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.
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+ Policy issues February 2018
1 The Government has published “A Green Future: Our 25 Year Plan to Improve the
Environment.” Proposals include a crackdown on plastics; 500,000 hectares of new
habitats for endangered species; funding of £5.7 millions to create a new Northern
Forest; consulting on a new environmental watchdog; creating a new approach to
agriculture and fisheries management; the creation of “nature friendly schools”; and
reviewing the effectiveness of National Parks.
2 The European Court’s Advocate General has determined that organisms derived by
gene editing technologies are exempt from EU rules on growing and marketing
genetically modified crops. However, the head of molecular genetics at Kings College,
London has suggested that exempting new plant-breeding technologies from GM laws
is “wrong and potentially dangerous.”
3 The Environment, Food and Rural Affairs Select Committee has criticised the Animal
Welfare Bill arguing it is “vague and ambiguous” and could result in unaffordable costs
+ CAP support details / payments February 2018
1 Rumours abound that Defra is considering a cap of £100,000 on Basic Payments from
2020 or 2021 with the cap gradually reducing until 2024.
2 Those farmers who have not received Basic Payment by the end of March will be offered
a bridging payment of 75 per cent in April. By the end of January 93 per cent of
claimants had been paid.
3 It is estimated that 4,500 Scottish farmers have not taken up the offer of interest free
loans equivalent to 90 per cent of 2017 Basic Payments.
4 A new round of the Agri-Environment Scheme in Scotland has opened. The scheme
supports environmentally friendly land management practices that aim to safeguard and
improve Scotland’s natural heritage and help businesses to adapt to climate change. The
application window will remain open until 13 April.
5 Applications have opened for the 2018 Countryside Stewardship Scheme.
6 The CAP Greening Group in Scotland has published a discussion paper which looks
ahead to future policy and mechanisms which could support more environmentally
sustainable farming and the delivery of public goods.
7 Applications have opened for the Countryside Stewardship Woodland Creation Grant
whereby a 2-year capital grant of up to £6,800 per hectare is available as well as annual
maintenance payments for a 10-year period.
+ Grants / regulations / legislation / environment February 2018
1 A ban has been introduced on the use of “microbeads” in cosmetic products.
2 Defra Secretary Michael Gove has intimated that the Environment Agency may be
restructured. This follows a report from the Natural Capital Committee claiming the
Agency could not address environmental protection when its spending and workload is
dominated by flooding.
Monthly Farming Update
3 The Agricultural and Horticulture Development Board is to invest £5 millions over the
next 5 years in supporting PhD university students in an effort to overhaul the industry’s
“fragmented” innovation and skills pipeline.
+ Other matters of farm finance and tenure February 2018
1 In 2016 the productivity of the food chain increased by 1.9 per cent while the wider
economy decreased by 0.3 per cent. This follows the previous 10 year period where
the average annual figures were increases of 0.4 per cent and 0.3 per cent respectively.
In 2016 the wholesale sector increased by 3.4 per cent but the catering sector fell by 2.7
2 Defra has published an analysis of the profitability and resilience of farms in England in
2016/17. The average level of liabilities across all farms was £202,100 per farm, similar
to 2015/16. 13 per cent of farms had liabilities of at least £400,000 while 28 per cent
had liabilities of less than £10,000. The highest liabilities were found in specialist pig and
poultry farms (£363,100), dairy farms (£360,100) and general cropping farms (£301,300).
The least debt was found in less favoured area grazing livestock (£83,400) and lowland
grazing livestock (£88,200). Farms in the South East had the greatest average liabilities of
£262,500. The average net worth was £1.8 millions with 40 per cent having net worth
of at least £1.5 millions. Mixed, owner occupied farms had the highest average net
worth at £2.46 millions while wholly tenanted farms had an average net worth of
£270,000. Cereal farms had an average net worth of £2.56 millions, that of general
cropping farms was £2.97 millions while horticulture farms had the lowest net worth of
£790,000. The average gearing was 10 per cent; 51 per cent of farms had gearing of less
than 5 per cent while 8 per cent of farms had gearing of over 40 per cent. Pig and
poultry farms had average gearing of 24 per cent, owner occupied farms 7 per cent and
wholly tenanted farms 29 per cent. Average liquidity was 224 per cent with two-thirds
having at least 200 per cent but 18 per cent had liquidity of less than 100 per cent.
Grazing livestock farms had the highest liquidity at 314 per cent for lowland areas and
298 per cent for less favoured areas while dairy farms had the lowest liquidity at 152 per
cent. The average return on capital employed was 0.46 per cent but 56 per cent of
farms had a negative return.
3 While total farm income from farming in Scotland rose by 5 per cent in 2016 to £672
millions, it is estimated to have risen by 36 per cent in 2017 which will be the third
highest since 2000 in real terms.
4 In November the price index of all outputs rose by 6.9 per cent compared to a year
earlier and by 0.9 per cent compared to October. The index for inputs rose by 4.1 per
cent and 1.4 per cent respectively.
5 The Scottish Government has introduced plans to reform the Scottish Crown Estate,
capital value estimated at £275 millions with an annual revenue of £15 millions. The
Scottish Crown Estate Bill will establish a framework for changes in the management of
Estate assets and give communities a stronger say including the opportunity for councils
and communities to participate in management.
6 Savills has reported falls in land coming to the market of 40 per cent in Wales, 16 per
cent in England and 11 per cent in Scotland.
7 The Scottish Government has published a report on ways of achieving a fair, sustainable
rent level for both landlord and tenant without recourse to the Land Court.
+ Product prices February 2018
A Market background
1 Sterling saw a higher level of volatility against the Euro this month, with a general trend
of improvement. From an opening position of 88.8p per €, the rate weakened (peaking
above 89.0p) and gained (dropping below 87.0p), before closing 1.3p stronger overall at
87.5p per €. The US Dollar / Sterling exchange rate movement was far more marked;
from a starting point of 74.0p per $, sterling improved for most of the month, with $1
dropping below 70p in the latter stages, before a late US recovery led to a closing rate of
70.8p per $, 3.2p stronger overall. Crude oil prices were buoyant but volatile
throughout the month with Brent crude, from a start point of $67.23 per barrel, twice
peaking above $70, before closing the month at $68.58 per barrel.
1 Wheat prices remained flat for the second month in succession. Initial concerns that the
wheat crops of Russia and Ukraine would suffer from frost damage have been alleviated
by recent snow cover; a good harvest is predicted, meaning downward pressure on
prices. Meanwhile in the US, dry conditions in the central states, from where more than
half the US winter wheat production comes, are having an opposite effect on world
prices. Oilseed prices fell further this month, again falling foul of a stronger Sterling
position, particularly against the US$, but also as a result of changes to biodiesel import
duties, encouraging imports. LIFFE feed wheat futures, despite closing at the same level
as a month earlier, were volatile throughout the month with swings in excess of
£3/tonne. In late January, deliveries for November 2018 and 2019 stood at £142/tonne
(-) and £144/tonne (-) respectively.
Average spot prices in late January (per tonne ex-farm): feed wheat £136 (-); milling
wheat £149 (-2); feed barley £126 (+3); oilseed rape £287 (-13); feed peas £139 (+6);
feed beans £147 (+5).
2 Potato prices remain under similar levels of pressure as a result of the volumes of crop
still available at this point in the season. The packing trade remains steady and mostly
contract driven, whilst the bagging trade is reportedly slow; both of which are putting
pressure on free-buy prices. Crops are understood to be storing well, with limited
instances of wet rots. The average potato price gained £4 over its opening position of
£141 per tonne to reach a January close of £145 per tonne (£56 below January 2017);
whilst the free-buy average dropped back materially, early on (from £95 per tonne to
£77) before gaining some traction to pull back to a January close of £87 per tonne (£8
down overall and £156 below January 2017).
2017 crop prices for grade 1 in late January (per tonne ex-farm): Maris Piper had both
improved and tightened its spread to between £175 and £250, whilst Desiree were
tighter-spread but weaker at between £115 and £145. King Edward had weakened
materially to between £100 and £160, whilst Estima and other white varieties were
steady at between £50 and £100.
1 Cattle price movements were generally negative this month. The average finished steer
price held relatively steady for most of the month, staying within £1 of its opening
position of 196p/kg lw, but fell back in the closing stages to a closing average of 189p/kg
lw (7p down in the month and 2p/kg above the closing average a year earlier). The
average finished heifer price fell back earlier in the month, having peaked at 210p/kg lw it
dropped back to close the month 8p lower at 201p/kg lw (1p above the price a year
earlier). The average dairy cow price peaked, from its opening position of £1,094, at
£1,291 per head before dropping back to £1,238 where it closed the month (compared
to £990 in January 2017).
Monthly Farming Update
2 The lamb market was, conversely, volatile and generally bold. The average new season
finished lamb price (SQQ live weight) opened at 178 p/kg lw, peaking at 188p/kg lw and
dropping to 181p/kg in the first half of the month. The remainder of the month saw
improvement, with a flourish in the final week to close the month at 191p/kg lw (up 13p
in the month to sit 21p/kg above the average a year earlier).
3 The average UK all pig price (APP), dropped below the prior year average for the first
time since September 2016, opening at 155.0p/kg dw the average declined to a closing
position of 151.0p/kg dw (down 4.0p/kg, to sit 2.8p/kg below the closing average a year
4 The UK average ‘all milk’ price for November, published in late January, reported a small
improvement, gaining 0.09p to give an average of 31.88ppl (6.34ppl above the price a
year earlier) well above the 5 year average of 28.09ppl. In the context of the ‘EU28’
farmgate milk price, the UK’s ranking for November remained steady at 17th. The EU28
weighted average for November was 34.59ppl (0.27ppl above the October 2017
+ Other crop news February 2018
1 An ADAS survey has found that sterile brome was the second most problematic
grassweed in the UK with 59 per cent of those sampled believing incidence had
increased over the past 10 years.
2 The price index for all crop products rose by 1.8 per cent in November compared to a
year earlier but fell by 0.2 per cent compared to October; the index for cereals rose by
13 per cent and 0.7 per cent respectively; the index for wheat rose by 14 per cent and
1.2 per cent respectively; the index for barley rose by 11 per cent compared to a year
earlier but fell by 0.3 per cent compared to October; and the index for potatoes fell by
27 per cent compared to a year earlier but rose by 9 per cent compared to October.
3 In November animal feed production rose by 11 per cent for sheep compared to a year
earlier with increases of 9.4 per cent for cattle, 6.2 per cent for poultry and 3.6 per cent
for pigs. Usage of wheat rose by 6.1 per cent while usage of barley rose by 20 per cent.
4 Celtic Renewables has been granted permission to build a commercial demonstrator
plant at Grangemouth at a cost of £5.25 millions. The plant will be capable of producing
500,000 litres of biobutanol annually.
5 The European Food Safety Authority Panel on Plant Health has categorised the
Guatemalan potato tuber moth as a Union quarantine pest for the EU. Moth larvae feed
exclusively on Solanum tuberosum. The pest was first found in Costa Rica but has
spread throughout Central America and has now reached Spain.
6 Proposals to build a new sugar beet factory in North Yorkshire have been deferred
following a dispute between the County Council and a Middle East sugar company, Al-
7 Soft fruit growers in Perthshire, Angus and Fife represented by Angus Growers Ltd have
estimated a loss of income in 2017 of £625,000 as a result of a shortage of labour to pick
8 Engineers at the University of Colorado are endeavouring to develop a scalable, costeffective
greenhouse material which will split sunlight into photosynthetically efficient
light and divert inefficient infrared light to aid in solar-driven water purification.
+ Other livestock news February 2018
1 Defra has approved expenditure of £7 millions on a new national import control system
for animals, animal products and high-risk food and feed.
Monthly Farming Update
2 In the year to October the number of bovine TB new herd incidents rose by 2 per cent
with increases of 2 per cent in the High risk area and 6 per cent in the Edge area but a
fall of 9 per cent in the Low risk area. There was a fall of 13 per cent in Scotland but a
rise of 11 per cent in Wales. The number of herds not officially TB free rose by 12 per
cent in England with increases of 11 per cent in the High risk area, 39 per cent in the
Edge area and 13 per cent in the Low risk area. There was a fall of 8 per cent in
Scotland but a rise of 16 per cent in Wales.
3 In December slaughterings of UK prime cattle fell by 5.9 per cent compared to a year
earlier to 147,000 head; beef and veal production fell by 5 per cent to 69,000 tonnes;
sheep slaughterings rose by 3.5 per cent to 1.25 millions while mutton and lamb
production rose by 2.6 per cent to 27,000 tonnes; and pig slaughterings fell by 6.1 per
cent to 803,000 head while pigmeat production fell by 6.2 per cent to 68,000 tonnes.
4 In November the price index for animals and animal products rose by 11 per cent
compared to a year earlier and by 0.3 per cent compared to October while the index
for milk rose by 25 per cent and 0.3 per cent respectively.
5 The latest Global Dairy Trade auctions saw the price index rise by 2.2 per cent given the
impact of dry weather on New Zealand milk production.
6 First Milk has reduced its producer price by 1ppl.
7 The Scottish Dairy Cattle Association has reported a fall of 39 in the number of dairy
farms in 2017 although the average herd size increased by 14 to 195 cows.
8 Meadow Foods has reduced its standard litre price by 0.75ppl to 29ppl.
9 Milk production in December reached 1,212 million litres, up 5 per cent on a year
earlier and up 3.6 per cent on November. The butterfat content was the same as a year
earlier at 4.19 per cent but rose 0.02 per cent compared to November. The protein
content was down 0.02 per cent both compared to a year earlier and to November.
10 All suppliers of goats milk to Arla have had their contracts terminated.
11 In December, UK dairies processed 1,149 million litres of milk, 3.2 per cent up on
November and 3.4 per cent up on a year earlier. Liquid milk consumed 49 per cent,
cheese 0.3 per cent, butter and milk powder each 1 per cent.
12 Barbers has reduced its milk price to 29.051ppl to ensure “sales competitiveness within
the broad customer base which ultimately underpins our supply chain.”
13 Promar’s Milkminder costed herds report for the year to October has revealed a 5.2
per cent increase in average milk production to 1.67 million litres per herd per year.
14 Arla is to invest £72 millions in production in the UK. Its facility in Aylesbury will
become the home of its Lactose free range of products.
15 Muller has reduced the price of a standard litre by 1ppl to 28ppl.
16 Aldi has announced that Arla will become its main supplier of milk and cream in England
and Wales although Trewithen Dairies will supply part of the South West. Graham’s
Family Dairy will supply Scotland.
17 The only abattoir on Orkney Islands, which claims to have the highest density of cattle in
Europe, has closed.
18 Welfare codes are to be updated for pigs, laying hens and meat chickens. Animal
keepers will be expected to maintain a more enriched environment to enable them to
display more of their natural behaviours, such as foraging. Consultation will last for six
19 Defra is to invest £1.6 millions on a new IT system to license and market veterinary
Monthly Farming Update
20 Avian influenza has been identified in wild birds in Dorset with the strain being closely
related to the H5N6 strain that has been prevalent in Europe. As a consequence a
prevention zone has been declared across the whole of England. Following the Dorset
outbreak, 13 dead wild birds were discovered in Warwickshire and there have been
reports from Hertfordshire, Rutland, Yorkshire and London. It is therefore a
requirement that bird keepers ensure the areas where birds are kept are unattractive to
wild birds, feeding and watering must take place in areas inaccessible to wild birds,
movement in and out of bird enclosures must be minimised, footwear must be
disinfected and the area where birds are kept must be clean and all concrete areas must
be disinfected and marshy areas fenced.
21 Scientists at the Pirbright Institute have identified a new type of immune cell in chickens
involved in the development of Marek’s disease virus which causes a deadly cancer of the
lymph nodes and suppression of the immune system.
22 In the 3 months to December, 7.5 million cases of eggs were packed, 4.3 per cent up on
the same period in 2016 but 0.5 per cent down on the 3 months to September. The
average farm-gate price was 69.7p per dozen, 1.4 per cent down compared to a year
earlier but 0.5 per cent up on the 3 months to September. The production of egg
products was 23,000 tonnes, 11 per cent down on the same period in 2016 and 4.2 per
cent down on the 3 months to September.
23 In December, commercial layer chick placings rose by 5.6 per cent compared to a year
earlier to 2.7 million chicks; broiler chick placings rose by 6.5 per cent to 84.6 million
chicks; turkey chick placings fell by 6.5 per cent to 800,000 chicks; turkey slaughterings
rose by 8.1 per cent to 1.9 million birds; broiler slaughterings rose by 2 per cent to 76.4
million birds; and total poultry meat production rose by 2.6 per cent to 140,100 tonnes.
+ Inputs / Supply business February 2018
1 Scientists at the University of Illinois have found that, given a choice, honey bees prefer
to collect sugar syrup laced with the fungicide chlorothalonil over simple sugar syrup.
The study found the honey bees preferred the naturally occurring chemical quarcetin
which is found in pollen and nectar but also sugar syrup laced with glyphosate at 10 parts
per billion but not at higher concentrations. The bees avoided sugar syrup containing
the fungicide prochloraz but would take sugar syrup laced with chlorothalonil at 0.5 and
50 parts per billion but not at 500 parts per billion.
2 A survey commissioned by Arysta Life Science UK has found that 80 per cent of those
sampled expect to increase their use of biostimulant products as a result of reduced
pesticide registrations and a need to embrace new technologies.
3 Defra has approved expenditure of £5.8 millions on a new IT system to enable
registration and regulation of chemicals.
4 A study undertaken by the University of Sussex has suggested that neonicotinoids may
not be causing the decline of bee populations as any negative effect can be offset by an
adequate food supply.
5 A survey on behalf of the Pesticide Action Network and campaign group SumOfUs has
revealed that 67 per cent of those sampled wish to see a reduction in pesticide use, 78
per cent would like the Government to provide more support to farmers to cut
pesticide use and 63 per cent want to retain EU regulations on pesticides after Brexit.
6 United Utilities has joined forces with the Welsh Dee Trust and Dee Valley Water to
provide a facility to dispose of illegal pesticides safely and free of charge.
7 In November the price index for energy and lubricants rose by 7.7 per cent compared
to a year earlier and by 8.2 per cent compared to October while the index in respect of
the costs of maintaining buildings rose by 5.7 per cent and 0.9 per cent respectively.
+ Marketing February 2018
1 China has agreed to lift its ban on British beef which has been in place since 1996
because of BSE.
2 The Food and Drink Sector Council has met for the first time. It agreed priorities for
the next 12 months including a focus on boosting skills, agricultural productivity and
improving the nation’s nutrition.
3 International assurance body GLOBAL G.A.P. has confirmed that growers who export
fruit and vegetables who meet Red Tractor standards will no longer require an
4 In the 12 weeks to the end of December, both Aldi and Lidl grew sales by 16.8 per cent
at an annualised rate while Tesco grew sales by 3.1 per cent. Sales at the Co-op fell by
0.2 per cent.
5 The merger of the world’s largest fruit and vegetable supplier, Greenyard, and US-based
Dole Food has collapsed.
6 Tesco has announced that, with effect from April, Red Tractor standards will be
recognised as equivalent to its Nurture scheme.
7 Figures released by Statistics Netherlands (CBS) and Wageningen Economic Research
show that Dutch exports of agricultural goods reached a record €91.7 billions in 2017,
up by 7 per cent on the previous year. Imports increased by 9 per cent to €62.6 billions
leaving an agricultural surplus of €29.1 billions. Horticulture was the biggest exporter at
€9.1 billions, followed by dairy at €8.9 billions, meat €8.3 billions and vegetables €6.7
billions. Germany took over 25 per cent of Dutch exports with the UK third largest at
+ Miscellaneous February 2018
1 In 2016/17 the rate of violence against individuals was 14.1 per 1,000 population in
predominantly rural areas compared to 22.2 per 1,000 in predominantly urban areas.
Vehicle offences in rural areas were 3.9 per 1,000 compared to 8.5 per 1,000 in urban
+ Postscripts February 2018
If only Winston was here today!
1. Diplomacy is the art of telling people to go to hell in such a way that they ask for directions.
2. You will never reach your destination if you stop and throw stones at every dog that barks.
3. Fear is a reaction. Courage is a decision.
4. A nation that forgets its past has no future.
5. The POSITIVE THINKER sees the INVISIBLE, feels the INTANGIBLE, and achieves the
6. If you’re not a liberal at twenty you have no heart, if you’re not a conservative at forty, you
have no brain.
7. Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its
inherent virtue is the equal sharing of misery.
Monthly Farming Update
8. There is nothing government can give you that it hasn’t taken from you in the first place.
9. The best argument against democracy is a five-minute conversation with the average voter.
10. Success consists of going from failure to failure without loss of enthusiasm.
11. A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every
12. The main vice of capitalism is the uneven distribution of prosperity. The main vice of
socialism is the even distribution of misery.
13. You don’t make the poor richer by making the rich poorer.
14. If Britain must choose between Europe and the open sea, she must always choose the open
+ Business Box February 2018
The crystal ball has just got a little darker!
Well, we all knew it was coming. Philip Hammond, the Chancellor
who has a penchant for proposing particularly unpopular changes to
tax and funding legislation and seems to have no concept of real life,
has instructed the Office of Tax Simplification to carry out a review of
The OTS was a good idea. It was introduced in 2010 and its first
results were to persuade the Chancellor at the time to abolish 43 tax
reliefs, most of which were so obscure that there was little impact on
any UK citizen but, like any quango, it had to justify its existence. Its
impact on the Exchequer was less than negligible.
However, complex as Inheritance Tax can be, there is a sinister
backdrop to the instruction. The announcement states the review
“will focus on the technical and administrative issues ... such as
submitting returns and paying the tax due.” Not simple issues but a lot
less complex than most aspects of tax legislation. However, it also
states it will “examine matters of routine estate planning and
disclosure.” It has been suggested there should be a simplification of
the reliefs for businesses, for example removing the need for farmers
to claim both agricultural and business reliefs.
Little publicised, a “committee” has been examining the reliefs available
To tax agricultural property would be total madness. An industry
which has a return on capital of less than 1 per cent cannot afford
penal capital taxes when no cash is generated. But the 100 per cent
relief can just as easily apply to “investment assets” such as cottages
which have become surplus to agricultural requirements. If they are
“surplus” many would say the Inheritance Tax exemption should not
When you look into your crystal ball to plan the future of your farm,
your family, your business, spare a thought for how legislation will
develop. It cannot get any more favourable than it is at present. You
may need to act before it is too late.
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The MFU was edited from
1991 to 2006 by John Nix,
Emeritus Professor of
Farm Business Management
at Imperial College London