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Monthly farming update

Our renowned Monthly Farming Update was started by Prof John Nix and is our running commentary on the industry. Offering the latest news and unique insights on the rural and farming sectors, updated on a monthly basis, the publication has a wide readership amongst farmers and professionals. Now available online as a free resource or via snail mail by request.

September 2017

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+ Policy issues

1 The CLA has called for a right to temporarily divert public rights of way for up to 40 days at a time to deal with changing needs of modern agriculture and farm use.

2 Defra has refused a request by trade union Unite to release a report on expected changes in food prices following the UK departure from the European Union.

3 Sir Lockwood Smith, until recently New Zealand High Commissioner to the UK, has claimed the British food and farming industry will thrive if it has a clean break from the EU and removes protectionist measures.

1 During 2016 direct payments to farmers increased by 11 per cent, compared to 2015, to £1,956 millions as a result of the more favourable exchange rate.

2 The Scottish Government has extended the time limit for claims under the Upland Sheep Support Scheme to 30 November because of poor weather.

3 DEFRA and the Rural Payment Agency have confirmed the 2017 BPS conversion rate to be €1 : £0.89470 (2016 BPS was 1 : 0.85228 and 2015 BPS was 1 : 0.73159).

1 The Scottish Government has raised its target of new tree planting from 10,000 hectares in 2016/17 to 15,000 hectares per year in 2024/25. In England only 525 hectares of new woodland was planted in 2016/17 and in Wales only 100 hectares.

2 The National Bee Unit has confirmed a sighting of an Asian Hornet at an apiary in Devon.

1 The first estimate of Total Income from Farming in England and the English regions for 2016 has been published. Compared to 2015 TIFF fell by 12 per cent to £2,460 millions. Milk was the greatest contributor to output at £2,052 millions followed by poultry meat at £1,868 millions, wheat at £1,498 millions, cattle reared for meat at £1,302 millions and fresh vegetables at £1,130 millions. The contribution of agriculture to the Gross Domestic Product fell by £395 millions to £6,249 millions. The South East and South West reported the largest falls, both of 20 per cent, followed by the North West at 18 per cent and the East Midlands at 16 per cent. The East of England contributed 26 per cent to TIFF overall followed by Yorkshire and the Humber at 8 per cent, the East Midlands and the South West at 13 per cent each and the West Midlands at 11 per cent.

2 Final estimates for agriculture in England as at June have been published. The utilised agricultural area increased by 0.6 per cent, compared to a year earlier, to 9.1 million hectares. The total croppable area increased by 1.2 per cent to 4.9 million hectares but permanent pasture remained unchanged at 3.8 million hectares.

3 During June the price index for all outputs rose 0.6 per cent on the previous month and 12 per cent on a year earlier while for inputs the index was unchanged and up 6.6 per cent respectively.

+ Product prices

A. Market background

1. Sterling finally found a little strength this month, with the Sterling / Euro exchange rate peaking as high as 87.5p per € before losing a little and closing at 88.1p per € (4.0p higher than the August close). The US$ / Sterling exchange followed suit for the first half of the month and, whilst peaking mid-month at 73.5p per $, the Dollar fought back leading to a close 2.7p stronger overall at 74.6p per $. Crude oil prices increased for most of September, with a few small blips along the way; Brent crude climbed from $52.38 per barrel to peak at $58.42, before tailing off in the latter stages close at $56.79 per barrel.

B. Crops

1 Wheat prices improved this month due to the pressures of the domestic market and despite stronger Sterling pushing markets the other way; further mid-harvest rains combined with reluctance of farmers to sell crop were the main drivers. Meanwhile, expectations that said rains will affect milling quality are keeping milling premiums above £15 per tonne in most parts of the UK with potential for more. Barley prices have been flat all month, whilst pulse prices continue to tail off. Oilseed prices, after slumping early on due largely to Sterling exchange rates, made minor gains over the rest of the month to claw a small amount back. LIFFE feed wheat futures have been volatile in the short and medium term, with a £4 swing in the November 2018 price over the course of the month; the longer term was less fluctuant and steadily weakened as the month passed. In late September, deliveries for November 2017, 2018 and 2019 stood at £141/tonne (+1), £147/tonne (-) and £147/tonne (-3) respectively.

Average spot prices in late September (per tonne ex-farm): feed wheat £133 (+3); milling wheat £147 (+3); feed barley £118 (-); oilseed rape £310 (-9); feed peas £140 (-2); feed beans £149 (-2).

2 The average potato price continued to fall this month as main crop harvest across the UK progressed, bringing better information on yield (above the five year average) and quality (good) to the market. The average price, from an opening position of £155 per tonne, dropped a further £18 to a late September close of £136 per tonne. However, it is the free-buy price that has been illustrating the nature of the current market, sitting well below the average. From an opening position of £102 per tonne, the free-buy price dropped a further £8 to a late September close of £94 per tonne.

Maincrop harvest is progressing well, with some areas reporting slow skin-set delaying harvest; recent wet weather has also added delays of its own. Blight pressure in the South and East of UK is relatively low, whilst the West has higher levels that are mostly under control.

2017 crop prices for grade 1 in late September (per tonne ex-farm): Maris Piper had weakened to between £135 and £180; Desiree had weakened materially to between £150 and £170; King Edward opened at a similar level to Desiree, between £160 and £170 and Estima and other white varieties were sitting far lower at between £60 and £95 but touching £150 for high quality samples with good baker content.

C. Livestock

1 Cattle prices were largely negative this month. The average finished steer price, from its opening position of 198p/kg lw, dropped back to 192p/kg before a late recovery led to a closing average of 193p/kg lw (down 5p/kg in the month, sitting 8p/kg above the closing average a year earlier). The average finished heifer price performed similarly without the late recovery, dropping from 211p/kg lw to close the month 10p lower at 201p/kg lw (2p above the price a year earlier).

The average dairy cow price remained volatile this month: dropping to £1,125 and peaking at £1,254 per head before dropping to a closing average of £1,081 (£1,082 at the end of September 2016).

2 The lamb market has had a bad month. The average new season finished lamb price (SQQ live weight) fell materially as a large increase in animal slaughterings (with expectations of further increases) combined with the continuing long-term downward trend in UK demand. From an opening price of 189 p/kg lw, the average fell throughout the month by a total of 27p/kg to a closing average of 162p/kg lw (9p/kg below the average a year earlier).

3 The combined effect of increased pig slaughterings in mainland Europe and a relatively flat demand for pig meat has seen the average price fall for five consecutive weeks. As such, the average UK all pig price (APP) dropped from the opening position of 168.0p/kg dw to a closing position of 165.7p/kg dw (down 2.3p/kg, to sit 23.2p/kg above the closing average a year earlier).

4 The UK average milk price for July, published in early September, showed an increase to 27.78ppl (up 1.03p) to sit 6.98ppl above the price a year earlier. In the context of the ‘EU28’ farmgate milk price, the rankings for July, published in late September, put the UK average milk price at 19th (unchanged) with an average of 27.84ppl (versus a EU28 weighted average of 31.19ppl).

+ Other crop news

1 During 2016 the overall value of crops fell by £370 millions, compared to 2015, to £6,993 millions. The value of wheat fell by 22 per cent to £1,498 millions as a result of the lower volumes and lower prices which also accounted for a fall of 15 per cent in the value of barley to £517 millions. The value of oilseed rape fell by 25 per cent to £502 millions mainly as a result of the reduced planted area. The value of sugar beet fell by 14 per cent to £150 millions as a result of lower prices and the planted area having reduced for the 5th year in succession. The value of potatoes rose by 33 per cent to £501 millions as a result of higher prices and an increase in the planted area.

2 In the year to June the total area of arable crops increased by 1.5 per cent to 3.9 million hectares. The area of cereal crops increased by 1.6 per cent to 2.7 million hectares mainly due to a 16 per cent increase in spring barley. The areas of both wheat and winter barley fell. The area of oilseed rape fell by 3.7 per cent to 550,000 hectares. The area of horticultural crops increased by 2.9 per cent due to a 3.3 per cent increase in the area used to grow vegetables and salads.

3 The price index for all crop products in June fell by 0.9 per cent compared to May but was up 8.4 per cent compared to a year earlier. The index for cereals fell by 2.4 per cent compared to May but was up 21 per cent on a year earlier. The index for wheat fell by 0.8 per cent but was up 24 per cent on a year earlier while the oilseed rape index fell by 7.2 per cent and 16 per cent respectively. The index for fresh fruit rose by 31 per cent and 23 per cent respectively.

4 Animal feed production in July rose by 26 per cent for sheep, 11 per cent for cattle and calves, 11 per cent for poultry and 3.8 per cent for pigs, all compared to a year earlier. The usage of wheat rose by 6.2 per cent while the usage of barley rose by 54 per cent.

5 With all sugar factories open for processing, the NFU is forecasting high yields of 26-32 tonnes per acre but the sugar content is generally low at 16.5 per cent.

6 The Agriculture and Horticulture Development Board and the British Beet Research Organisation are to create a new research partnership to develop practical soil biology management guidance.

7 The volume of sugar beet production is expected to soar in the 2017/18 season following the ending of quotas. The German sugar industry association has forecast domestic production to increase by 27 per cent to 31.48 million tonnes, the French Ministry of Agriculture is expecting increased production of 6 million tonnes to 40.48 million tonnes while British Sugar is expecting UK production to rise from 900,000 tonnes to 1.4 million tonnes.

8 The World Apple and Pear Association has forecast that EU apple production in 2017 will fall by 21 per cent to 9.343 million tonnes while the pear crop will only fall by 1 per cent to 2.148 million tonnes. UK apple production is expected to fall by 25 per cent with a fall of 7.4 per cent in pear production.

9 AHDB Horticulture has announced a research survey that will establish the current level of use of automation and robotics in horticulture and identify how investment in technology could address concerns about labour availability and costs.

10 The prestigious Goudhurst and Paddock Wood NFU Orchard Competition has been won by Adrian Scripps Ltd.

+ Other livestock news

1 In the year to June the total number of cattle and calves in England was static at 5.4 millions, as was the breeding herd at 1.9 millions. The number of pigs increased by 1.5 per cent to 4 millions with fattening pigs up 1.7 per cent to 3.6 millions. The number of sheep and lambs increased by 3.1 per cent to 15.8 millions with the female breeding flock increasing by 3.8 per cent to 7.4 millions and lambs increasing by 2.6 per cent to 8 millions.

2 The Badger Edge Vaccination Scheme has been relaunched with projects set to start in Spring 2018. Applicants may apply for a grant of up to 50 per cent of their costs out of a total fund worth £700,000 over 4 years.

3 Eleven additional licences for badger control have been granted covering parts of Devon, Wiltshire, Somerset, Dorset and Cheshire. Licences have also been granted for supplementary badger control in parts of Gloucestershire and Somerset which have completed the original 4-year licence periods.

4 In the year to June the number of new bovine TB herd incidents in England fell by 1 per cent with falls of 1 per cent in the High risk area and 23 per cent in the Low risk area but an increase of 1 per cent in the Edge area. There were falls of 30 per cent and 2 per cent in Scotland and Wales respectively. However, the number of herds in England not officially TB free rose by 6 per cent with increases of 6 per cent in the High risk area and 7 per cent in the Edge although there was a fall of 7 per cent in the Low risk area. In Scotland and Wales there were falls of 14 per cent and 4 per cent respectively.

5 Defra has awarded a contract to the Origin Group to deliver a new bovine TB advisory service to farmers.

6 Cheshire East Council is to ban badger culling on all land under its direct control.

7 Subject to approval from the Competition and Markets Authority the joint venture between Dawn Meats and Dunbia is to proceed. The new venture will process 900,000 cattle and 2.6 million sheep in the UK annually.

8 During August slaughterings of prime cattle rose by 0.5 per cent compared to a year earlier to 157,000 head; beef and veal production fell by 0.9 per cent to 71,000 tonnes; sheep slaughterings fell by 0.4 per cent to 1.198 millions; mutton and lamb production fell by 1 per cent to 27,000 tonnes; pig slaughterings fell by 0.2 per cent to 895,000; and pigmeat production rose by 2.5 per cent to 77,000 tonnes.

9 The price index for animals and animal products rose by 1.9 per cent in June compared to May and by 15 per cent compared to a year earlier. The index for pigs rose by 1.3 per cent and 28 per cent respectively while the index for milk rose by 3.8 per cent and 34 per cent respectively. The index for compound feeding stuffs fell by 0.3 per cent but was up 8.9 per cent on a year earlier.

10 Muller is to invest £100 millions over the next 3 years in a programme of development, manufacture and marketing of a new generation of yoghurt and desserts.

11 Meadow Foods is to increase its standard A price by 1ppl to 31ppl.

12 During June dairies used 888 million litres of milk, a fall of 5.7 per cent on May but up 2.7 per cent on a year earlier. Of the total, 48 per cent was used for liquid milk, 26 per cent for cheese, 2.1 per cent for butter and 1.9 per cent for cream.

13 During 2016 the value of milk fell by 12 per cent, compared to 2015, to £2,052 millions driven by lower prices and volume. The value of livestock primarily for meat remained unchanged at £4,853 millions. The cost of animal feed fell by 5.8 per cent to £2,949 millions due to a combination of lower prices and volume.

14 Dale Farm is to offer producers a three-year fixed volume contract at 27ppl with effect from January.

15 During August, milk production fell by 2.8 per cent compared to July to 1,152 million litres but was up 2.4 per cent on a year earlier.

16 Arla has increased its standard litre price by 1.5ppl to 32.3ppl.

17 Graham’s the Family Dairy has opened a £1.5 millions logistics facility in Kintore, Aberdeenshire.

18 First Milk has increased prices by 1ppl.

19 All farms in the Marks & Spencer dairy pool now have to comply with RSPCA Assured standards.

20 During August average butterfat content rose 0.06 per cent compared to July, to 4.02 per cent and was up 0.04 per cent on a year earlier. Average protein content rose by 0.05 per cent and 0.04 per cent respectively.

21 Muller has increased its standard non-aligned price by 0.5ppl taking the price paid to Muller Direct producers to 30.5ppl.

22 Latest provisional figures show that UK butter production in 2016 was 80 per cent of all supplies, the highest figure since 1987. Provisional 2017 figures show increases to 89 per cent in the first quarter and 93 per cent in the second quarter. Cheese production however is relatively static at 58 per cent of UK supplies in 2016.

23 The Food Standards Agency has reported that 24.4 per cent of sheep and goats were slaughtered without pre-stunning between April and June, up from 15 per cent in 2013. The number of chickens slaughtered without pre-stunning rose from 3 per cent to 18.5 per cent.

24 Poultry giant Cargill is to establish a joint venture company in the UK with Faccenda Foods merging their interests in chicken, turkey and duck.

25 During August, commercial layer chick placings rose by 9.5 per cent to 2.5 million chicks; broiler chick placings fell by 15 per cent to 1.8 million chicks; broiler slaughterings rose by 10.5 per cent to 82.5 million birds; and poultry meat production rose by 17 per cent to 153,900 tonnes.

26 The Government Chief Vet has announced that the UK now meets international requirements to declare itself free from H5N8 avian influenza.

27 Danish owned Tulip has acquired pig producer Easey Holdings.

+ Inputs / Supply business

1 During 2016, the cost of fertilizer fell by 19 per cent, compared to 2015, to £837 millions due to lower oil prices, the reason also for the fall of £43 millions in energy costs to £817 millions.

2 The Department of Transport has proposed to limit the volume of crop-based biofuels in the UK to 4 per cent in 2018 decreasing to 2 per cent by 2032. Many EU states have opted for 7 per cent as set out in the EU directive.

3 The European Food Safety Authority has concluded that glyphosate cannot be classed as an endocrine disruptor and does not interfere with human hormone systems.

4 The price index for energy and lubricants fell by 0.8 per cent in June compared to May but was up 5.1 per cent on a year earlier.

5 Glasson Fertilizers is to purchase the former Bunn Fertilizer blending plant and storage facility at Montrose.

+ Marketing

1 Exports of feed barley in July totalled 113,000 tonnes, the second highest monthly figure in the past 14 years.

2 The first ever consignment of Hampshire Down sheep to Spain has arrived in Valencia from Pembrokeshire.

3 Exports of British beer grew by £100 millions to £600 millions in 2016 with shipments to 121 countries. More than 500 breweries opened in the year and over 2,000 new beer brands were launched.

4 Deer antlers are being exported to China for use in medicinal products.

5 Waitrose has launched Celeriac Rice.

+ Miscellaneous

1 The Department of Transport has confirmed that agricultural tractors will not be required to undertake roadworthiness testing but testing is likely to become mandatory for any tractor licensed for commercial haulage travelling further than 15 miles from their base.

2 Ofcom has removed a legal requirement for BBC Radio to broadcast farming issues.

3 The Road Haulage Association has invited the agricultural industry to join with it in making a group claim for compensation before the Competition Appeal Tribunal following the European Commission ruling that MAN, Volvo/Renault, Daimler/Mercedes, Iveco and DAF operated a truck purchase cartel.

4 The UK Vineyards Association and English Wine Producers have merged to form UK Wine Producers.

5 Jason Burgess has been appointed chairman of British Growers Association.

+ Postscripts

Anonymous, circa 1973!

Won’t you join our Common Market? Said the Spider to the Fly, it really is a winner and the cost is not too high.

I know De Gaulle said “Non”, but he hadn’t got a clue.

We want you in, my friends and I, for we have plans for you.

You’ll have to pay a little more than we do, just for now.

As Herr Kohl said, and I agree, we need a new milch cow.

It’s just a continental term believe me, mon ami, like “Vive La France” or “Mad Anglais” or even “E.E.C.”

As to the rules, don’t worry friend, there’s really but a few.

You’ll find that we ignore them – but they all apply to you!

Give and share between us, that’s what it’s all about.

You do all the giving, and we all share it out.

It’s very British, is it not, to help a friend in need?

You’ve done it twice in two World Wars, a fact we must concede.

So climb aboard the Market Train, don’t sit there on the side.

Your continental cousins want to take you for a ride.

+ Business Box

It is good to talk!

A survey undertaken by stockbroker and financial advisory firm Brewin Dolphin has revealed that 47 per cent of UK adults have never discussed inheritance matters with their families while 26 per cent do not consider such a conversation to be a priority.

This may not come as a surprise to many, death is not a matter the discussion of which is easily broached. But, like it or not, death and taxes are the only things that are certain. What is more, the death of an older generation is probably top of the list at causing disharmony amongst the younger generation. Families that have survived quite happily can suddenly go on to a war footing the moment the box is lowered into the ground.

The structure of a will for a farmer or estate owner is often very complex and distressing. Does equity amongst children take precedence or does preservation of the family farm or estate come top of the list? Can one merge the two or does this cause even more trouble to emerge? What if the successor to the farm or estate does not carry out the objectives of the deceased? You cannot change your will from 6 feet under!

Many choose to pass the responsibility for decision making to trusted friends or advisers. This can work as necessary decisions can be taken in the cold light of day but it is an enormous responsibility and can simply put such friends into the centre of the war zone and at risk of their decisions being contested, possible in the courts.

It may not be very palatable but, if there is going to be contention, bring it into the open while you are around to deal with it. Listen to the views of your children or heirs and keep a proper record of discussions. Not only can you listen to their opinions but you can express the reasons for your plans for your estate.

If there is one person who can solve potential family disputes it is you. Don’t bury your head before they bury you!