporary basis. There are moves to increase this to 10,000 in the light of a severe labour shortage in the soft fruit sector which has increased production by 130% in 20 years. The traditional labour supply from Eastern Europe has all but dried up.

The Milk Cost Production Survey shows a sharp fall in dairy farmers’ earnings in 2019. The dry summer hampered milk production and required extra feed to be bought in resulting in profits falling from 5.9p/litre to 2.69p/litre. Only a marginal improvement is forecast for this year.

The largest single grain shipment, this season, has left the Portbury grain terminal in Bristol. The shipment of 64,000 tonnes of feed barley is headed for Saudi Arabia which is the world’s biggest importer of barley.

FarmWeb News – 28/10/2019

The EU has confirmed the acceptance of the UK’s listed status application (“third country” status) which will allow the export of live animals, meat and dairy products to continue after Brexit. It confirms the UK has met EU standards on animal health and biosecurity but does not affect any tariff barriers that may be raised.

The provisional figure for the 2019 UK wheat harvest is 16.28m tonnes, a 20% increase on 2018 and in line with expectations. Barley production has risen by 25% to 8.18m tonnes, well ahead of forecasts, leaving around 2m tonnes available for export.

The milk market is quiet at the moment, First Milk and a few smaller dairy processors have announced slight reductions in the milk price they pay to producers for November. Saputo (formerly Dairy Crest) and others are holding current prices.

The milk processor, Muller, has highlighted problems with over-production in Scotland. Milk volumes have risen by 25% in the last five years significantly outstripping demand. Excess milk totalling 180m litres is being shipped to dairies in England, for sale. Muller say this situation is costly and not sustainable and is reviewing its operations in Scotland.

There are an estimated 8,820 dairy farmers in Great Britain according to the latest survey from the Agriculture and Horticulture Development Board. The figure represents farmers actively contributing to GB national milk production and is almost 50% lower than the Defra estimate which includes herds of less than 10 animals. The number of producers continues to fall at the rate of one per week.

The UK farmland market continues to be quiet against a background of political and economic uncertainty. Only 83,000 acres have been publicly marketed in 2019, the lowest for 10 years and 40% less than 2018. A fall-off in demand has meant that prices have not moved much except for some local anomalies.

The UK apple harvest has been hit hard by a 20% shortage of foreign labour, with millions of apples left unpicked. The sector is worth £400m out of the £2bn fruit and vegetable industry with sprouts, cabbages and cauliflowers also likely to be affected as they ripen for the Christmas trade.

The latest statistics on Scottish farming show cattle numbers down 2% to 27,600, the lowest since the 1950s. Sheep numbers are up by 1% at 82,700 and there is a similar rise in employees to 67,100.

FarmWeb News – 26/09/2019

A Government sponsored independent review on support funding has recommended changes to make payment rates more equal over the next two years. The new rates will favour those in upland areas particularly in Wales and Scotland and the Government has allocated £56m in new money to support the review.

Austria has rejected the proposal for a free trade deal between the EU and Mercosur, a trading bloc comprising Brazil, Argentina, Uruguay and Paraguay. The deal was negotiated after 20 years of discussions and needs the agreement of all EU states. Mercosur currently exports 20% of its food and drink output to EU members.

The Local Government Association (LGA) has expressed concern over a steep rise in the number of farm buildings converted to dwellings, without planning permission. Current regulations allow conversion into up to five new homes but the LGA says that no regard is paid to local infrastructure needs and is calling for the regulations to be scrapped.

The latest industry estimate puts British milk volumes at 12.58bn litres, slightly up on the previous estimate and a 29-year high point. The rise in production is a result of good weather and good pasture boosted by concentrates fed during the winter period.

The hot, dry conditions in 2018 saw the cost of farm fires rise by 27.5% to £46.4m, the highest total for four years. The east of England was the worst affected region at £11.1m, a rise of 225%. Scotland and the South-West were also badly affected at £7.6m and £7.2m respectively. Electrical faults accounted for 37% of fires and arson 20%.

Defra has announced the creation of 11 new badger culling areas and the re-licensing of the existing 29, taking the total to 40. The new areas are principally in the Midlands and South-West. After four years of culls, the incidence of TB in Somerset has fallen from 24% to 12% and in Gloucestershire from 10.4% to 5.6%. The number of cattle slaughtered, in Wales, increased by 21% to 12,000 in the twelve months to May 2019.

The Agriculture Bill, in its current form has been shelved since completing its committee stage in November 2018. This means that a new version will need to appear in the next Queen’s speech in order to complete its passage. Farm leaders are concerned that this delay will impact on the proposed farm support programme, post-Brexit

FarmWeb News – 27/08/2019

The Government intends to publish details of a new National Food Strategy, next year. This is the first review of the nation’s food system for 75 years and has been launched to ensure the food industry supports growth, the environment and is resilient to the challenges posed by climate change. Evidence is being gathered from farmers and the public.

UK exports of red meat and offal rose by 13% in volume and 8% in value in the first six months of 2019. Almost half of the £711m worth of exports went to non-EU countries. Pig meat exports to Asia rose by 56% driven by pig disease problems in China and the low value of sterling. The area accounts for 35% of pig meat exports. The EU remains an important market for sheep meat.

The Welsh Government has announced a support scheme for farmers who will not receive their Basic Payment Scheme support payment on the first day it is due, in December. The support payment will be for up to 90% of the anticipated claim and has been welcomed by farming leaders.

Oilseed rape harvest results have been patchy as the planting of next year’s crop gets underway. Poor yields have been attributed to pest damage by the cabbage stem flea beetle which is more prevalent following the ban on neonicotinoid pesticide. However, with prices at over £320/tonne and buoyant markets, alternative crops do not look too attractive.

According to national statistics rural crime rose by 12% in 2018, to £49.9m. Statistics show a rise in most types of crime in most areas of the UK. Much of the rise is due to thefts of farm vehicles and ATVs which rose by 26% and 19% respectively to a total of £10m. Thefts of livestock rose to £2.5m as gangs become more proficient and the number and size of incidents increase.

In December 2018, Defra ordered an immediate ban on slug control products containing metaldehyde based on the alleged detrimental effect on other wildlife. The High Court has now overturned the ban saying the decision was flawed. Farmers have welcomed the decision and wildlife supporters have condemned it.

The Scottish National Texel sheep sale, this month, showed the buoyancy and confidence of the market in this breed with a top price of 200,000gns (£210,000) for a ram lamb. This is the second highest price ever, the record is 220,000gns (£231,000) also for a Texel.

Farmers in Scotland have urged the Home Secretary to prioritise the scheme for seasonal foreign workers, underlining the fact that they occupy full and seasonal posts right across all areas of agriculture, skilled and non-skilled. Current recruiting difficulties are expected to worsen in the spring.

FarmWeb News – 23/07/2019

Following the decision by Natural England to revoke some wild bird management licences, at short notice, Defra assumed authority for them. The new licences issued by Defra have been confirmed as temporary. A broader review of the General Licences will take place in February 2020.

The EU is proposing to introduce movement testing for TB on all cattle that have not been tested in the previous six months as part of the new Animal Health Law. UK farming unions are opposed to the change claiming it will be of limited benefit.

The tractor market appears to have stabilised after two months of large year-on-year movements likely to have been caused by Brexit preparations. In the first half of the year 6,320 new tractors were registered, a fall of 3% on 2018.

The NFU (E&W) has highlighted the possible adverse effects of a no-deal Brexit for sheep farmers. With 40% of production exported to France the imposition of any tariff is seen as a major threat. Both leadership candidates have promised support for the agricultural industry.

The Agriculture and Horticulture Development Board monitors the amount of British produce put on sale by the major supermarkets. The latest information relates to beef and lamb. Budgens, Lidl, M&S, Morrisons and Waitrose sell 100% British beef in all their stores, with Tesco, Sainsbury and Asda lagging behind. For lamb Morrisons, Co-op and Aldi are at 100% with M&S improving to 99%.

An all-party group of MPs has produced a report calling on the Government to raise the level of ethanol in road fuels from the current 5% to 10%. The introduction of this E10 petrol will improve emissions and be the equivalent of taking 700,000 cars off the road. In addition, it will support the £1bn bioethanol production industry currently struggling because of Government indecision.

An annual report on dairy costings discloses that larger herds, producing 0.5m – 5m litres, increased production by up to 5% last year, whereas smaller herds produced less milk. This trend has been evident for three years with larger herds better financed and less reliant on drought-affected summer grazing.

Export demand for UK soft fruit has risen consistently over the last five years. Last year broke records with a rise of 69% to £22.1m sold to 34 different countries with most going to the Netherland, Spain and Republic of Ireland.

A recent conference sought to encourage growers to go organic citing 40% lower costs, giving good margins. The UK is 30% self-sufficient in organic cereals which account for only 1.2% of UK production.

FarmWeb News – 01/07/2019

Responding to calls in the media for people to eat less meat for environmental reasons the Pasture-Fed Livestock Association highlights the fact that all systems do not have the same impact. Cattle and sheep that are 100% grass-fed benefit the countryside, overall without the higher carbon footprint of feed grain production.

Exports of British cheese reached a record £665m in 2018 with exports to Asian markets growing at an unparalleled pace led by China and Malaysia with combined imports of over £11m. The USA imports £50m, the EU remains the largest export market and cheddar the most popular cheese with 48% of the market. Export growth has continued into 2019 at 14% for the first quarter.

The Welsh Government has announced that the current Basic Payment Scheme will end after 2021. It will be replaced by a new post-Brexit scheme targeting biodiversity, carbon emissions and clean air. Farmers are concerned that incentives are needed to safeguard food production with current subsidies accounting for 80% of incomes, on average.

The National Audit Office (NAO) has warned Defra that it must carefully approach its roll-out of the post-Brexit subsidy scheme. There will be less than one year for farmers to consider important choices. The NAO points out that agriculture contributes over £8bn to the economy and employs 470,000 people. It estimates that 42% of farmers would make a loss without direct subsidy payments.

The milk processor, Arla, has announced that prices for July will remain unchanged, for the sixth month in a row. A sign of the present stability in the market although volumes are rising throughout Europe with the UK forecast to reach a 29-year high. Arla currently pays producers 30.22p/litre for conventional milk and 41.47p/litre for organic.

Defra is moving forward with the, previously announced, six-monthly TB tests for cattle in High Risk areas. In addition, £300,000 has been allocated for badger vaccinations to create buffer zones around those High Risk areas. Farmers can apply for grants of up to 50% of the cost of the vaccinations.

Food and drink exports to China have received a boost with finalisation of the protocol opening up the market for beef products, worth up to £230m in the first five years. Exports of pork are also set to rise with China now importing food and drink products worth over £600m from the UK.

FarmWeb News – 23/05/2019

The milk processor co-operative, First Milk, has announced a reduction in prices to producers as from June. Prices have been stable since February. The co-operative has 2,200 members and blames downward pressure on the UK dairy market. Prices across the UK are around 27-29p per litre with a rise in production of 1.1% in the year to date. Meanwhile Arla has confirmed that its price will be unaltered for June.

Following the recent £1bn sale of Dairy Crest to the Canadian company Saputo, it has been announced that the Dairy Crest name will disappear in July and the company will be known as Saputo Dairy UK.

Defra has released figures for organic farming in the UK for 2018. These show that the amount of land farmed organically has reduced by 8.4% to 474,000 hectares, representing 2.7% of total farmed land. Around 70% of organically farmed land is down to pasture and the fall is mainly in this low production land. There was a small increase in the amount of land proceeding towards conversion to full organic.

Registrations of new tractors rose by 35% in April to 1,606 units, the highest figure for seven years. The rise in the year-to-date is 1.6%.

The profitability of UK farming fell by 17% to £4.7bn in 2018. Gross output rose by 2% to £26bn with small increases in both the livestock and arable sectors. However, both sectors suffered with adverse weather conditions and an overall 8% rise in input costs, mainly fuel, feed and fertilisers, hitting finances.

A recent analysis of 15 major dairy producing countries compares production costs and profitability. A high level of international trade means that UK farmers are competing in a global market. The analysis showed that lower overhead costs were a major factor in profitability and that the UK had higher machinery costs, spending more than twice as much as the others and margins suffered accordingly.

New Defra rules mean that farmers, in England, who charge the public to attend events will need to obtain a licence from their local authority. An inspection will be required, and the licence will cost £260 but may vary between authorities.

FarmWeb News – 08/05/2019

The latest farm income forecasts for Wales show that average income is expected to fall by 15% to £29,500 for the year to March 2019. Dairy incomes are likely to be down by 23% and lowland sheep and cattle producers by 29%. The fall is due to pressure on farmgate prices and a significant increase in input costs caused by adverse weather conditions over the last twelve months.

Defra has initiated an urgent review of wild bird management licences following the decision by Natural England to revoke several of them at a critical time of the year for bird control. The move caused uproar in the farming community with Natural England seemingly having little idea of the consequences of the ban. Some restricted licences have since been issued and have been heavily criticised. It seems that Defra may be moving towards taking over the authority from Natural England.

Farming leaders are calling for the development of a UK-wide framework for agriculture post-Brexit. The framework should acknowledge the differing needs of the devolved areas of the UK whilst constraining policies that would disrupt the internal market and food chains. Farmers are increasingly concerned at the lack of clarity and progress on future farming policy.

The numbers of cattle in both the beef and dairy industries, in Scotland, have continued their ten-year decline. At the end of 2018 there were 1.66m beef and dairy cattle, a fall of 2% over the previous year. Producers have called for more government investment to reverse the decline.

In 2016 the Government closed off the solar power feed-in-tariff schemes effectively removing the major incentive for new investment. However, the solar power industry is urging farmers and landowner to consider the sector again. Since 2016, installation costs have fallen by a third and wholesale electricity prices have increased by 80% with more large companies seeking to buy green energy making the installations viable again.

Compensation paid by the Welsh Government for cattle slaughtered as a result of TB has risen by almost 24% to £14.5m in the last twelve months. New incidents are up by 5% and the number of cattle slaughtered by 12%. Farmers have blamed the rise on the failure of the eradication scheme.

FarmWeb News – 26/04/2019

An announcement from the Department for Transport on E10 fuel is expected later this year. The fuel contains 10% bioethanol made from feed wheat and is used in the USA and elsewhere in Europe. Ahead of this announcement an all-party group of MPs has launched an inquiry to promote its introduction which will support farmers, improve the environment and help stabilise the UK bioethanol industry which is currently struggling to survive.

The world’s largest second-hand farm machinery dealer is based in the UK and it is reporting that the market is currently buoyant. Stock levels are up over 30% as farmers seek to take advantage of high prices, with sales showing an 11% increase in the first quarter compared to 2018. The main buyers are from Ireland, Spain and Eastern Europe with increasing interest from African and Middle-Eastern countries.

The latest figures from Defra show that the agri-food sector contributes almost £122bn to the UK economy, a rise of 8%. In 2018, exports increased by 2.5% to £22.6bn. The number of people employed in the sector now exceeds four million.

The amount of farmland, across Britain, coming onto the market in the first quarter of 2019 was the lowest for 25 years at 10,400 acres. This was 28% less than 2018 and 40% less than the 10-year average. Whilst there is no shortage of buyers, the current Brexit and financial uncertainties are dampening the supply and little change is forecast.

The milk processor, Arla, has announced that its price to producers for May deliveries will remain unchanged. Current prices for conventional milk are 30.23p/litre and for organic 41.98p/litre. Arla’s view is that the European market for both types is stable, presently, with prices on the world market higher than those in Europe.

Farmers are reminded that the deadline for applications for the Basic Payments Scheme is 15th May 2019. Despite the current political uncertainty, the Scheme rules and application process have only minor changes pending completion of the passage of the delayed Agriculture Bill.

FarmWeb News – 18/04/2019

The most widely used chemical to control leaf spot in barley, Chlorothalonil, has been declared a category 1 carcinogen by the EU. This will lead to it being banned and will be a major setback for growers, especially in Scotland, due to the growing conditions there. The fungicide has been in use for over 50 years both in Europe and elsewhere, without a problem.

Officials from Algeria have visited the UK with a view to expanding their import of cereals. Algeria is currently the largest non-EU recipient of UK wheat with imports of over 216,000 tonnes. The visit focused on the potential for UK biscuit wheat which is not available in Algeria.

The Welsh Government is proposing significant changes to the Countryside Rights of Way Act to give greater access to land. The changes will effectively allow non-motorised multi-use by removing many of the present restrictions. Farmers are concerned that “thrill-seekers” will increase the problems they currently have with public access.

First Milk and Dairy Crest have announced that the milk price for May will remain unaltered. The processors have warned members of uncertainty and downward pressure on prices in the domestic market.

New requirements have come into force for VAT-registered businesses, with a taxable turnover of over £85,000 to file their returns online. The returns for income tax and corporation tax will follow this format within the next two years. The patchy digital infrastructure across many rural areas has left farmers struggling to access a stable and secure internet. Politicians have criticised HMRC for failing to support farmers and other small businesses during this change.

A survey by the Agriculture and Horticulture Development Board shows that there are around 8.850 dairy producers in Britain. This is likely to be more accurate than the Defra statistics which show 16,600 dairy holdings of which 40% have fewer than 10 cows making them more likely to be suckler herds than dairy producers. Despite falling herd numbers production is forecast to be around 12.6bn litres this year, the highest for over 25 years.