Farm News 167

Farm News 167

A strategy and action plan for the development of the anaerobic digestion industry, produced by DEFRA, has been criticised as lacking targets and firm action. The industry is expanding, but only slowly, with 35 plants operational and a further 33 under construction and planning. Farm waste is likely to account for around 10% of the material consumed by such plants. The slight increases in Feed-in-Tariffs, recently announced are unlikely to significantly boost the number of installations.

Permission is being sought for the first field trials of GM wheat in the UK to begin next year. The wheat has been modified to resist aphid attack thus reducing the need to spray. Trials of GM potatoes continue although the commercial growing of GM crops is banned in the EU.

The Welsh government has again postponed the proposed badger cull in order to reassess the science behind the plan. The move has been criticised by farm leaders with TB costing over £12m annually. DEFRA is still considering what action to take in England.

The NFU (E&W) is to expand its headquarters in Warwickshire with the addition of a £1.8m conference centre.

Merchants are warning of a shortage of seed, particularly for barley and oats, this autumn. Dry growing conditions have had an adverse affect on seed production in a market that is traditionally finely balanced between supply and demand.

Emyr Jones, a livestock farmer from N Wales, has been elected president of the FUW. Mr Jones has been deputy president since 2003.

Increased world demand for agricultural machinery is leading to longer lead times on the delivery of new tractors. Sales in the UK are up by 3.4% in the year to date with a surge in demand of almost 20% in May.

The Agricultural Wages Board for England & Wales has awarded farm workers increases of 2.5% to 2.9%. The rise in Scotland was 2.5%. Employers are unhappy with the awards and with the continuing existence of the Boards in Great Britain which are likely to be abolished in the near future.

Farmers Weekly has launched a crime register to help tackle the £40m per year rural crime bill. The register is accessed via the website. Meanwhile, a Cheltenham based security firm, has created a specialised farm protection team to help deter thieves and evict travellers illegally camped on farmland.

Farm News 166

A new strain of MRSA has been found in some dairy herds. The strain was first detected in 2007 and did not show up under traditional test methods. Milk remains safe to drink as the bug is killed by the pasteurisation process.

A recent report from DEFRA states that maintaining the UK countryside provides benefits of more than £30bn per year. The national assessment looked at the whole of the natural environment and was produced in advance of the forthcoming Natural Environment White Paper on the subject.

The severe winter has meant that some farmers have lost up to one-third of their sugar beet crop. Whilst the world price of sugar has been rising, the price paid to producers by British Sugar has not, leading many to question the economics of continuing with the crop.

The decision by Russia to end its ban on grain exports in July caused the price to fall on world markets. Prices are predicted to remain volatile as there are doubts about the size of the forthcoming Russian harvest and likely amounts available for export. The dry spring may reduce UK yields by up to 25% on lighter lands.

A major new grain handling and storage facility is to be built near Kettering in the East Midlands by the farmer co-operative Camgrain. The first phase with a capacity of 55,000 tonnes will open in time for the 2012 harvest. The second phase will increase capacity to 90,000 tonnes.

Ministers from the “G20” countries are to meet, this month, to discuss food security and prices. High on the agenda is how the speculative activity of commodity traders can be curbed. The UN has concluded that speculative trading is responsible for a significant part of recent food price rises as billions of dollars have poured into the market.

Farm News 165

The Farming Regulation Task Force, formed in June 2010, to recommend changes to the rules and regulations governing farming, has presented a report to the agriculture minister. It recommends changes in 200 areas to remove duplication and ease the administrative burden on farmers.

The addresses of the farms taking part in the badger cull in West Wales may be kept secret to avoid reprisals by animal activists. Meanwhile the Government has confirmed that it has not yet decided whether to order a cull in England.

The danger of employing unlicensed farm workers is highlighted by a court case in Swindon. Nineteen farmers are in the dock over the use of an unlicensed gangmaster, Marden Management, who supplied British and foreign workers to UK dairy farms. Those accused include Reading University and the NFU (E&W) vice president.

A prosecution by Health & Safety resulted in a major farming company being fined £120,000 with £45,000 costs after an employee was electrocuted whilst combining. The trial highlighted a number of failings on the part of the employer. Organisations within the industry have launched a new initiative, The Farm Safety Charter, to help cut the high number of deaths in the sector.

The number of farmers applying for the Single Payment on line almost doubled to 30,000 in 2011, around 30% of the total. On line applications are part of the RPA plan to improve the speed and accuracy of their payments system which has attracted much criticism over the years.

The Government has published plans for the appointment of the new Groceries Code Adjudicator. The code is intended to curb abuses in the grocery food chain and protect the interests of the consumer. Farming leaders see it as a tool to reign in the power of the supermarkets but fear it will lack teeth. Supermarkets are critical of the initiative and forecast it will increase their costs and therefore the price to consumers.

Increasing world demand and production problems have resulted in a rise in fertiliser prices of 10-30% over 2010. The traditional buying season in the UK has started earlier than usual and farmers have been surprised at price levels. Trade remains brisk with high cereal prices meaning that fertilisers are still affordable.

Farm News 164

Sales of new season lambs have got off to brisk start. Volumes, at the early sales are up by over 60% on last year. Despite this supplies in Europe remain tight so prices are holding firm. Good prices and future feed costs are tempting producers to sell animals earlier and at lighter weights than usual.

Trade talks between the EU and South American producers (Mercosur) are unlikely to be concluded before the end of 2011. EU farmers are concerned that increased access to European markets for beef and poultry, in particular, will have an adverse effect on their finances.

The role of DEFRA in animal disease research was expanded this week with the launch of a new global initiative funded by the EU. DEFRA will lead the project in addition to its current role as leader of a similar project covering EU member states.

Drax, the power station operator has set up an experimental farm to further investigate how crops grown for energy can be improved. Miscanthus and different cereals will be trialled. Drax already has the capacity to use 100,000 tonnes of pelleted straw in its power generation.

Farm visits by the public and school children in particular are being promoted by LEAF and FACE, two leading organisers in this area. Advice and seminars are available to farmers on how to go about organising such visits and the arrangements that will be needed to accommodate visitors.Insurance implications.

Continuing problems with the supply of seasonal labour have led HM Revenue to double the number of enforcement officers it employs. They will target gangmasters operating outside the rules and failing to pay tax. They will also offer free checks to farmers on the credentials of prospective gangmasters.

Gloucester and Hampshire constabularies are the latest to highlight the increase in rural crime. With thefts of machinery and equipment rising, both are focusing more attention on rural areas and are building crime prevention partnerships with farmers.

After a gap of over four years, another attempt is being made to initiate a government enquiry into the alleged adverse human health effects of organophosphate sheep dips. Previous investigations have failed to prove a link.

EU agricultural exports rose by 20% in value last year to a record €91bn, just behind the world leader, the USA, with €92bn.

Farm News 163

Significant price falls in the world and European dairy markets have fed through to the UK with most prices down by around 3%. The fall is softened to some extent by a weakening of the pound against the euro.

Tractor sales are marginally down across the UK in the year to date but there is wide regional variation. Sales are down over 10% in the eastern counties but up over 10% in the mixed farming areas of Lancashire and Yorkshire.

The lack of rain in the last few months is beginning to have an adverse effect on potential crop yields. Farmers are concerned that cereals and oilseed rape, on lighter land, in the south and east of England could suffer yield reductions of up 30% unless there is early rain.

A large scale outbreak of TB, involving 100 animals, has been discovered in a herd in Cumbria, an area generally free of the disease. The herd was last tested 18 months ago. It is not clear how the disease reached the farm as there has been no movement of animals. Investigations continue. The National Trust is to vaccinate badgers on land it owns in an effort to control the disease.

NFU Mutual has announced an underwriting loss of £150m for 2010 following a rise in claims costs generally and large losses in particular. After allowing for investment income, a pre-tax profit of £159m was made compared to £366m in 2009.

The government is planning to set up a new Animal Health and Welfare Board for England by the end of 2011. In a departure from previous practices the Board will include farmers and industry experts in addition to DEFRA officers and will make recommendations on policy direct to the minister concerned. A similar, informal partnership already exists in Scotland which is unlikely to change.

UK milk production rose by 4% in March amid further calls for a better deal for producers from the NFUs. The average UK price, at around 27p, is 3p/litre below the EU and a further fall in producer numbers is forecast in the autumn when feeding and housing costs increase.

The Royal Highland Agricultural Society is to go ahead with a £30m expansion of facilities at its showground, adjacent to Edinburgh airport. The plan will include a new pavilion, exhibition hall, hotels and business facilities.

A £3m on-farm anaerobic digestion plant in Lancashire will start producing commercial scale electricity next month. The plant is the first of four planned by Farmgen with the electricity already sold, under contract to Marks & Spencer.

Farm News 162

The UK oilseed rape harvest is on track to be a record and by a considerable margin. The harvest is expected to come in at 2.5m tonnes, a rise of 400,000 tonnes on last year. Prices remain very firm at over £400/tonne as demand continues to exceed supply. The UK is the third largest producer in the EU.

Beef prices have risen 9% in the last year and have broken through the £3 per kilo level for the first time. The rise is driven by rising production costs and a shortage of supplies.

Agricultural students are not immune to the high costs of fees. The Royal Agricultural College and several leading universities have announced their intention of charging the maximum of £9000 subject to government approval.

A number of crime prevention initiatives are being launched, around the country, to help combat the rise in thefts of agricultural machinery and vehicles. The initiatives involve farmers, insurers and the police. NFU Mutual is to exhibit a “super secure” tractor at shows across the south of England this summer.

Dairy Crest is the latest of the large processors to raise the price they pay their preferred producers for milk. The rise of 1p/litre will be paid for six months to reflect an increase in production costs. Dairy Crest recently increased its price to consumers by 3p/litre.

Sales of organic products fell by 6% to £1.73bn in 2010, although sales of organic beef rose by 18%. Both the acreage and number of organic farmers fell slightly during the year but the sector remains optimistic about the future.

The price of agricultural land in the UK has continued the upward trend that was evident throughout 2010.Market demand exceeds supply and banks remain willing to support buyers with land seen as a sound long term investment.

Farm News 161

Industry groups have called for a change to the way new entrants are attracted into farming. A recent conference highlighted the barriers to entry and called for more tenancies to be made available. One large landlord comments that too many enter farming as a lifestyle choice and not as a business decision.

Rising input costs and tight marketing conditions mean that 25% of poultry producers are running at a loss. The average profit margin on poultry has fallen to 3%.

The 800 members of Tesco Sustainable Dairy Group are to receive a record 29.78p per litre for their milk from 1^st April. This new price is around 3p/litre above the market average.

Exports of butter and cheese rose by 22% and 8% respectively during 2010. However, the imports of dairy produce still exceed exports by £1.2bn.

The December 2010 census of UK agriculture shows that cattle, sheep and pig numbers have fallen to 9.9m, 21.3m and 4.4m, respectively. The falls are under 1% but the numbers are at their lowest level for 10 years.

The number herds with a TB reactor fell by 200 in Wales but rose by 270 in England, to 3622 during 2010. Almost 8,000 herds were under movement restrictions across Great Britain. Farming leaders are again calling for the government to act on improving TB control measures.

The promised review of Feed-in Tariffs has got under way quickly with Government proposals to cut support by between 42% and 72% for larger solar panel schemes. This will have a dramatic effect on the viability of such schemes. A small increase in the rates for anaerobic digestion, where the uptake has been disappointing, is proposed. 

DEFRA has introduced tougher measures on cattle identification after evidence that some farmers have switched ear tags from diseased to healthy stock. In future, any animal testing positive for TB will be tagged and a sample of its DNA taken for future checks.

Farm News 160

The Caravan Club is again looking for additional sites in advance of the main touring season. The Club wants to expand its network of small 5-pitch sites, known as Certified Locations (CLs) and is authorised to grant certificates to operate these, to landowners, without the need for planning permission.Insurance implication

A recent survey by Barclays Business showed that up to 50% of farmers were intending to invest in new machinery in 2011. Around half thought they would be spending £25,000 to £100,000. Barclays take the survey as a sign of confidence within the industry. Tractor and equipment sales in January show small rises on last year.

The Government has announced a review of the Feed in Tariff scheme in the light of evidence that the support money available for schemes is being soaked up by large solar parks to the detriment of small businesses and householders.   

The RPA will not achieve its target of processing 95% of Single Farm Payment claims by 31^st March. Blame for this continues to be placed on the inadequate IT system that caused so many problems in the past.

UK farm borrowing rose by 3.7% to £11.6bn in 2010. The rise was expected by financial commentators as arable farmers continue to invest in more land and grain handling and storage equipment. Deposits held by farmers in their accounts also rose, by 4.5% to £5.3bn.

The Welsh Assembly has decided to go ahead with its cull of badgers in an area of west Wales containing over 300 herds of cattle. The cull is part of the plan to combat TB in cattle and was welcomed by farming industry leaders. An earlier cull was abandoned after it was ruled illegal by the courts.

It is estimated that the bad winter will cost farmers and growers £100m. Damage to farm buildings will exceed £30m with sugar beet and vegetables being the crops worst affected.

The production of green energy takes a further step forward with the announcement, by the Government, of its Renewable Heat Incentive. The Incentive will start in October 2012 and will reward the generation of heat from renewable sources. Farmers are expected to be well placed to take advantage of the scheme.Insurance implication.

A row has broken out between farming leaders and the RSPB over comments made by a director of the latter on the impact of farming on wildlife numbers. The RSPB comments do not recognise the significant fall in fertiliser and pesticide use or the many wildlife initiatives undertaken by farmers.

Farm News 159

The German dioxin scare has forced UK pig prices down as demand for pigmeat has fallen. This coupled with higher feed costs is leading to a loss of £21 per pig for producers. Asda is to pay a support supplement to its producers and the EU is considering plans to support the market.

South Korea is suffering the worst outbreak of foot-and-mouth disease in the country’s history. Over 3 million cattle have been slaughtered since the start of the outbreak in November, at a cost of £841m. We are approaching the 10^th anniversary of the last major UK outbreak.

DEFRA forecasts that, in England, incomes on livestock farms will fall over the next year with pigs down 68%, beef 50% and dairy 28%. Arable farmers are set to benefit from the current high prices for commodities with rises of up to 68% for cereal growers.

Total income from farming in Scotland rose by 25%, last year, to £618m. The rise was due to higher prices for cereals, oilseed rape and finished sheep and cattle together with a slight fall in overall input costs.

A survey of over 800 dairy units, carried out by the NFU (E&W) showed the average cost of milk production exceeded the average price by 3p per litre, resulting in losses to the industry of £330m per year.  Rises in feed and bedding costs are adding to the losses sustained by producers.

There are fears that as much as 20% of the UK 7m tonne sugar beet crop could be lost due to adverse weather conditions. The mild, wet weather is causing a rapid deterioration of beet that has not yet been lifted making it impossible to process and leading to a £15m loss to growers.

Calls by the UK Government for substantial cuts to the CAP budget have been criticised by Ministers from Scotland, Wales and Northern Ireland. The Ministers claim that such cuts would seriously damage the viability of agriculture in their areas.

The EU is planning to crack down on speculation in commodities, such as cereals, in an attempt to limit the unprecedented volatility in prices seen over the last twelve months.

Farm News 158

The German dioxin scare has forced UK pig prices down as demand for pigmeat has fallen. This coupled with higher feed costs is leading to a loss of £21 per pig for producers. Asda is to pay a support supplement to its producers and the EU is considering plans to support the market.

South Korea is suffering the worst outbreak of foot-and-mouth disease in the country’s history. Over 3 million cattle have been slaughtered since the start of the outbreak in November, at a cost of £841m. We are approaching the 10^th anniversary of the last major UK outbreak.

DEFRA forecasts that, in England, incomes on livestock farms will fall over the next year with pigs down 68%, beef 50% and dairy 28%. Arable farmers are set to benefit from the current high prices for commodities with rises of up to 68% for cereal growers.

Total income from farming in Scotland rose by 25%, last year, to £618m. The rise was due to higher prices for cereals, oilseed rape and finished sheep and cattle together with a slight fall in overall input costs.

A survey of over 800 dairy units, carried out by the NFU (E&W) showed the average cost of milk production exceeded the average price by 3p per litre, resulting in losses to the industry of £330m per year.  Rises in feed and bedding costs are adding to the losses sustained by producers.

There are fears that as much as 20% of the UK 7m tonne sugar beet crop could be lost due to adverse weather conditions. The mild, wet weather is causing a rapid deterioration of beet that has not yet been lifted making it impossible to process and leading to a £15m loss to growers.

Calls by the UK Government for substantial cuts to the CAP budget have been criticised by Ministers from Scotland, Wales and Northern Ireland. The Ministers claim that such cuts would seriously damage the viability of agriculture in their areas.

The EU is planning to crack down on speculation in commodities, such as cereals, in an attempt to limit the unprecedented volatility in prices seen over the last twelve months.

Farm News 157

Changes to the TB controls for higher risk herds and new terminology to describe the status of herds came into force on 1^st January 2011. Herds will be placed in one of three categories, namely, Officially TB Free (OTF), Officially TB Free Suspended (OTFS) where disease is suspected and Officially TB Free Withdrawn (OTFW) where disease is confirmed. The new terminology brings Britain into line with the EU.

There is concern that the recent severe weather will hit the oilseed rape crop. The hard frosts have damaged sizeable areas of the crop in the northern parts of Britain and most are unlikely to recover.

The latest survey of farm incomes in Wales shows mixed results for the last twelve months. Input costs rose by up to 20% across the sectors, dairy farms fared poorly with reductions of up to 13% in farm gate milk prices. Hill and upland livestock producers had a better year with income rises of between 19% and 56%. Welsh farming, overall, receives £280m in EU subsidies and most sectors would not be viable without this support.

A strengthening demand for milk supplies from manufacturing is forecast to lead to higher prices for farmers. Both Tesco and Milk Link have recently announced rises for producers.

The Organic Trade Board is embarking on a £1.8m campaign to reverse the decline in UK sales in the sector. The fund includes support from the EU. Sales of organic food in other European states are up to four times higher than in the UK. Conventional farmers have complained about unfair and misleading statements in the campaign literature.

Following the demise of the Royal Show in 2009, the Royal Agricultural Society has announced a £50m property deal partnership to develop the showground. The deal comes after criticism of the Society’s management. Developments on the site will be related to agriculture and rural interests, ruling out use for housing and industry.

European farmers’ organisations have warned the EU against introducing any further regulations to make the CAP “greener”. They point out the measures that have been implemented in the last twenty years and the costs to agriculture that cannot be wholly passed on. EU states import products from countries not subject to these costly regulations, giving them a price advantage.

In order to meet budget and restructuring targets, the RPA which is responsible for administering the Single Payment scheme, is to reduce its 3,400 workforce by 20% over the next two years. 

Farm News 156

NFU Mutual has reported receiving hundreds of claims for damage to farm buildings by storm and burst pipes following the recent heavy snow falls across northern England and Scotland. The final cost to the insurance industry is set to exceed the £30m paid out for similar damage last year.

The Government considers that the EU plans to reform the CAP lack ambition and should be aimed at reducing and abolishing subsidies. Farmers should rely less on direct subsidies and be rewarded more for their work to enhance the countryside. A major reform of the CAP is scheduled for 2013.

The numbers of both sheep and cattle, in Wales, increased last year amid signs of optimism for the sector. Breeding ewes rose by 3% to 4.1m and cattle by 2% to 242,000.

A leading firm of land agents has highlighted the benefits to farmers of generating renewable energy for both own use and export to the national grid under the feed-in tariffs. For energy intensive enterprises such as dairying, the repayment time on investment can be as low as three years with significant on-going savings in future years. Income from feed-in tariffs is generally exempt from income tax provided most of the power generated is for own use.There are insurance implications for any installation.

The continuing high prices of wheat and oilseed rape are having an impact on other crops. The acreage of pulses grown in the UK is likely to fall by up to 25% as the financial return on these crops is significantly lower. The lower acreage is forecast to lead to a rise in prices with demand outstripping supply.

The price of diesel is encouraging farmers and buying groups to get together in a hedging scheme to fix forward prices. Clydesdale Bank is offering this service to the agricultural industry for the first time.

The 2010 harvest results from DEFRA show that wheat production rose 6% to 14.9m tonnes, barley was down 21% at 5.3m tonnes and oilseed rape was up 17% to a record 2.23m tonnes. Poor market prospects led to a significant fall in the acreage of barley planted.

Official figures show that overall farm incomes, across Europe, increased by 12.3% last year. However, Britain lags behind with a fall of 8.2%. The rise puts incomes back to 2008 levels but there are wide differences between member states. Milk prices rose by 9% on the Continent, far ahead of Britain which is now near the bottom of the EU milk price league.