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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 daily and monthly basis, the document has a wide readership amongst farmers and professionals. Now available online as a free resource or via snail mail by request.

September 2016

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+ Policy issues

All politicians are busy preserving their employment status, policy-making has therefore gone to pot!
1 The Scottish Government has rejected the European Commission proposal for a one-month extension of the deadline for submission of Single Application Forms as a result of apparent satisfaction with the application process.

1 Rothamsted Research has announced three new science portfolios – Superior Crops, Securing Productivity and Future Agri-Food Systems - designed to bring together global innovation to benefit farmers, secure food production and protect the environment.

2 It is estimated that the population of farmland birds in 2015 was less than half the numbers in 1970, although the majority of the decline occurred between the late 1970’s and the 1980’s due to rapid changes in farmland management in this period. Between 2009 and 2014, 32 per cent of species increased their numbers while 42 per cent showed a decrease. Between 1970 and 2015 populations of farmland specialists declined by 67 per cent while farmland generalist populations declined by only 3 per cent. Grey partridge, turtle dove, tree sparrow and corn bunting have declined by over 90 per cent whereas populations of stock dove and goldfinch have more than doubled. The yellow wagtail has declined by 65 per cent and the kestrel by 50 per cent while populations of wood pigeon and jackdaw have more than doubled.

3 The results of the 2017 Farm Practices survey concerning greenhouse gas mitigation have been published. The proportion of holdings with a nutrient management plan has remained constant at 56 per cent covering 75 per cent of farmed area. The proportion of holdings processing slurry, crops or other feedstocks by anaerobic digestion has increased from 1.4 per cent in 2011 to 5.5 per cent. Approximately 76 per cent of farmers spread manure or slurry on grassland or arable crops but 54 per cent never calibrate their spreader. While the Farming and Ammonia Reduction Grant Scheme is available to dairy and beef farmers to help reduce ammonia emissions by funding covers for slurry stores, only 41 per cent of livestock farmers are aware of its existence. 67 per cent of livestock holdings have storage facilities for solid manure, 25 per cent store slurry in a tank while 16 per cent store in lagoons.

4 Research published in the Journal of Economic Entomology has suggested that honey bees living on or near to farms are healthier than those that live elsewhere. Better nutrition sources and nectar yields in agricultural areas outweigh the risk of exposure to pesticides.

5 Between 2000 and 2015, the estimated soil nutrient balances for nitrogen and phosphorus have fallen by 21 per cent and 47 per cent respectively.

6 Estimated agricultural emissions of nitrous oxide have fallen by 10 per cent, methane emissions have fallen by 11 per cent and ammonia emissions by 12 per cent.

7 In a paper published in Environmental Pollution, scientists from the Universities of Sussex and Padua in Italy have claimed that many garden plants marked as being “pollinator friendly” contain pesticide residues from applications during production which could be harmful to insects.

1 In 2016, the Utilised Agricultural Area in the UK increased by 1.2 per cent to 17.4 million hectares. Of the total, 508,000 hectares were farmed organically, a fall of 13,000 hectares compared to a year earlier. The total labour force fell by 2.1 per cent to 466,000.

2 Kite Consulting has reported that average debt in the dairy sector has increased from £1,900 per cow in 2014 to £2,356 per cow in 2017 and is forecast to grow to £2,700 per cow.

3 While the area of land farmed organically has fallen by 32 per cent since a peak in 2008, in 2016 the area in conversion rose for the second year running. Permanent pasture, at 66 per cent, accounts for the largest share of the organic area followed by temporary pasture at 18 per cent and cereals at 7.6 per cent. Organic poultry rose by 10 per cent to 2.8 million birds, organic sheep fell marginally to 841,000, organic cattle increased slightly to 296,000 while organic pigs rose by 5 per cent to 31,000. The number of producers and processors registered with organic certification bodies rose by 5 per cent to 6,363 but this masks a fall in the number of producers, down by 35 per cent since 2007.

4 The price index for all outputs in March was 13 per cent higher than a year earlier while the index for all inputs was 6.4 per cent higher.

5 The rate of new house build completions in 2014/15 in predominantly rural areas grew at a faster rate, 8.6 per 1,000 households, than in predominantly urban areas, 6.2 per 1,000 households. Nearly 42,000 new houses were completed in predominantly rural areas in 2014/15.

6 Knight Frank has reported a stabilising of land values with the average value of bare land in the first quarter of the year being £7,435 per acre.

+ Product prices

A. Crops

1 Cereal prices remained largely flat this month, with small gains early on but dropping back again shortly thereafter. The market was quiet as many buyers sat on their hands awaiting signs of how the general election might play out and how the 2017 crop will react to late rainfall. The concerns caused by overly dry conditions in Europe have been partially alleviated by the arrival of rain, although the rainfall deficit is far from being offset. Sterling weakened materially against the Euro this month, with a monthly spread of between 83.9 and 87.3 p per €, closing 2.6p down at 87.3p per €; meanwhile against the US$ the movement was less marked, dropping 0.7p to sit at 78.0p per $. Crude oil prices were again volatile, with Brent crude swinging between $48 and $54 per barrel to close back where it started the month at $51.98 per barrel. LIFFE feed wheat futures moved positively at all levels and, despite a volatile month, did not drop below the month’s opening position, closing stronger in the short term than in the medium term. In late May, deliveries for November 2017 and 2018 both stood on a par with the current spot price of £142/tonne (+4) and (+2) respectively; March 2019 deliveries had improved to 145/tonne (+3).

Average spot prices in late May (£/tonne ex-farm): feed wheat 142 (-); milling wheat 147 (-); feed barley 120 (+2); oilseed rape 322 (-7); feed peas 161 (+9); feed beans 175

(+8).

2 2016 crop potato prices remained volatile with an overall weakening. The GB average, from an opening position of £217 per tonne, dropped by £4, then peaked at £218 before dropping back more harshly to a mid-May average of £205 per tonne (£12 below the April close, dropping below the price a year earlier by £8). The free-buy average took more of a hit as the market relaxed: dropping from a starting point of £252 to a mid-May position of £229 per tonne (£23 below the previous month’s close and £16 below the price a year earlier). The diminishing levels of 2016 crop continue to store well, albeit with increasing concern over skin finish. 2017 crop development is good and has benefited from the recent rains and sunshine, however, rainfall is still in deficit and crops without irrigation have been held back. The increasing heat/humidity combination means many growers are mindful of blight.

2016 crop prices for grade 1 in mid-May: Estima had fallen back to between £200 and £280 per tonne, with the baker market peaking at a weaker £300. King Edward movements were limited, with prices in the region of £325 per tonne, whilst Maris Piper prices were broadly static at between £260 and £310 per tonne. Desiree had improved marginally to between £300 and £320 per tonne.

B. Livestock

1 Cattle prices were unpredictable this month, albeit with relatively small movements involved. The average finished steer price, from its opening position of 188p/kg lw, dropped to 187p, rose to 190p, dropped back to 189p, before closing the month just above 190p/kg lw (2p/kg up in the month, to sit 15p/kg above the closing average a year earlier). The average finished heifer price was less volatile, rising to a mid-month peak of 201p/kg lw, before dropping back to close the month 1p up overall at 199p/kg lw, 12p above the price a year earlier. The average dairy cow price picked up on the volatility elsewhere, dropping to £860 per head before improving to a closing average of £1,077 per head (£978 at the end of May 2016).

2 The average finished lamb price (SQQ live weight) made material gains this month, partly as a result of the weakened Sterling and partly due to UK support for British product. From an opening position of 182 p/kg lw, after dropping by 6p/kg, the average price proceeded to gain 18p/kg over the rest of the month to reach a closing average of 194p/kg lw (up 12p/kg in the month).

3 The average UK all pig price (APP) improved further throughout May, but with a slightly different dynamic. Whilst the smaller UK pig herd and the resulting reduced supply remain factors for buoyant prices, demand for pork cuts is lower compared to this time last year and this is tempering the effect. From the opening position of 158.2p/kg dw, the price steadily rose to a closing average of 161.9p/kg dw (3.7p/kg up in the month, to sit 42.8p/kg above the May 2016 closing average).

4 The UK average milk price for March, published in early May, was unchanged from February at 27.46ppl – 5.03ppl above the price a year earlier. Despite this and the weakening of Sterling, the UK average milk price for March gained a place in the EU farmgate milk price ‘EU28’ rankings, from 19th up to 18th, with an average of 27.46ppl versus a stronger EU28 weighted average of 29.54ppl (up 0.28ppl).

+ Other crop news

1 Stocks of wheat at the end of June 2016 rose by 34 per cent compared to a year earlier to 2.7 million tonnes while stocks of barley fell by 2.2 per cent to 770,000 tonnes. Stocks of oats stood at 70,000 tonnes with maize at 50,000 tonnes.

2 The price index for all crop products rose by 15 per cent in March compared to a year earlier and by 2.5 per cent compared to February. The cereal price index rose by 24 per cent and by 3.3 per cent compared to February. The potato price index rose by 27 per cent and by 3.2 per cent compared to February. The oilseed rape index rose by 37 per cent while the fresh fruit price index rose by 20 per cent.

3 In the period January to March, the milling, starch and bioethanol industries used 1.709 million tonnes of wheat, an increase of 13 per cent on the same period a year earlier. Of the total, 1.479 million tonnes was home produced. Brewers, maltsters and distillers used 460,000 tonnes of barley, an increase of 3.2 per cent, and 172,000 tonnes of wheat, an increase of 21 per cent.

4 During March, animal feed production rose by 8.8 per cent for sheep, 4.1 per cent for poultry and 7.4 per cent for cattle but fell by 1.3 per cent for pigs compared to a year earlier. The usage of wheat and barley increased by 4.9 per cent and 4.2 per cent respectively.

5 Research funded by Elsoms has identified the three main pathogens responsible for parsnip canker.

6 A project between Tom Smith Plants, NPK Technology and ChilliBobs has resulted in Dragon’s Breath, reportedly the “world’s hottest chilli” measuring 2.4 million Scoville Units (SCU), some 200,000 SCU hotter than the current record holder.

+ Other livestock news

1 The number of new animals affected by the bluetongue virus BTV-8 in France in 2017 has reached 650 and cases have been reported in Seine-Maritime. The nearest case to the UK is 150km from our shores.

2 The 2016 data on pedigree farm animals has been published. In cattle, the largest number of female registrations was from the Jersey breed at 6,600, a 6 per cent fall on 2015 indicating a breeding female population of 24,000. The smallest number of registrations was of 4 Vaynol cattle indicating a breeding population of 8. In sheep, the largest number of female registrations was of the Swaledale breed at 69,000 indicating a breeding population of 165,000 but this is down from 750,000 in 2002. The smallest breeding population is the Boreray breed with 426 breeding females. In pigs, the numbers of pedigree British Landrace have fallen from about 5,500 in 2002 to about 200 in 2016, while the numbers of Large White have fallen even more, from about 6,500 in 2002 to about 300 in 2016.

3 In February there was a fall of 7 per cent in the number of new herd bovine TB incidents in England, with falls of 7 per cent compared to a year earlier in the High risk area and 24 per cent in the Low risk area but an increase of 5 per cent in the Edge area. There were falls of 19 per cent in Scotland and 14 per cent in Wales. The number of herds not officially TB free fell by 3 per cent in England with falls of 4 per cent in the High risk area and 22 per cent in the Low risk area but an increase of 5 per cent in the Edge area. In Scotland and Wales there were falls of 3 per cent and 8 per cent respectively.

4 Slaughterings of prime cattle in April fell by 2.6 per cent compared to a year earlier to 161,000; beef and veal production fell by 6.2 per cent to 62,000 tonnes; sheep slaughterings rose by 21 per cent to 995,000; mutton and lamb production rose by 19 per cent to 24,000 tonnes; pig slaughterings fell by 11.2 per cent to 786,000; pigmeat production fell by 10.9 per cent to 68,000 tonnes.

5 Milk production in April increased by 0.8 per cent compared to March to 1,251 million litres, almost the same level of production as a year earlier. The average butterfat content was 4.06 per cent, down 0.06 per cent on March and 0.1 per cent compared to a year earlier. The average protein content was 3.29 per cent, up 0.03 per cent on March and 0.02 per cent compared to a year earlier.

6 Arla UK has reduced its liquid milk price by 0.4ppl to 27.73ppl.

7 During March, dairies used 820 million litres of milk, up 18 per cent on February but down 12 per cent on a year earlier. Of the total, 45 per cent was used for liquid milk production, 30 per cent for cheese, 2.4 per cent for butter and 2.3 per cent for cream.

8 Muller has reduced its standard milk price by 0.5ppl to 26.19ppl.

9 Dairy Crest has reduced its Davidstow contract price by 1ppl to 28ppl.

10 The Elanco Blowfly Strike Tracker has reported first cases in Hampshire, Wales, Gloucestershire, East Sussex and Essex.

11 In the period January to March, egg packing stations packed 7.4 million cases of eggs, up 2.8 per cent on the same period a year earlier. The average farm-gate egg price was 70.9p per dozen, 2.4 per cent less than a year earlier. The production of egg products fell by 0.7 per cent to 22,800 tonnes.

12 In April, commercial layer chick placings fell by 1.3 per cent compared to a year earlier to 3.4 million chicks; broiler chick placings rose by 7.2 per cent to 101.4 million chicks; turkey chick placings fell by 9.6 per cent to 1.1 million chicks; turkey slaughterings rose by 4.5 per cent to 1 million birds; broiler slaughterings rose by 7.6 per cent to 100.4 million birds; and total poultry meat production rose by 5.3 per cent to 172,400 tonnes.

13 The price index of animals and animal products rose by 11 per cent in March compared to a year earlier. The pig price index rose by 35 per cent with an increase of 0.7 per cent over February. The milk price index increased by 0.03 per cent compared to February. The price index for straight feeding stuffs rose by 20 per cent and by 1.8 per cent compared to February.

1 The 2015/16 Farm Business Survey has revealed that 21 per cent of farms use precision techniques to guide fertilizer application while 23 per cent use soil nutrient software packages to help determine applications. Only 12 per cent of farms use green manures in arable rotations. The average application was 113kg per hectare of nitrogen, 20kg of phosphate and 25kg of potash.

2 Despite a proposal by the European Food Safety Authority and the European Chemicals Agency that its use be authorised for 15 years, the European Commission is expected to approve the use of glyphosate for only 10 years.

3 Bayer has been granted an emergency 120-day authorisation for the use of insecticide Movento Top to control woolly aphids on apples.

4 The energy and lubricants price index in March rose by 20 per cent compared to a year earlier.

5 Amistar has been granted an Extension of Authorisation for Minor Use as a fungicide on field vegetables.

6 An Extension of Authorisation for Minor Use has been issued for Shark, a herbicide control against a variety of weeds that reside in the planting holes of strawberry crops.

+ Marketing

1 Kantar Worldwide has reported growth of £1 billion in sales in the grocery sector in the 12 weeks to 23 April. Aldi sales grew by 18.3 per cent, Lidl by 17.8 per cent, Waitrose by 3.1 per cent, Co-op by 2.6 per cent and Sainsbury’s by 1.7 per cent.

2 The value of food, feed and drink exports in 2016 increased by 8.7 per cent compared to a year earlier to £20.1 billions but the trade gap in food, feed and drink increased by 4.2 per cent to £22.5 billions.

3 Morrisons has entered into a three-year contract with Arla to exclusively supply its own-brand milk from next March.

+ Miscellaneous

1 It comes as no surprise that it is more healthy to live in a rural area than in an urban area. On average, people born in mainly rural areas in 2013-15 are expected to live two years longer than people born in mainly urban areas. The average life expectancy in 2013-15 was 79.4 years for men and 83.1 years for women.

2 The CLA has launched “The Countryside Matters”, a new initiative to unite people who care about the countryside.

3 David Clarke, chief executive of Assured Food Standards, has announced his retirement after 19 years of leadership which has seen the Red Tractor Assurance mark grow to its current prominent status. David will be succeeded by Jim Moseley, the current Assured Food Standards chairman.

+ Other Business

Postscripts

The UK Tax System explained in Beer.

Suppose that once a week, ten men go out for beer and the bill for all ten comes to £100.

If they paid their bill the way we pay our taxes, it would go something like this:-

The first four men (the poorest) would pay nothing.

The fifth would pay £1.

The sixth would pay £3.

The seventh would pay £7.

The eighth would pay £12.

The ninth would pay £18.

And the tenth man (the richest) would pay £59.

So, that’s what they decided to do.

The ten men drank in the bar every week and seemed quite happy with the arrangement until, one day, the owner caused them a little problem. “Since you are all such good customers, he said, “I’m going to reduce the cost of your weekly beer by £20.” Drinks for the ten men would now cost just £80.

The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free but what about the other six men? The paying customers? How could they divide the £20 windfall so that everyone would get his fair share? They realised that £20 divided by six is £3.33 but if they subtracted that from everybody’s share then not only would the first four men still be drinking for free but the fifth and sixth man would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fairer to reduce each man’s bill by a higher percentage. They decided to follow the principle of the tax system they had been using and he proceeded to work out the amounts he suggested that each should now pay.

And so, the fifth man, like the first four, now paid nothing (a 100% saving).

The sixth man now paid £2 instead of £3 (a 33 per cent saving).

The seventh man now paid £5 instead of £7 (a 28 per cent saving).

The eight man now paid £9 instead of £12 (a 25 per cent saving).

The ninth man now paid £14 instead of £18 (a 22 per cent saving).

And the tenth man now paid £49 instead of £59 (a 16 per cent saving).

Each of the last six was better off than before with the first four continuing to drink for free.

But, once outside the bar, the men began to compare their savings. “I only got £1 out of the £20 saving,” declared the sixth man. He pointed to the tenth man, “but he got £10.”

“Yes, that’s right,” exclaimed the fifth man. “I only saved £1 too. It’s unfair that he got ten times more benefit than me.”

“That’s true” shouted the seventh man. “Why should he get £10 back when I only got £2! The wealthy get all the breaks.”

“Wait a minute,” yelled the first four men in unison, “we didn’t get anything at all. This new tax system exploits the poor”. The nine men surrounded the tenth and beat him up.

The next week the tenth man didn’t show up for drinks, so the nine sat down and had their beers without him. But when it came to pay the bill, they discovered something important – they didn’t have enough money between all of them to pay for even half of the bill.

And that, boys and girls, journalists and government ministers, is how our tax system works. The people who already pay the highest taxes will naturally get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy and they just might not show up anymore. In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier.



What are mates for!

The agricultural community is a friendly bunch, always willing to lend a helping hand, unlike the professional community who will lend one helping hand and present a bill with the other!

But sometimes helping hands can slap you in the face. Take the case of Lejonvarn v Burgess (2017).

Basia Lejonvarn was a Dutch registered architect living in London. Her friends, the Burgess family, were planning landscaping to their rear garden at a cost of over £200,000. Ms Lejonvarn suggested a much lower budget could be achieved and she began to produce design and project management services apparently on a gratis basis.

As time passed the Burgess family became concerned as to the likely cost and the quality of the work. The relationship deteriorated, another landscape designer was recruited and a claim for £265,000 was made against Ms Lejonvarn.

The court found that, even though no formal contract existed, there is a duty of care where services are carried out. The court emphasised that this case “was not a piece of brief ad hoc advice of the type occasionally proffered by professional people in a less formal context.” However, it did acknowledge it was a “cautionary tale.”

So next time you offer a helping hand be careful not to lose a friend and a packet in the process!