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 2019


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+ Policy issues

Policy issues

1 The Environment Bill has passed its second reading in the House of Commons and should have passed on to the Committee stage but there is a little matter standing in its way!

CAP/Brexit (etc.) support details/payments

1 The exchange rate for calculating payments under the Basic Payment Scheme has been set at €1 : £0.89092. This compares to £0.89281 in 2018 and £0.89470 in 2017.

2 Natural England has published results of the Results Based Agri-Environment Payment Scheme which was developed as a pilot in England in 2016 to 2018. The scheme was delivered in partnership with the Yorkshire Dales National Park Authority. It operated in Wensleydale (on species rich meadows and grassland for breeding waders) and Norfolk/Suffolk (delivering plots of winter bird food and flower-rich mixtures for pollinators). Farmers managed their land as they chose but the annual payment was linked to the success of the project.

3 An initial £80 millions has been paid to the Scottish Government out of the £160 millions of convergence funding the UK Government has agreed to pay in respect of the period 2014-2020. The first beneficiaries will be those who farm in marginal uplands, hill farms and island areas.

1 The Government’s Growth Programme has opened for new applications. The programme has initial funding of £35 millions but this may be increased to £50 millions if there are enough high-quality applications. Grants will be made to projects for rural start-ups and existing businesses to purchase equipment to facilitate growth or create opportunities for tourism. The threshold for minimum grants has been reduced to £20,000.

2 A report published by Natural England has shown that 80 per cent of farmers who have received advice from the Catchment Sensitive Farming service have seen improvements in water quality on their land or have benefited financially. The report indicates that the first 12 years of the advisory service have witnessed reductions in nitrogen levels of 4 per cent, phosphorus levels of 8 per cent and a fall of 12.3 per cent in sediment.

3 Some beekeepers have reported the banning of neonicotinoids has had an adverse effect on bee colonies because of the reduction in the oilseed rape growing area, the crop being a useful early food source.

4 The European Food Safety Agency is conducting a further consultation with its stakeholder group to obtain up-to-date evidence on bee mortality.

5 A report produced by the Institute for Sustainable Development and International Relations, funded by the French Government, has suggested that reducing food production by 35 per cent, changing diets and expanding grasslands would reduce greenhouse gas emissions by 45 per cent and help restore biodiversity.

6 An asian hornet sighting has been confirmed in Christchurch, Dorset on 1 October.

1 Survey results of Farm Business Income for 2018/19, covering the 2018 harvest have been published. Income of cereal farms rose by 8 per cent to £67,300; general cropping farms rose by 22 per cent to £106,400; dairy farms fell by 38 per cent to £73,700; lowland grazing livestock farms fell by 39 per cent to £12,500; less favoured area livestock farms fell by 42 per cent to £15,500; mixed farms rose by 5 per cent to £45,500; horticultural farms rose by 12 per cent to £52,100; pig farms fell by 1 per cent to £29,600; and poultry farms fell by 21 per cent to £74,700.

2 Strutt & Parker has forecast that net profit for the ‘average’ farmer will fall by 50 per cent over the next decade even with a doubling of environmental payments. Cereals, mixed and lowland livestock farms will see falls of 54 per cent, 46 per cent and 54 per cent respectively but dairy farms will only suffer a fall of 10 per cent.

3 According to the latest Knight Frank farmland index, the average price of bare land in England and Wales fell by 0.8 per cent in the three months to September to £17,235 per hectare. Meanwhile Carter Jonas has reported a 40 per cent reduction in land put to market compared to a year earlier.

4 The Agricultural Price Index for August shows that outputs fell by 4.1 per cent compared to July and by 6.5 per cent compared to the peak a year earlier. Inputs fell by 0.3 per cent compared to July but were up 1.4 per cent on a year earlier.

+ Product prices

A Market background

1 With Brexit still going nowhere and now a looming election it is surprising that, in the face of the expectation of volatility, Sterling not only gained strength against both Dollar and Euro but also held steady for much of the month. Against the Euro, Sterling opened at 89.0p per €, fell to 90.1p early on, then gained 4.3p over a matter of days to peak mid-month at 85.8p before closing at 86.1p per € (2.9p stronger). The pattern of movement against the US Dollar was very similar; opening at 81.4p per $, the Pound fell to 81.9p before improving materially to 76.9p before eventually closing at 77.3p per $ (4.1p stronger). Brent Crude oil prices were marginally less volatile than over previous months but were weaker overall. Opening at $61.91, the average price fell in the first few days to a low of £57.71 and recovered to a peak of $62.02 before closing the month at $60.23 per barrel; a net reduction of $1.68 (3 per cent).

B Crops

1 The average wheat price improved overall this month, albeit marginally and after having fallen back initially. Reduced expectations for the 2019/20 harvests in Australia and Argentina have added a bullish, but small, swing to the market, whilst ‘radio silence’ over the maize crops in the US and South America has left the market guessing. Sterling’s recent strength and the dragging-on of Brexit continued to suppress prices. The European market is clearly second-guessing the level of milling quality crop carried in store as the average premium increased to £16 per tonne. LIFFE feed wheat futures showed a fair amount of movement in both directions this month, improving overall in the short and medium term but holding largely static in the longer term. In late October, deliveries for November 2019, 2020 and 2021 stood at £139/tonne (+3), £153/tonne (+8) and £149/tonne (-) respectively. Oilseed prices suffered in the short term as a result of stronger Sterling and the suppressed oil price but the underlying market is relatively bullish. The short supply of rape seed in the EU, and to an extent further afield as the Australian canola crop looks poor, remains a factor that cannot be ignored.

Average spot prices in late October (per tonne ex-farm): feed wheat £132 (+5); milling wheat £147 (+5); feed barley £117 (+5); oilseed rape £317 (-11); feed peas £171 (-); feed beans £177 (-).

2 The average potato price (2019 crop) continued to fall back in October as maincrop harvest progressed; the free-buy price was a little more unpredictable. By late October 70 per cent of the GB potato crop had been lifted, leaving a material tonnage in the ground with the wet weather to contend with. Harvest progress has therefore slowed, particularly for those with heavier land; furthermore the wet harvested crops are likely to have limited suitability for longer term storage putting further pressure on the current market price. Movement of 2019 crop was mainly under contract with limited free-buy movement, as producers have been more focussed on harvest and drilling. By late October the average potato price was £11 below its opening position of £150 per tonne closing at £139 per tonne (£39 below the October 2018 closing average). The free-buy average was more volatile, opening at £123 per tonne, dropping to £119 and improving to £131 before dropping back to close the month at £120 per tonne (£3 down and £131 below the October 2018 close).

2019 crop prices for grade 1 packing in late October (per tonne ex-farm): Salad varieties, mainly Maris Peer and Gemson, were marginally stronger at the top, achieving between £260 and £380; Maris Piper were materially improved at the low end at between £125 and £175; King Edward were moving at between £170 and £230; white varieties had improved to between £100 and £200; whilst red skin varieties moved only in limited numbers at an average of £155.

C Livestock

1 Cattle prices started well, fell back, then recovered to end up at a similar level as last month. The average finished steer price, from its opening position of 171p/kg lw, rose to a peak of 175p and fell back to 165p/kg before improving again to close at 172p/kg lw (up 1p and 10p/kg below the closing average a year earlier). The average finished heifer price missed the early gain but had a similar month from there on. From an opening position of 189p/kg lw, the price dropped to 179p and then spent the remainder of the month climbing to close back at 189p/kg lw (static and 10p below the price a year earlier). The average dairy cow price retained its volatility; starting from an opening position of £1,037 per head, the average peaked at £1,227 mid month before dropping back below £1,000 per head and eventually closing at £934 per head (£103 down and £69 below the average a year earlier).

2 Lamb prices continued to fall early on, but then went on to recover some of the value lost in the previous month’s fall. The average new season finished lamb price (SQQ live weight) fell from its opening position of 163p/kg lw, to 160p/kg before steady improvement saw the price reach a closing position of 167p/kg lw (4p up and 1p/kg above the average a year earlier).

3 The average UK all pig price (APP) broke away from the expected trend this month. At a time when prices would generally be falling away, they have increased week on week. Opening at 155.5p/kg dw, the average improved to close at 159.0p/kg (up 3.5p to sit 10.0p/kg above the closing average a year earlier).

4 The UK average ‘all milk’ price for August, published in October, reported an increase of 0.30p to an average of 28.80ppl (0.87ppl below the average in August 2018 and 1.66ppl above the rolling 5 year average of 27.14ppl). In the rankings against the ‘EU28’ farmgate milk price, the July figures remain the most recent release – putting the UK 20th against a EU28 weighted average of 31.04ppl.

+ Other crop news

1 Defra has published the first estimates of 2019 wheat and barley production. The provisional wheat harvest is 16.283 million tonnes, 20.1 per cent up on 2018 and 7 per cent above the five-year average. The provisional barley harvest is 8.18 million tonnes, 25.6 per cent up on 2018 and 18 per cent above the five-year average.

2 First estimates for the Scottish cereal harvest suggest an improved spring barley yield to 6.7 tonnes per hectare and a total production of 1.628 million tonnes, up 17 per cent on 2018. The winter barley yield is forecast to be 8.4 tonnes per hectare with total production of 410,000 tonnes up 53 per cent on 2018 but the quality is believed to be poor. Wheat yields are up 36 per cent to 9.3 tonnes per hectare giving a production increase of 46 per cent to 997,000 tonnes although, as with barley, there has been a reduction in quality. Oat yields are up by 21 per cent to 211,000 although there are issues with low bushel weights and sprouting. Oilseed rape yields are up 6 per cent to 4.1 tonnes per hectare while production is up 3 per cent to 130,000 tonnes.

3 The AHDB has reported that most cereal aphids collected in September did not carry barley yellow dwarf virus but 20 per cent of bird cherry-oat aphids did.

4 Research in Germany has suggested that more than one spring crop every six years in the rotation reduced the risk of black-grass 2.5 times while growing fewer than four winter cereals in six years reduced the risk sevenfold.

5 The Red Tractor Combinable Crops & Sugar Beet Board has agreed that, in view of Brexit delays and HGV availability, grain destined for animal feed, export and non-food users can be stored until 15 November.

6 Ahead of the release of the full Recommended List for winter wheat 2020/21, AHDB has issued the ratings for yellow rust and brown rust resistant varieties following higher than expected disease levels in some varieties in the 2018/19 season.

7 The Agricultural Price Index for August for crops shows that crop products fell by 10.3 per cent compared to July and by 9.9 per cent compared to a year earlier; cereals fell by 13.6 per cent and 27.1 per cent respectively; barley fell by 14.5 per cent and 44 per cent respectively; oats fell by 36.7 per cent and 34.7 per cent respectively; potatoes fell by 28 per cent and 24.4 per cent respectively; fresh vegetables fell by 9.2 per cent and 1 per cent respectively; and forage plants fell by 20.2 per cent compared to a year earlier. However, oilseed rape rose by 3.2 per cent and 6 per cent respectively while fresh fruit fell by 23.8 per cent compared to July but rose by 4.2 per cent compared to a year earlier.

8 Figures released by Kantar indicate that chilled potato products, which account for 3 per cent of the market by volume but 8 per cent by value, have seen a fall of 6 per cent this year in both value and volume.

9 NIAB EMR at East Malling has submitted plans to the local authority for an Advanced Technology Horticultural Zone which will comprise four state-of-the-art glasshouses, an energy centre and other related facilities. The glasshouses will incorporate high-tech imaging, robotics, precision irrigation rigs, research-standard LED lighting and CO2 systems.

10 An NFU survey has revealed that 16 million apples have been left on the tree because of a shortfall of pickers of 16.3 per cent.

11 Fresh Forward Breeding & Marketing BV has acquired the entire apple breeding programme of Wageningen University & Research.

12 A Memorandum of Understanding has been agreed between NIAB EMR, Locate in Kent and Oost NL, the East Netherlands Development Agency, to foster greater links for scientific studies and food and drink opportunities in the UK and the Netherlands.

13 Staples Vegetables has launched Burgundy Broccoli.

14 With effect from 1 November, the EU has introduced new rules to prevent the introduction and spread of tomato brown rugose fruit virus.

15 Research undertaken by the University of Sheffield has suggested that sperm quality can be improved with a diet supplement found in cooked tomatoes.

+ Other livestock news

1 The Veterinary Medicines Directorate has reported that sales of antibiotics for use in food producing animals have reduced by 53 per cent in the years 2014 to 2018. Sales of Highest Priority Critically Important Antibiotics of vital importance to human health have reduced by two-thirds in the same period and now only represent 0.7 per cent of total antibiotic sales.

2 AHDB has reported a 35 per cent increase in the use of vaccines to protect calves against pneumonia since 2011 with a 50 per cent increase in vaccines to protect against bovine rhinotracheitis. While 20 per cent of breeding cows are vaccinated against calf enteritis, the use of vaccines to prevent bovine viral diarrhoea has fallen to its lowest level since 2011.

3 A report by the Zoological Society of London and Imperial College has suggested that badger culling makes bovine TB worse in cattle as a result of increasing in rangeing behaviour.

4 In the year to July, the number of new herd bovine TB incidents in England fell by 4 per cent, compared to a year earlier. There was a fall of 8 per cent in the High risk area but increases of 9 per cent and 15 per cent in the Edge and Low risk areas respectively. In Scotland there was a fall of 37 per cent and in Wales a fall of 3 per cent. The number of herds not officially TB free at the end of July in England was down 7 per cent on a year earlier with a fall of 10 per cent in the High risk area but increases of 2 per cent and 35 per cent in the Edge and Low risk areas respectively. In Scotland there was a fall of 13 per cent but a rise of 6 per cent in Wales.

5 Figures published by the Scottish Government from the June census show that sheep numbers rose by 1 per cent with lamb numbers up 4 per cent. However, cattle numbers continued to decline, down by 2 per cent to the lowest number for 60 years.

6 In September, UK prime cattle slaughterings rose by 6.8 per cent, compared to a year earlier, to 170,000; beef and veal production rose by 6.5 per cent to 77,000 tonnes; sheep slaughterings rose by 6.9 per cent to 1,187,000; mutton and lamb production rose 8.4 per cent to 27,000 tonnes; pig slaughterings rose 4.5 per cent to 887,000; and pigmeat production rose by 5.9 per cent to 78,000 tonnes.

7 Israel and Turkey have reported outbreaks of Lumpy Skin Disease in cattle.

8 Latest AHDB figures suggest there has been a 0.4 per cent reduction in the number of dairy farms during 2019.

9 An increase in milk production and a fall in processing sites has resulted in a milk surplus in Scotland of 200 million litres.

10 First Milk has announced an increase in its member premium, from 0.25ppl to 0.5ppl, with effect from next April.

11 Tomlinsons Dairies, based near Wrexham, has collapsed with 150 staff being made redundant. The dairy has 40 farmer suppliers on aligned contracts with Sainsbury’s and over 30 suppliers on non-aligned contracts.

12 As a result of a fall in milk processing capacity, Welsh milk production is expected to result in a surplus of over 1 billion litres resulting in half the country’s production requiring processing in England.

13 Barber’s has reduced its milk price by 0.75ppl making a standard litre 27ppl.

14 Meadow Foods has acquired Nimbus Foods, a manufacturer of food decorations and toppings.

15 First Milk has reduced its price by 0.45ppl to 27ppl for its standard liquid contract and 27.9ppl for its manufacturing contract.

16 Randall Parker Foods beef abattoir at Llandiloes, Powys has closed.

17 In September, UK dairies processed 1,105 litres of milk with the yearly rolling average remaining unchanged from August. Compared to August, milk available to processors fell by 2.6 per cent; liquid milk production fell by 0.8 per cent; cheese production fell by 5.9 per cent; butter production fell by 6.9 per cent; and milk powder production rose by 5 per cent.

18 Defra has published updated guidance on how to provide enough storage and keep storage records of organic manures in a nitrate vulnerable zone.

19 In September, average butterfat content rose by 2.7 per cent on August to 4.14 per cent and by 1.4 per cent compared to a year earlier. Protein content rose by 3.2 per cent to 3.41 per cent and by 0.4 per cent compared to a year earlier.

20 The Agricultural Price Index for August showed an increase of 0.4 per cent in animals and animal products compared to July but a fall of 4.2 per cent compared to a year earlier; cattle and calves fell by 0.9 per cent and 7.8 per cent respectively; pigs rose by 0.5 per cent and 4.5 per cent respectively; sheep fell by 5 per cent and 8 per cent respectively; milk rose by 1.7 per cent compared to July but fell by 3.6 per cent compared to a year earlier; and eggs rose by 0.3 per cent compared to a year earlier.

21 Latest forecasts suggest that global milk supplies for 2019 will be no better than the previous year. Growth in supply in the US at 0.3 per cent is well below the norm of 1-1.5 per cent; in Argentina yield is 2 per cent down on 2018; production in Australia is contracting; growth in New Zealand is less than 1 per cent; and growth in the EU will be no more than 0.5 per cent.

22 During the last two weeks of September, East Timor reported 100 outbreaks of African Swine Fever in a high density area of over 44,000 pigs.

23 Finland has reported an outbreak of Aujeszky’s disease in a wild boar close to the Russian border.

24 The British Free Range Eggs Producers Association has launched a model contract to improve fairness in the free range egg supply chain.

25 In the three months to September, 8 million cases of eggs were packed in UK packing stations, up 3.6 per cent on a year earlier and 0.9 per cent on the quarter to June. The average farm-gate price was 69.1p per dozen, 0.3 per cent down on a year earlier and 2.6 per cent down on the quarter to June. The production of egg products was 23,500 tonnes, down 5 per cent on a year earlier but up 5 per cent on the quarter to June.

26 In September, UK commercial layer chick placings rose by 7.6 per cent, compared to a year earlier, to 3.2 million chicks; broiler chick placings fell by 0.4 per cent to 84.1 million chicks; turkey chick placings rose by 19 per cent to 2 million chicks; turkey slaughterings fell by 10 per cent to 900,000 birds; broiler slaughterings fell by 5.2 per cent to 81.1 million birds; and total poultry meat production fell by 3.5 per cent to 146,000 tonnes.

+ Inputs / Supply business

1 The EU has resolved not to renew approval of thiacloprid, a systemic insecticide that controls pollen beetle in oilseed rape, aphids in vegetables and potato crops and reduces wheat blossom midge damage in wheat.

2 The Agricultural Price Index for August for energy and lubricants shows increases of 0.7 per cent compared to July and 3 per cent compared to a year earlier; fertilizers rose by 2.1 per cent and 1.6 per cent respectively; animal feeding stuffs fell by 1.9 per cent and 1.3 per cent respectively; straight feeding stuffs fell by 6 per cent and 6.6 per cent respectively; and vehicle maintenance costs rose by 0.1 per cent and 2.1 per cent respectively. Chemicals fell by 0.2 per cent compared to July but rose by 13.5 per cent compared to a year earlier; veterinary services rose by 0.6 per cent compared to a year earlier; compound feed stuffs rose by 1.2 per cent compared to a year earlier; and building maintenance costs fell by 0.1 per cent compared to July but rose 2 per cent compared to a year earlier.

+ Marketing

1 The Chinese Government has finalised the agreement whereby UK beef producers will have full access to the Chinese market. The Chinese authorities have cleared four beef sites for export with further sites under review.

2 With effect from 18 October, the US has applied tariffs to nearly all UK butter and cheese exports to the country.

3 Poland’s largest supermarket has delisted a large UK exporter of potatoes over concerns of a no-deal Brexit.

4 Irish Whiskey has been granted Protected Geographical Indication status along with Irish poteen and Irish cream.

5 In the year to August, exports of food and drink products rose by 3.8 per cent to £24 billions with 60 per cent going to EU countries. However, imports rose by 2.7 per cent to £48.5 billions with 70 per cent coming from the EU.

6 Scotch whisky has been granted Protected Geographical Indication status.

7 Lidl has pledged a further £15 billions to British suppliers over the next five years in addition to increasing sales of British-sourced fresh produce by over 10 per cent in the next year. All of its fresh poultry will be sourced from UK farms.

8 Sainsbury’s is to become the first major retailer to only sell free range eggs.

9 Somerset cider brandy has been granted Protected Geographical Indication status.

10 The Rural Payments Agency has published updated guidance on Intervention and Private Storage Aid schemes.

11 Nationwide Produce has agreed a partnership with Albert Bartlett to sell a new range of “Albert Bartlett Signature Range” potatoes into non-retail outlets including food service, catering and wholesale.

12 Cornwall-based tea company, Tregothnan, has secured new orders from the US worth £95,000 and from Kazakstan worth £50,000 following an event at 10 Downing Street.

13 Jupiter Group has acquired Cool Fresh International including it logistics group Saphir BV and Agro-Marketing Cool Fresh Espana, based in Valencia.

+ Miscellaneous

1 NFU Mutual has reported a 62 per cent increase in rural crime in Scotland to a cost of £1.6 millions. This is compared to a 26 per cent increase across the UK as a whole.

2 Figures published by the Health and Safety Executive record that 32 farm workers died from work related injuries in 2018/19 while 699 farm workers suffered work related injuries.

3 A survey commissioned by the British Guild of Agricultural Journalists has found that 84 per cent of consumers consider the Government should ensure imported food meets UK-produced standards; 53 per cent would accept lower welfare standards if the food produced was cheaper; 48 per cent want a levy imposed on food with a higher carbon footprint; 34 per cent support the use of genetically-modified technology; 62 per cent believe the primary responsibility of a farmer is to produce food rather than care for the environment; and 36 per cent consider farmers receive an unfair share of the retail price.

+ Postscripts

As this is the time of year for make believe ...

A couple in their early 60s were out celebrating their 35th wedding anniversary in a quiet, romantic little restaurant. Suddenly, a tiny, yet beautiful, fairy appeared on their table and said, “For being such an exemplary married couple and for being faithful to each other for all this time, I will grant you each a wish.”

“Ooh, I want to travel around the world with my darling husband” said the wife. The fairy waved her magic wand and – abracadabra! – two tickets for the new QM2 luxury were in her hand.

The husband thought for a moment and said, “Well this is all very romantic, but an opportunity like this only occurs once in a lifetime, so, I’m sorry my love, but my wish is to have a wife 30 years younger than me.”

The wife and the fairy were deeply disappointed, but a wish is a wish so ... the fairy made a circle with her magic wand and abracadabra! – the husband became 92 years old.

The moral of this story ...

Men might be ungrateful ... but fairies are ... female!!!!!

+ Business Box

The skeleton in the cupboard!

If the pun can be forgiven, Lloyds Bank has not discovered a cache of skeletons but a cache of thousands of stored wills in its “Safe Custody” service which was closed to new customers in 2011. Have estates been administered correctly by executors not knowing that a valid will was held by the bank?

This matter raises a number of issues.

Why on earth would someone wish to deposit their will with a faceless bank? When the will needs to be activated the testator will not be here so can hardly direct the executors to its whereabouts.

Some testators use bank corporations to act as executors. Utter madness. Faceless bureaucrats will administer the will at vast cost and without any knowledge of the family or the beneficiaries.

Increasingly, firms of solicitors are using corporations to act as executors as a precaution against litigation. This means that individuals who will act will likely have no understanding of family circumstances or personnel.

The advice is simple. Appoint trusted individuals to act as executors, ideally younger than the testator, furthermore, you can identify replacement executors to cover the early departure of your first choice. Use family members unless there is discretion in the will which could result in conflict. Avoid professionals unless absolutely trusted. Provide each executor with a copy of the will and any letter of wishes and tell them where the originals are stored. If they are trusted individuals this is not an issue, if they are not then they shouldn’t be executors in the first place!

You have carefully guarded your estate during your lifetime, do not let its destiny be handled by a “random bod” when you have gone.

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