FarmWeb News 07/02/2012

FarmWeb News 07/02/2012

The Government is embarking on a plan to boost UK food and drink exports to the developing world. The Farming, Food and Drink Exports Plan is intended to support and encourage sales into countries such as China, India and Russia. UK food and drink exports are at record levels but most currently go to the USA and Europe.

Farms in Kent and East Anglia have been affected by Schmallenberg Disease (SBV), a newly emerging livestock disease spreading from Germany, Belgium and the Netherlands.  The disease seems to cause mild health problems in adult cattle and birth defects.  The disease is spread by midges and is under urgent investigation by the EU.

World wheat values have strengthened to over £155/tonne on fears of the effects of the drought in South America and tight supplies in Eastern Europe.  Demand for UK wheat has increased with exports approaching 1.5m tonnes in 2011.  There are worries that the freezing conditions across Europe may threaten the crop and push prices up further.

According to the land agents, Savills, expansion of existing farms, particularly arable, accounted for 50% of land sales in 2011.  Farmers bought over 60% of the land on offer with the rest going to investment institutions.  The latter accounted for a good proportion of sales with profit-taking being the incentive as some land values have almost doubled in the last four years.

Total income from farming in Scotland rose by 4.1% to £569m in 2011.  Results varied across the different farming sectors with specialist beef rearers losing income, sheep remaining static and arable and dairy farmers increasing their incomes.

Landowners and occupiers affected by the High Speed Two rail line will be offered a £1,000 access payment to allow contractors to carry out environmental impact assessments.  The payment has been negotiated with HS2 Ltd by the NFU and CLA.

DEFRA figures for 2011 show that, for the first time, over half (51%) of the eggs produced in the UK were from non-caged birds.  Product labelling and increased public awareness are the main reason for this rise, up from 14% in 1995.

According to NFU Mutual, thefts of ATVs rose by 150% in 2011, with only 5% recovered.  Machinery thefts are estimated at £70m of which £25m relates to tractors.

FarmWeb News 23/01/2012

The storms earlier this month have caused damage estimated at £5m to property in rural areas.

DEFRA has announced the location of the two trial badger cull areas.  The first is in West Gloucestershire, covering areas mainly in the Forest of Dean and Tewkesbury but extending to Wychavon, Malvern Hills and South East Herefordshire.  The second area is West Somerset and Taunton Deane.  Exact maps will not be published nor will the participants be identified.  The cull is due to start in the autumn.  Farmers have welcomed the announcement and there is unlikely to be any legal challenge to it, at this stage.

The number of herds in Wales under TB restrictions increased to 140 per month in 2011 compared to 114 per month in 2010.  Average compensation has fallen by 25% to £1,500 since 2006.  The Welsh Assembly is still considering how to best tackle the disease.

An indication of the tight margins in the poultry industry is given in the latest results from the major poultry processor, Faccenda.  Despite a rise in sales of 14%, to £313m, profits fell to £2.6m.  Faccenda runs a fully integrated operation taking poultry from day-old to table-ready.

A firm of consultants has warned that sterling is likely to continue to strengthen against the euro in the absence of a longer term solution to the eurozone problems.  This will make farm exports to Europe more expensive and food imports cheaper and more attractive to UK buyers.

The continuing opposition to GM from the EU and protest groups has led the German chemical group, BASF, to announce the cessation of its scientific research in Europe and its transfer to the USA where the attitude is more positive.

The seriousness of flouting cattle movement regulations has been highlighted in a recent court case with a farmer being fined £18,000 for failing to record and report the movement of cattle onto and off his farm.

The takeover of Robert Wiseman Dairies by the multinational, Muller, is likely to go ahead.  Wiseman provides almost one-third of the fresh milk consumed in Britain.  The £280m takeover has the support of the Wiseman board.

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DEFRA is launching a new “Farming Advice Service” covering professional advice on a range of subjects including cross compliance and climate change. The Service brings together a number of different advice lines under one number.

DEFRA has achieved its best ever record for the Single Farm Payment, made to English farmers, in December. Payments started on 1^st December and 87% of claimants have been dealt with in the month comprising £1.4bn paid out to 91,400 farmers. Uncertainty over the future of the euro has led those who opted for payment in euros to convert to sterling as soon as the money is received, rather than wait for a better exchange rate.

The Institute of Animal Health has warned farmers of the continuing threat from animal diseases both endemic and exotic. Diseases have cost the UK £15bn in the last 15 years. A number of diseases have moved into Europe from Africa, Turkey has proved vulnerable and African Swine Fever is out of control in Russia.

The Scottish forestry industry is worth over £1bn per year but is forecasting a difficult future with a shortage of timber for processing in as little as 15 years time. Efforts have been made to counter this with incentives from the Scottish Government aimed at expanding the forested area from 17% to 25% by 2025. However this has met with resistance from farmers who fear the long term effect on beef and sheep enterprises. Sheep numbers declined by over 30% in some areas between 1997 and 2010.

The Government decision to slash the level of support for feed-in tariffs has been declared illegal in a court case brought by Friends of the Earth and two installers. The Government is to appeal this ruling as it still considers the tariffs are too high and not sustainable. Two cross- party committees have already criticised the way the cuts were handled.

DEFRA has finally announced a controlled cull of badgers, in England, to combat the spread of TB in cattle. Two pilot operations will take place in autumn 2012, over a six week period, with the results closely monitored and considered before a wider roll out. The Government has spent £35m on research into vaccines to date, with a further £20m promised over the next five years. Farmers and vets have welcomed the announcement but supporters of the Badger Trust are considering further legal action against it.

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The UK has persuaded the EU to delay the implementation of electronic tagging for the 8 million sheep born before 1^st January 2010, until 2014. This will save farmers up to £11.5m over the next three years.

Tractor sales are up 4% to the end of November and at 13,398, have already exceeded the total for 2010.

Work has started on the first national badger survey in England since 1997. DEFRA says that having an estimate of badger numbers will help them in planning future policy. A decision on two trial culls of badgers, in England, is expected soon. A decision on the cull in Wales has been deferred until the New Year.

Plans to bring fast broadband to rural areas have stalled. Despite Government assurances to the contrary, work has not started in any of the four pilot areas named last year.

Cereal prices are forecast to ease during 2012 but to remain firm due to tight world supplies and continuing demand.

The EU has agreed to give dairy farmers more power to negotiate fair prices for their products and to balance the power between producers, processors and retailers. Producer groups will have more say in the prices for raw milk and an increased influence in the dairy supply chain. The changes are aimed at helping producers cope with the abolition of milk quotas in 2015.

Following the demise of the national organisation, the Norfolk branch of the Farming and Wildlife Advisory Group has reformed as a stand alone business. Local farmers have taken up positions as chairman and directors of the new concern.

Police in Hampshire and Northumberland are warning farmers and rural businesses of an increase in the number of thefts of heating oil and fuel from tanks and vehicles. Thefts are mainly from unsecured stores which are usually visible from the road.

The Government has published the Water White Paper on the future use and regulation of water resources. Farming leaders have generally welcomed the consultation document as concerns rise over the future availability of adequate supplies. Irrigation of crops is critical in some areas but farming uses only 1% of water abstracted from rivers.

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The lack of autumn rainfall, across the Midlands, has led to concern over a shortage of feed through the winter. Reservoirs are low after the driest year since 1910 and the quality and quantity of grazing has suffered.

Expected good cereal harvests in Russia and other Black Sea countries are likely to lead to a rise in exports from the area. The rise is forecast to more than make up for the expected shortfall from the USA and should lead to an easing of prices on the world market.

The Farming and Wildlife Advisory Group is expected to go into administration within the next few days. The Group, a charity, was set up in 1969 and has suffered losses since government funding was cut in 2010.

Government support for smaller solar power schemes is to be cut with reductions in the feed-in tariffs of 50% for new installations. Rates on larger schemes have already been cut. The new tariffs will hit householder and small commercial installations and raise doubts about viability. The solar power industry fears that the cuts will cause demand to collapse as happened in Spain.  Budget constraints are cited as the reason for the cuts.

High quality potash reserves have been found in North Yorkshire. Test drilling on the North Yorkshire Moors has unearthed a huge deposit that could last 100 years, supplying all of the UK needs and exports.

MPs have voted in favour of the Public Bodies Bill which will abolish a number of quangos including the Agricultural Wages Board. An amendment to remove the Board from the Bill was defeated. The Board was set up in 1948.

The financial outlook for the dairy industry has improved since the spring, boosted by rising milk prices andstrong market demand for animals. Exports to Europe have been helped by the strength of the euro against the pound and the UK becoming a bluetongue-free area.

The 64% rise in the cost of tractor thefts, in the last two years, has led to the launch of specific GAP insurance products for the agricultural sector, by ALA Insurance. The contracts provide cover for the shortfall between market value, at the time of loss and the full invoice cost or the amount of outstanding finance on the item.

The level of criticism over the proposed CAP reforms, from EU ministers, means that the new CAP is unlikely to be agreed in early 2013 for implementation in 2014. The UK government and farmers are unhappy with many of the proposals.

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Figures from a national harvest survey show that cereal yields appear to be better than the original predictions in western and northern areas with the south east and East Anglia suffering most from the dry weather.

Farmers in the Welsh uplands, which cover 80% of the country, will lose 20% of their subsidy following a decision by the Welsh Government to abolish a top-up payment. The move has been condemned by farming leaders.

The EU has put forward proposals for reform of the CAP with the main points being

• Direct support payments capped at €300,000
• 30% of payments to be aimed at “greener” practices including 7% set-aside with penalties for non-compliance.
• Increased funding for research & development
• Financial assistance for new young farmers and small rural businesses
• Confirmation that sugar quotas will end in 2015.
• Support payments restricted to “active” farmers

Farming leaders and the Government are unhappy with the proposals and will be lobbying for changes.

The unexpected outbreak of TB in Cumbria, earlier this year, has led to a call for stricter testing of animals before they are moved into the area. Such rigorous testing has resulted in Scotland remaining free of the disease.

Figures from the provisional DEFRA June census show a continuing slight fall in the number of cattle and a small rise in the number of sheep. The UK is the largest sheep producer in the EU and third largest cattle producer.

The market for quality pedigree cattle remains buoyant with £73,500 being paid for a Charolais bull at Stirling. The price is the highest ever paid in Scotland.

With the debate on the proposed badger cull still raging, DEFRA is proposing to tighten up TB testing regulations by introducing fines for overdue tests. Farmers will lose up to 95% of their compensation, on a sliding scale, where tests are more than 60 days overdue. The proposals will bring England in line with Wales.

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Animal welfare campaigners have alleged that 90% of egg producers in Greece have not yet begun to convert their cages to meet the new welfare standards that come into operation in January 2012. UK producers are concerned that some EU member states are not pursuing the imposition of the new rules and are asking for imports from these areas to be banned.

Farming leaders in Wales have expressed concern that the plans for a badger cull, to help control TB, have lost momentum. The change of government in May has led to a review of the science behind the programme and a subsequent period of inaction.

A proposed new biomass fuelled power station in Holyhead has been given the go-ahead by the government. The station will provide enough power for 300,000 homes. This follows authorisation for two similar sized stations in Yorkshire and Lincolnshire last month.

Strong demand for beef from China, Russia, Brazil and India has pushed up prices in the EU by 18% since January. Demand is likely to continue as exports from both the USA and Argentina have fallen.

Livestock farmers and meat processors have been told that they cannot escape the imposition of the full cost of meat inspections. The £25m cost is to be passed on to the industry by the Food Standards Agency.

The exchange rate for calculating the Single Farm Payment shows a slight increase on last year which will benefit British farmers. The rate is the second highest since the SFP was introduced in 2006.

The 2011 oilseed and cereal harvest looks to be a lot better than the early forecasts. Wheat production has fallen by only 1.5% and the quality is good .Oilseed production has risen by 29% on an increase in acreage planted of 12%.

Milk Link is to expand its creamery in Lockerbie with a £20m investment in the plant. Cheese production will be increased by 50% to 37,000 tonnes, requiring an additional 120m litres of milk. The creamery will be one of the largest and most advanced in the UK. Both Tesco and Arla have announced price increases to producers.

In developed countries government support for agriculture fell to an average of 18% of farm income, in 2010, a record low. In the EU, the level of support was 22% and falling.

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To highlight the launch of their new Farm Safety Crusade, NFU Mutual has estimated that injuries from falling bales will cost around £10m in 2011.

The EU seems likely to abolish sugar quotas and minimum prices in 2016, 12 months after the current regime is due for review. The action is forecast to reduce prices by 9%. The UK sugar beet harvest is now underway and good growing conditions look likely to result in a heavy crop with a high sugar content. However, processing at the four factories is threatened by strike action by workers unhappy with a pay offer.

A number of companies are now offering barn buildings specifically designed to host solar panels rather than having them fitted afterwards. The companies are forecasting that the electric generated by the panels will give a return on capital of 6-10%. Such installations are forecast to become more attractive as the cost of the panels falls.Insurance implications.

In an effort to combat falling sales of organic produce, the Soil Association is to attempt to dispel the elitist image of the sector. It is felt that the public have become more interested in buying local produce than organic.

The NFU has announced its intention to set up a dedicated professional service for tenant farmers to advise on all aspects of tenancies via links with local land agents and valuers. The service will be in direct competition with the Tenant Farmers Association which, itself, grew out of a perception that their particular needs were not being met by the NFU.

Plans to introduce a grocery chain ombudsman to oversee the relationship between supermarkets and farmer producers are likely to be delayed until 2014. The bill will not be debated until 2013.

Three of the four agricultural colleges in Scotland have agreed to merge in an effort to secure their future and improve the quality and delivery of their education and skills courses. The fourth is likely to join them. The move has been welcomed by the NFUS.

Despite gloomy forecasts following the spring drought, the wheat harvest in England looks to have recovered well to be only slightly down on the five year average. The total crop is estimated at 13.6m tonnes.

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The overall cost of producing food rose by 13% in the year to August 2011. Fertiliser prices are up 38% and fuel 25%. Seed, livestock feed and machinery prices all show double figure rises.

After several years of little action, a number of Canadian and Australian wheat organisations are again extending their research into GM wheat varieties. The research has also been widened to include improvements to yields, drought resistance and health benefits. Such varieties are likely to command a price premium. The Soil Association has been accused of overstating the potential dangers of GM in their response to proposed field trials in the UK.

The dry weather in France has led to a shortage of straw for livestock farmers. UK straw merchants are currently shipping 1,500 tonnes per week to France at £120/tonne compared to £100/tonne in the UK. Livestock farmers in the UK are concerned that this trend plus increasing use of straw as fuel in power stations will leave them short this winter. French farmers have received a €1000 subsidy from their government to help with feed costs.

Wheat prices are firming up again, across the world with downgrades forecast, in terms of quality and/or quantity, from some of the leading producers. The UK is likely to have a lower exportable surplus than in 2010.

The replacement of the Hill Farming Allowance with an uplands stewardship scheme in 2010 has led to 34% of hill farmers losing their support payment according to the Tenant Farmers Association. Those on short-term tenancies have been the hardest hit.

UK poultry farmers are concerned that imports of cheap eggs are likely to rise. A number of EU states are not fully compliant with the new welfare rules which raise production costs by 10%. In addition, production costs are much lower in the likes of the USA and China, both large producers with lower welfare standards.

Broadband coverage in rural areas has been given a boost with the allocation of £363m to improve the service in England and Scotland. This is part of the total broadband budget of £530m funded from the licence fee. Wales and N. Ireland have already received their share. 

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Following a judgement in the European Court, the published list of recipients of EU subsidies has been significantly shortened with the removal of sole traders and family partnerships. Only 17,000 of the 210,000 domestic recipients will now be identified.

Sales of organic produce fell by 6% to £1.7bn in 2010. This continues the decline since the peak in 2008 when sales reached £2.1bn. The number of organic producers and acreage has reduced accordingly as farmers switch back to conventional methods.

Recent research estimates the grouse shooting industry in England and Wales to be worth almost £68m. It supports over 1,500 jobs and grouse moor owners spent £52m on moorland management in 2010.

A rural crime survey carried out by NFU Mutual shows that farm thefts rose by 17% to almost £50m in 2010. Whilst expensive power tools are still the most popular items stolen, thefts of tractors, fuels and livestock have all risen significantly.

Nine major retailers and processors have been fined a total of £50m by the OFT for price fixing in relation to milk and cheese in 2002 and 2003. Tesco, one of those fined, has indicated its intention to appeal against the decision.

A survey has shown that dairy farmers’ confidence in their own industry has fallen with over 10% intending to quit and few planning on major capital investment in the next five years. Optimism was greater amongst younger producers with larger herds and good retailer contracts. MPs have called for the Government to intervene in the industry to ensure fair and clear contracts for producers.

Increased acreage planted and higher yields have led to a fall in potato prices for the 2011 harvest. Good growing conditions have brought the main crop in two weeks early with average yields up by 15%.

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Latest figures from the EU show the average farm gate milk price in the UK is 26.2p per litre, the lowest of the EU-27 countries. The EU average is 12.5% higher, with producers in some countries getting well over 30p per litre.

Good progress is being made with the oilseed rape harvest with yields in many areas being better than expected. The arrival of new supplies to the market has resulted in a price fall of around 3%.

DEFRA has announced further plans to consider a cull of badgers in areas of South West England and the Midlands worst affected by TB. The initial plans include the involvement of farmers in the cull but lawyers have already warned of legal problems with this aspect. The cull is to be preceded by a nine week consultation period and has been welcomed by farmers.

The world demand for lamb exceeds supply resulting in a strong market that is likely to continue for some time yet. Rising demand from the Far and Middle East has coincided with a fall in supplies from New Zealand to the benefit of British producers. Currently, 30% of English lamb is exported. Welsh lamb is to be promoted in Europe over the next three years, in a recently announced £3.5m marketing scheme.

The Labour opposition is campaigning for the retention of the Agricultural Wages Board which is due to be abolished in the near future. Labour maintains that it will have an adverse effect on workers. Farm employers welcome the abolition.

Farming leaders have welcomed the proposed changes to planning regulations announced by the Government. The draft policy recognises the need for change and diversification in farming and supports sustainable development in those areas.

Sales of seed for some varieties of wheat and barley are 30% up on last year. The rise is due to concern over availability as supplies are tight following the spring drought.

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The RPA has announced that over 99% of English farmers received their Single Farm Payment before the EU deadline of 30^th June. This means that the Agency will not incur any late payment fines under EU rules as in previous years.

Harvest is starting to get underway in the south east counties of England. Winter barley on light lands is showing reduced yields but farmers are more optimistic for better results on heavier soils.

Dairy Crest is seeking to expand its milk production by recruiting new producers and offering existing ones an incentive for higher volumes through to March 2013. Increases are expected from other processors in the coming weeks.

DEFRA has launched a £10m fund to support the building of new anaerobic digestion plants, with grants of £50,000+. The aim is to divert 300,000 tonnes of food waste from landfill. Meanwhile a poultry farm in Hereford is set to switch on a plant that will use 1,700 tonnes of manure annually to produce power for the farm and 450 homes.

Overall returns from investments in tenanted farmland were 9% in 2010, a recent survey has revealed. Most of the return was in the form of capital appreciation with rental income accounting for only 1.6%.

The EU is proposing that the CAP be fixed at €371bn for the funding period 2014 to 2020. In addition, it is likely that 30% of the fund will be directed towards mandatory measures to improve the environment. EU auditors have criticised the subsidy system for being too complex and for allowing money to go to those not directly involved in farming.

Wool prices have reached a 25 year high, driven by increasing demand and tight world supplies. The UK price has trebled since 2008 but still only covers the cost of shearing. Almost 70% of UK wool is exported.

A second case of TB has been confirmed in Cumbria, close to where the first outbreak was found. Tests are underway to ascertain if the two cases are linked and if the disease is now present in local wildlife.