FarmWeb News 06/08/2012

FarmWeb News 06/08/2012

Currently repairs and maintenance to listed buildings are subject to 20% VAT, whereas alterations are zero rated.  HMRC has indicated that this zero-rate concession will end on 1^st October 2012, bringing listed buildings into line with other types of buildings.  Whilst lobbying by interested groups continues, owners are rushing to complete any outstanding alterations before this deadline.  Insurance implications for both sums insured and future claims costs.

NFU Scotland has formed a new umbrella organisation, Dairy Farmers Together, to strengthen the hand of producers in the light of the recent milk pricing problems. Start-up finance of £100,000 has been provided by the Scottish Government.  Meanwhile, intense lobbying and physical blockades have resulted in the four big milk processors withdrawing the price cuts planned for August as industry-wide discussions take place on a future pricing structure.  The uncertainty does not seem to have affected the prices of dairy cows which are forecast to remain firm.

A study by the NFU E&W has shown that the incidence of fly-tipping on private land has risen by 45% in the last twelve months, costing farmers an average of £170 to clean up.  The CLA has set up a pilot scheme with Suffolk County Council, funded by DEFRA, to find ways of helping victims with the clean up.  FarmWeb’s policy provides up to £5,000 cover for this event.

The Scottish Government has set up the Land Reform Review Group to oversee a wide-ranging review of land use and management in the country.  There is concern about abandonment and inappropriate land use.

Figures from NFU Mutual show thefts from farms totalled £52.7m in 2011, a rise of 6% on the previous year.  Theft of tractors has fallen in England and Wales, but risen in Scotland and Northern Ireland.  Power tools, quad bikes, metal, fuel and farm chemicals are all popular targets for thieves.

The adverse weather has delayed harvest in many areas.  Over 40% of the winter barley and 20% of the oilseed rape crops have been harvested, and some wheat harvesting has also started.  Yields on all crops are around average but quality is variable and not expected to improve as harvesting progresses.  Visit the home page of our website for FarmWeb’s practical help for farmers during harvest.

MEPs have submitted over 7400 amendments to the CAP reform proposals which were published in October 2011.  Most amendments relate to the re-direction of money into green schemes and to the newer EU members in Eastern Europe.  The reform package has been widely criticised by the UK Government and farmers.

FarmWeb News 24/07/2012

Two of England’s premier agricultural events have fallen victim to the poor weather. The Great Yorkshire Show was cancelled on the evening of the first day, due to the car parks becoming unusable, at a cost of £2m to the organisers. The CLA Game Fair scheduled for Belvoir Castle, Leicester has also been cancelled. The CLA estimates that £155m has been lost to the rural economy through the poor weather affecting shows and events so far this season

The High Court has dismissed an appeal by the Badger Trust against the DEFRA proposals for trial badger culls in Somerset and Gloucestershire in the autumn. The culls form part of the TB eradication programme.

The Government and the insurance industry are continuing to discuss ways to ensure that flood insurance remains affordable. The main issue is the subsidising of rates in high risk areas being unequal between companies because of varying exposures in such areas. The current “deal” between insurers and the Government, whereby flood insurance was maintained in high risk areas in return for improved flood defence, expires next year.

Anger amongst dairy farmers at the recently announced further round of price cuts from 1^st August, has resulted in protests at shows and processing plants. In a deal brokered by the farm minister, processors and farming leaders have agreed a code of practice to cover their contractual relationship in future.  Essentially, 30 days notice of a price change will be given to farmers and they will then have the right to exit the contract after giving three months notice.

The National Audit office has refused to sign off DEFRA’s accounts, for the fourth year in a row.  Penalties totalling £46m were imposed by the EU for non-compliance with their rules in 2011/12 and £125m has been set aside for possible further penalties.  The Rural Payments Agency is also unable to quantify the value of over/under payments it has made to farmers under the single payment scheme.

The first crops of winter barley are being harvested across southern England during breaks in the weather. Yields are said to be reasonable but the moisture content is high at 21-24%, resulting in higher drying costs.

Proposals for the reform of the CAP were criticised as being too complicated, when they were published in October 2011. The various national agencies responsible for making the payments have now lent their support to the criticism by saying that the proposals would take up to two years to implement, pushing them way past the required 2014 start date.

FarmWeb News 08/07/2012

The value of British farms is forecast to rise by 37% over the next four years, out performing most other countries in the world and the forecast rises in gold and oil prices. Whilst around 60% of sales are to farmers, pension funds and other institutions remain keen to invest in the sector.

The EU is to claw back €426m of CAP payments from member states because of non-compliance with subsidy rules. Spain, Italy and Greece, between them, account for the bulk of this amount.

An Industry Code of Practice has been produced to help prevent or control ill health to visitors caused by contact with animals at farm open days. The Code is intended to apply to all such premises whether open for just one day or specialising in regular visits and comes amid increasing numbers of farm visitors.

Grain prices across the world are rising again underpinned by expected yield reductions in the USA caused by very hot weather. The current UK price of £170/tonne ex-farm has produced an increase in sales.

Crisis meetings are taking place between the Government and the various stakeholders in the milk industry following the latest round of price cuts by four major processors. Producers say prices have been driven to their lowest level for seven years and put the viability of the sector in doubt.

According to provisional figures from the HSE, the number of agricultural workers killed rose from 30 to 33 in the twelve months ending March 2012. Of these, 22 were self employed and 11 were employees. A farmer in East Yorkshire has been fined £10,000 for breaches of safety rules when a worker fell through a roof and was seriously injured.

A global initiative on the £3.2bn annual cost of foot-and-mouth disease has led to the Institute for Animal Health in Pirbright being awarded £2m to fund research into the disease over the next five years. The Institute is a world leader in this field.

Stricter rules on the movement of cattle came into force on 1st July amending some of the previous exemptions such as movement to agricultural shows. In addition, compensation will be reduced where the statutory TB test is significantly overdue at the time of an outbreak.

The NFU (E&W) has appointed Andy Robertson as its next Director General. Robertson was formerly chief executive of NFU Scotland.

FarmWeb News 26/06/2012

The Government has announced the formation of the TB Eradication Advisory Group for England (TBEAG). The Group will comprise members from Government, farming, veterinary, scientific and conservation sectors. The Group will carry on and broaden the work of a similar predecessor group.

Difficult trading conditions have meant that 25% of UK poultry companies are trading at a loss, some for the second or third consecutive year. Tight margins and rising production costs are blamed.

NFU Mutual has disclosed a rise of 45% in thefts from farms in Scotland in 2011. The cost is estimated at £1.8m. In addition, livestock rustling increased by 165% to £250,000. Despite these rises, rural crime fell by 11% across the UK in 2011.

Returns from let farmland and rural properties rose by 15.9% in 2011, outstripping other investment sectors. Most of the gain (14.2%) was through capital growth. The sector is forecast to continue to perform well with a likely rise in the income side over its low 1.6% 2011 figure. Other sector returns last year were, bonds 15.6%, commercial property 7.8%, residential property 11.3% and equities 3.5%. Average land values, in Great Britain, increased by 3.9% in the first half of 2012.

Sugar beet growers are lobbying against the proposed reform of the CAP regime that will mean an end to quotas and an erosion of growers’ rights. The reform is scheduled for 2015 and is likely to lead to lower prices. The 3,500 growers in England produce under contract to British Sugar, their sole customer. A frost insurance scheme is being introduced to protect growers from losses by severe weather.

Discussions are going on between dairy farmers and Dairy UK, which represents the milk processors, on a voluntary code of practice on milk contracts. Processors have cut prices by up to 2p/litre this year on contracts that producers say they are unfairly locked into.

Minimum wages for farm workers are to rise by up to 2.8% following agreement between employers and unions at the recent Agricultural Wages Board negotiations. This is likely to be the last round of negotiations under the Board as it is scheduled to be disbanded as part of the Government drive to cut bureaucracy.

New tractor registrations increased by 5% in May, continuing the trend of recent months, giving a year to date increase of almost 11% over 2011.

FarmWeb News 06/06/2012

Protests have begun at the site of a trial of GM wheat at Rothamstead Research. Protestors failed in their attempt to destroy the crop because of a heavy presence of police and security staff. The wheat, which is resistant to aphids, is being grown under strictly controlled conditions and is due to be harvested in September. The crop is now protected by a High Court order forbidding unauthorised access.

A judicial review of the decision to cull badgers will take place in the High Court on 25th & 26th June. The Badger Trust believes there are serious flaws in the Government proposals for the cull.

The fall in the cost of solar PV installations and changes to Government rules has led to a renewed interest in the technology. Installers are looking for suitable sites of 25-50 acres and farmers can expect a rent of up to £1,000/acre for a twenty five year contract. The NFU report that over 30% of farmers in England and Wales will be involved in renewable energy initiatives this year. Large projects are planned in Hampshire and Pembrokeshire.

Further consolidation in the dairy sector looks likely with the proposed merger of Milk Link and Arla Foods. The new company will be the largest milk processor in the UK controlling 27% of the market. Milk Link members should see their income rise by 2-3p/litre when the transition is complete. Arla is also merging with another milk co-operative in Germany making it the third largest processor there.

Farmers are being urged to consider the new pension rules now, even though most will not be affected until at least June 2015 under the phasing-in arrangements. Employers will need to set up pension schemes as the majority of farm workers will be covered by the rules, including casual and seasonal employees, within certain conditions.

All four existing Scottish agricultural colleges have formally agreed to merge and become the Scottish Rural University College. The new body will come into existence in August, in time for the autumn intake of students.

The CLA is concerned that the effects of the Energy Act 2011 will adversely affect farmers’ rental incomes. As from April 2018, all privately rented dwellings and business premises must be brought up to a minimum energy efficiency standard. The age and construction of many farm properties will make it prohibitively expensive to do so.

FarmWeb News 20/05/2012

Second generation solar PVpanels giving better performance at a lower cost are proving to be popular with farmers. A thinner, more efficient film has led to price falls of 30% in the last twelve months giving an annual return of over 13% on investment. In addition to the financial benefits to farmers, the panels are being promoted as a good selling point to potential customers, such as supermarkets, anxious to improve the green credentials of their supply chain. Insurance implications.

After more than a decade of campaigning by farming unions, a bill to create a grocery chain adjudicatorwas mentioned in the Queen’s speech. Farming leaders are pressing for the adjudicator to be given powers to fine supermarkets that breach the Supply Code and to take evidence from third parties such as the NFU’s.

A ground breaking deal has been reached with the Chinese Government for the import of pig meatworth £50m from the UK. Porkis the most popular meat in China and consumption is increasing rapidly. A UK agricultural trade mission is in China to promote increased exports.

A major new campaign to encourage people to buy British produceis being launched by the industry. The campaign will focus on the contribution British farming makes in areas such as animal welfare, economic growth and the environment.

An award of £152,000 has beenmade to the widow of a worker involved in the repair of poultry houses made from asbestos. The exposure to asbestos led to the development of mesothelioma, a form of cancer, which caused his death.

Construction has started on the UK’s second straw-fired power stationat Sleaford, Lincs. The plant will consume up to 240,000 tonnes per year of mainly wheat straw from farms in a fifty mile radius. The plant is scheduled to begin operation in January 2014 with a further plant planned at Brigg. Supplies are secured from farmers on long-term contracts. Insurance implicationsas bales remain the responsibility of the farmer until moved to the plant.

Changes to the VAT statuson repairs and alterations to listed buildings come into force on 1st October 2012. The full rate of VAT may apply to items that were zero rated in the past.

Farming leaders have welcomed proposals to modernise the law relating to unrecorded rights of way. The aim is to make access rules easier to understand and reduce the current lengthy process of resolving any rights of way issues and disputes. 

FarmWeb News 03/05/2012

UK negotiators are seeking changes to the CAP that would allow individual countries to reduce direct support payments by up to 20%. This would be in addition to current proposals allowing up to 10% to be diverted into rural development schemes. Farming leaders have criticised the proposals which could create a significant competitive disadvantage between countries. EU auditors have branded the whole CAP reform package “too complex to administer”.

The Welsh Government’s decision to opt for vaccination of badgers against TB is likely to cost taxpayers £3.5m net, according to the FUW. The calculation uses the Government’s own figures of the £5.7m cost of the scheme less probable savings in lower payouts for infected cattle. The cost of the abandoned badger cull scheme was calculated at zero.

The proposed badger cull in England will face a High Court challenge and to help reduce the spread of TB in the interim, DEFRA has announced tougher movement control and compensation measures to take effect from 1st July 2012.

Sales of tractors rose over 10% in the first quarter of 2012 with farmers generally going for bigger machines. The rise in sales is partly driven by the significant reduction in tax relief for machinery and plant that came into effect in April.

Arla has joined Dairy Crest and Robert Wiseman in reducing the price of milk to farmers by 2p per litre. The price is now around 26p per litre which is almost 4p below the estimated production cost. All companies blame market pressures. The cuts have been heavily criticised by farming leaders and come on the back of a survey, in March, showing increased optimism amongst producers.

Weak demand at home and the strength of sterling has led to a fall in deadweight lamb prices of around 10%. Imports are 21% lower and exports 8% higher with France and Germany the leading markets.

According to provisional DEFRA figures the total income from farming rose by 25% to £5.69bn in 2011. Output across all sectors rose 15% outpacing the 10% increase in costs. Industry analysts feel the figure is over-stated and that the final figure will be closer to 15%.

Exports of UK rapeseed have reached record levels over the last eight months. Driven by strong demand from Germany prices remain strong at £380 – £395/tonne. World supplies are likely to remain tight, with a fall of over 10% forecast in the harvests of the main South American producers.

FarmWeb News 19/04/2012

Dairy Crest is to lose the contract to supply Tesco with liquid milk in July when it falls due for renewal. Supplies will be sourced from Arla and Robert Wiseman instead. Dairy Crest is to close two bottling plants and transfer the work elsewhere in a cost-cutting exercise.

The RSPB has taken on the tenancy of a 500ha upland sheep farm in the Lake District.  The project aims to “integrate hill farming with habitat restoration and improve drinking water quality”.  Nearby Haweswater is the main source of water for North West England.  The RSPB already has a lowland farm in Cambridgeshire.

The Government and the dairy sector have come together to launch Dairy 2020, a new initiative aimed at producing an integrated strategy to make the UK industry the most sustainable in the world.  It is also hoped that it will address the annual dairy trade deficit of £1.2bn.  Milk production for year ending March 2012 rose by 1.4% to the highest level since 2006/7.

A serious outbreak of TB in West Lothian, Scotland has led to the slaughter of 60 infected animals.  The cause of the outbreak is a mystery because the herd is closed with no new animals introduced for over 20 years.  The incidence of TB in Scotland remains very low with 6 cases in 2010 compared to 433 in Wales and 2025 in England.

Natural England has scrapped its 50 year plan for hill farming which leant more towards environmental management than food production.  The move has been welcomed by farming leaders, the agency has been told by government to work more effectively with farmers and rural communities.

Farm rents increased by an average of 25% across Great Britain in the year ending October 2011.  Eastern England showed the highest rise of 32%. Increases over the last three years have added £3,500 to the cost of an average size farm.

FarmWeb News 04/04/2012

The drought situation in England has worsened with parts of Yorkshire now added to the official drought areas. Whilst cereal crops are not yet at risk, farmers will find it more difficult to get licences to irrigate other crops. The Environment Agency has formed a national group to tackle the issues.

The Tenant Farmers Association is one of a number of rural groups concerned at the new planning guidelines brought into force under the National Planning Policy Framework.  The Framework is intended to make planning permission easier to get and could lead to more industrial and residential development of farmland.

NFU Mutual has announced an underwriting profit of £105m in 2011 compared to a loss of £150m the previous year.  Overall income rose 6% to £1,273m with renewal retention remaining high at 94%.

Tesco is to cut the price it pays farmers for milk by 0.65p/litre next month.  The price is reviewed every six months and reflects the fluctuating cost of production. The reduction is due to the 25% fall in the price of feed over the last twelve months.

Farming and other land based industries have come together to promote a more positive image of the sector as a career choice.  Farming alone will require 6,000 new entrants each year over the next decade and is currently only attracting 70% of these.

Germany has joined the Netherlands in making Schmallenberg a notifiable disease as it continues to spread in both countries.  All cases must now be reported giving a more accurate picture of the disease.

Sow stalls will be banned throughout the EU from January 2013 bringing it into line with the UK where the ban was introduced in 1999.  However, over half of the EU countries are unlikely to comply with the new rules.

Exports of meat and meat products rose by 22% to £2.35bn in 2011.  Most exports go into Europe but new markets are opening up in Africa and the Far East.

A trial has begun, in England, on a GM variety of wheat that has been engineered to repel aphids thus reducing the amount of insecticide that would need to be applied.  GM trials are strictly licensed and controlled and protests are expected.

FarmWeb News 24/03/2012

More investment in rural areas has been announced by DEFRA with the launch of five “Rural Growth Networks” in England. The Networks cover Wiltshire, Northumberland, Durham, Devon, Somerset, Cumbria and Warwickshire. The £15m, three year project is forecast to create 700 new businesses and 3,000 jobs.

The Welsh Government has finally decided not to go ahead with the proposed cull of badgers after many months of deliberation.  The intention now is to develop a badger TB vaccination programme.  The decision has been condemned by veterinary and farming leaders as being based on politics and not science. England is still on course for a cull in pilot areas and Northern Ireland is considering similar action.

Over 50% of the UK milk is produced in 10 counties with Devon, Dyfed and Cumbria accounting for 20% between them.  Production is becoming increasingly concentrated in these counties where rainfall continues to be adequate despite drought conditions elsewhere.

The HSE intends to go ahead with its scheme to recover its costs from farmers who breach health and safety rules.  The Fee For Intervention scheme has been delayed by technical difficulties but is expected to be launched in October 2012.

In the past, most centralised grain drying and storage facilities have been farmer owned co-operatives taking the grain through to marketing and sale.  A new large scale venture in Wiltshire offers drying and storage only, leaving farmers to market the grain themselves.  Close consideration of insurance requirements is clearly needed.

The collapse of over 5,000 farm buildings under weight of snow, in the 2010-11 winter has caused concern in the construction industry.  Farm buildings are generally designed for a 20 year life with little control over the quality of materials and construction.  Changes are set to be introduced in industry standards and quality should rise with the advent of the new EU “CE” mark, in 2014, confirming a building is fit for purpose.

The Government has called for the horticulture sector to increase production of plants and flowers to reduce the level of imports.  Over 75% of retail flowers are imported from as far away as South Africa and South America.

Farmers’ leaders are concerned that agriculture will not get its fair share of scarce water resources in those areas worst affected by the drought.  Crop irrigation accounts for only 1% of water usage but there are fears that farmers will be asked to reduce this.

FarmWeb News 07/03/2012

DEFRA has announced the launch of the Rural Economy Grants scheme, the latest initiative to help generate a thriving rural economy. The scheme makes £60m available to farmers and entrepreneurs to improve their existing business or pursue new opportunities.

The Schmallenberg virus has continued its rapid spread across southern counties of England.  Over 100 cases have now been reported with over 90% involving sheep resulting in birth defects and abortions.  The remaining cases are in cattle with no other species affected.  DEFRA will not give the disease “notifiable status” as it believes this would not help to control it.

The price of eggs is set to rise by 15-20% due to increased production costs and a shortage of supplies.  The ban on eggs from old style cages that took effect in January has made the problem worse in countries such as France where prices are up 75%.

Sales of small utility vehicles (UTVs), to farmers, rose by 24% last year at the expense of ATVs which fell by almost 5%.  The greater carrying capacity of UTVs is a big draw but they are equally attractive to thieves as crime figures show.

Exports of red meat from the UK rose by 25% in 2011 to almost £1.1bn.  Beef showed the biggest rise of 32% to £437m.  However, red meat imports also rose by 5% to £2.7bn.

A £300m bioethanol plant near Hull is due to open in few months time.  The plant will consume 1.1m tonnes of locally sourced wheat, annually, to produce 420m litres of bioethanol and 500,000 tonnes of high protein animal feed.  A similar sized plant on Teesside is due to re-open after initial teething difficulties.

The total income from farming in Wales, rose by 30% in 2011.  A rise of 16% overall, is forecast for 2011/12 with lowland cattle and sheep enterprises leading the way with a forecast 20% increase.

The EU Commission is asking member states to clamp down on CAP subsidies being paid to land owners who qualify but who are not actively farming within the spirit of the policy.  These so called “slipper farmers” were highlighted in a recent Panorama television programme.

Organic food sales fell by 3.7% in 2011, the third annual fall, leaving sales 20% down from their peak in 2008.

FarmWeb News 22/02/2012

The Environment Agency has warned that the continuing drought conditions will adversely affect the availability of water for crop irrigation later in the year. The east and south of England are worst affected with restrictions on water abstraction licences already in force. The south-east has been declared a drought area by DEFRA.

The Farming Minister has suggested that the RPA has performed much better at making Single Farm Payments than in any previous year.  He has announced a series of initiatives over the next five years to improve both service to customers and value for taxpayer’s money.

The high prices available for sheep meat on export markets led to the UK becoming a net importer in 2011, for the first time in 17 years.  Exports totalled 98,000t compared with imports of 88,000t.  Retail prices have risen 13% in the last few months leading to a fall in consumption of 15%.  Supplies remain tight across Europe.

A Limousin bull has sold for a record £126,000 at a recent livestock sale in Penrith.  The previous record was £105,000 and the sale is evidence of the buoyant state of the pedigree market.  In addition, the market for store cattle and calves continues to strengthen following rises in the latter part of 2011.

Farmright, the West Country milk processor has gone into administration leaving debts with its 80 farmer suppliers and Dairy Crest.  The move is indicative of industry worries over the finances and cash flow of milk processors and more rationalisation seems likely.  The Farming Minister has called for more effort from the dairy industry to increase production to reduce the current level of dairy product imports.

A recent analysis of road accidents shows rural roads to be more dangerous than urban ones, particularly for young male drivers.  The greater speeds and higher mileages travelled by rural dwellers leave drivers 37% more likely to have an accident.  The same factors mean that rural accidents have, historically, been more severe.

European farm leaders have called on the EU to ensure that the proposed reforms to the CAP are aimed at increasing food production and not hindering it.  They consider that some of the environmental proposals will make it more difficult for farmers to achieve the required production levels.