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 August 2022
1 The Government has announced new plans to drive down nutrient pollution thereby allowing the construction of sustainable new homes in England. A new legal duty will be imposed on water companies to upgrade wastewater treatments works by 2030 in ‘nutrient neutrality’ areas to the highest achievable technical levels. Further, a new Nutrient Mitigation Scheme will be established by Natural England to help wildlife and boost access to nature by investing in projects such as expanded wetlands and woodlands thereby enabling local authorities to grant planning permission for new developments in areas with nutrient pollution issues.
2 Defra has published its Annual Progress Report on the 25 Year Environment Plan covering the year to 31 March.
+ Reform August 2022
1 Defra has opened for applications a £12.5 millions competition for research and innovation into the development of products such as methane reducing animal feeds and high protein crops.
2 The Rural Payments Agency has begun issuing Basic Payment Scheme advance payments.
3 The Welsh Government has announced the Sustainable Farming Scheme which includes support to manage and enhance habitats across at least 10 per cent of a holding or creating new habitats where existing habitats do not exist; to ensure necessary biosecurity measures are in place to reduce risks of spreading disease, including the provision of wash stations and ensuring farm boundaries are secure to prevent straying stock; completing an annual benchmarking self-assessment to improve business performance; restoring damaged peatlands through ditch blocking or re-establishing vegetation; growing crops to reduce purchased feeds; establishing new horticultural enterprises within existing farm businesses; and providing support for farmers to work together across catchments to improve water quality.
+ Grants / regulations / legislation / environment August 2022
1 The Environment Agency has published ‘Working with Nature’ in which it reports England as ‘one of the most nature depleted countries in the world’ and it cites one of the major reasons for this as being agriculture.
2 Defra has announced the Frequently Flooded Allowance, with funding of £100 millions, to help communities which suffer from repeated flooding. The funding is targeted at eligible communities where 10 or more properties have flooded twice or more in the last 10 years. It is expected that about 80 schemes will receive support over the next 4 years.
3 Defra has opened applications from local authorities for the Air Quality Grant with £7 millions available. This year’s grant period will prioritise projects that reduce pollution where there are nitrogen dioxide exceedances; projects focusing on improving public knowledge and information about air quality including steps individuals can take to reduce their exposure to air pollution; and projects that include measures to deal with particulate matter which is the pollutant most harmful to human health.
4 Further findings of the larger eight-toothed European spruce bark beetle have been made in Kent, Surrey, East and West Sussex.
5 Alan Lovell DL has been appointed the new Chair of the Environment Agency.
+ Other matters of farm finance and tenure August 2022
1 Agriculture in the United Kingdom 2021 has been published. Headline figures show the Utilised Agricultural Area fell by 0.2 per cent to 17.2 million hectares, covering 71 per cent of land in the UK; the total croppable area rose by 0.5 per cent to 6.1 million hectares; the area of cereals increased by 5.7 per cent to 3.2 million hectares; the area of oilseeds fell by 15 per cent to 352,000 hectares; the number of cattle and calves fell by 0.1 per cent to 9.6 million head; pig numbers increased by 5.3 per cent to 5.3 million head; sheep and lamb numbers rose by 0.8 per cent to 33 million head; and the total labour force fell by 1 per cent to 467,000. Average Farm Business Income was up 19.2 per cent at £46,500; while 28 per cent had FBI of over £50,000, 16 per cent achieved negative results; Total Income from Farming rose by 14 per cent to £5,998 millions; agriculture’s contribution to the UK economy rose by 8.9 per cent to £11,222 millions representing 0.5 per cent of Gross Domestic Product; total livestock output was up 6.8 per cent to £16,285 millions with increases of £344 millions for dairy and £310 millions for beef but a fall of £38 millions for pigmeat; total crop output rose by 20 per cent to £10,876 millions with an increase of £1,160 millions for wheat but falls of £123 millions for fruit and £119 millions for potatoes; input costs rose by 12 per cent to £18,854 millions with increases of £978 millions for animal feed and £559 millions for fertilizer; and Total Factor Productivity increased by 2.9 per cent. The annual average price index for outputs increased by 10 per cent but that for inputs increased by 11 per cent. The wheat harvest increased by 45 per cent to 14 million tonnes with the value up 75 per cent at £2.7 billions; barley fell by 14 per cent to 6.9 million tonnes but the value was up 9.4 per cent at £1.2 billions; oilseed rape fell by 5.5 per cent to 981,000 tonnes but the value rose by 36 per cent to £488 millions; sugar beet increased by 26 per cent to 7.4 million tonnes while the value increased by 30 per cent to £216 millions; the value of vegetables fell by 0.1 per cent to £1.7 billions and fruit by 12 per cent to £917 millions; the value of beef and veal increased by 10 per cent to £3.3 billions, mutton and lamb by 12 per cent to £1.5 billions and poultry meat by 2.5 per cent to £2.9 billions but the value of pigmeat fell by 2.6 per cent to £1.4 billions; the value of milk and milk products rose by 7.8 per cent to £4.8 billions; and the value of eggs increased by 11 per cent to £818 millions with production up 4.1 per cent. The area of land farmed organically increased by 3.6 per cent to 507,000 hectares; the area in-conversion increased by 34 per cent to 42,000 hectares; of the organic land, 61 per cent is in England, 21 per cent in Scotland, 16 per cent in Wales and 2 per cent in Northern Ireland.
2 In 2020, the agri-food sector in the UK accounted for 6 per cent of total Gross Added Value, down from 6.1 per cent in 2019; while the retail sector increased by 14 per cent, the non-residential catering sector fell by 31 per cent. Employment rose by 0.6 per cent to 4 millions but those involved in wholesaling fell by 2.6 per cent. Total factor productivity of the food chain increased by 0.4 per cent.
3 The Scottish Government has begun consultation on a new Land Reform Bill which it is intended will be introduced by the end of 2023. The Bill proposes to introduce a public interest test for transfers of large-scale landholdings and require owners of said holdings to give prior notice to community bodies of their intention to sell. Landowners seeking subsidies will be required to have the land registered in the Land Register of Scotland in order to improve transparency of ownership. The consultation closes on 25 September.
4 The Agricultural Price Index for May shows an increase for outputs of 4.9 per cent, compared to April, and by 19 per cent compared to a year earlier. The index for inputs increased by 1 per cent and 29 per cent respectively.
5 Draft legislation has been included in the Finance Bill which, if passed into law, will result in payments under the Lump Sum Exit Scheme being treated as capital receipts. Individual recipients may be liable to Capital Gains Tax, companies to Corporation Tax on chargeable gains.
6 HM Revenue & Customs has published a consultation document seeking views on potential design options for digitalising business rates. Data held by local authorities, the Valuation Office Agency and HM Revenue & Customs will be linked.
7 NatWest has announced it has allocated £1.25 billions of funding to be made available to farmers.
+ Product prices August 2022
A Market background
1 With no significant changes with the war in Ukraine war or the world energy market and with UK inflation climbing further, the volatility in Forex has remained. The Dollar continued to weaken against the Euro, dropping to parity. Sterling closed up against the Euro and marginally up against the US Dollar. From a starting position of 86.1p per €, Sterling improved to peak near the end of the month at 83.5p, closing the month at 83.9p per € (2.2p stronger). Against the US Dollar, Sterling opened at 82.2p and dropped in stages to a mid-month low of 84.9p; the second half of the month saw a full recovery, resulting in a closing position of 82.1p per $ (0.1p stronger). Gold prices fell back below £1,500 per troy ounce, except for an unexpected micro-peak mid-month where, for one day, the price shot to its highest peak ever (£1,669 per ounce), the month close was £1,457 per ounce.
2 Crude oil prices relaxed from the peaks of recent months, although remaining above $100 per barrel for all but a couple of days. Brent Crude closed $10 lower, having opened the month at $114 per barrel, the average dropped back to fluctuate between $99 and $107 per barrel throughout the month, eventually closing at $104 per barrel.
1 The cereals markets saw increased price pressure this month as Northern Hemisphere harvest started in earnest. Whilst in the short-term outlook is flat, the longer-term outlook still points towards insufficient wheat supplies to meet global demand, even as Ukrainian wheat is permitted to move; the hot, dry summers seen across Europe and the US grain regions has hampered quality and yield overall. Average milling premiums have risen once more, nudging £40/tonne due to these concerns. Feed wheat futures retained their volatility, with swings exceeding £20/tonne but with an underlying fall in the short and medium term, as one would expect with harvest underway. By late July, deliveries for November 2022 and 2023 were £268/tonne (-9) and £240/tonne (-8) respectively; meanwhile March 2024 deliveries improved to £258/tonne (+8). The oilseed rape price also fell significantly, dropping throughout the month to a low of £445/tonne, but rebounded in the final days. The crude oil price continued to support prices whilst the marginally stronger Sterling, the anticipated exports from the Black Sea region and the forecasts for Canadian yields did not.
Average spot prices in late July (per tonne ex-farm): feed wheat £247 (-15); milling wheat £285 (-5); feed barley £215 (-19); oilseed rape £517 (-53); feed peas £268 (-12); feed beans £278 (-22).
1 The average live-weight cattle prices for steers and heifers held relatively steady this month. The average finished steer price fell from its opening average of 248p/kg lw to a low of 243p/kg but bounced back to 250p/kg before dropping back in the final stages to close at 243p/kg lw (down 5p, to sit 18p/kg above the average a year earlier). The average finished heifer price dropped from 256p/kg lw to 252p/kg and rose to 260p/kg before closing at 257p/kg (up 1p, to sit 21p above the average a year earlier). Dairy cow prices maintained a similar level of volatility, falling from the opening position of £1,490 per head to £1,369, before climbing steeply to close at £1,605 (up £115 and sitting £422 above the average at the end of July 2021).
2 The average finished lamb price (new season SQQ live weight) fell, despite starting the month with improvement, by a further 14 per cent overall, in line with the expected seasonal trends as larger numbers of animals reached market weights. Starting from an opening position of 302.7p/kg lw, it first peaked at 316.9p/kg before dropping back for the remainder of the month to close at 259.3p/kg (43p down to sit 1.4p/kg above the average a year earlier but 43p/kg below the 5-year rolling average).
3 The average UK all pig price (APP) continued its ascent in July but to a lesser extent; in the context of a contracting UK demand and lower export demand from China, the UK market is under pressure, although UK production is contracting faster than demand as production costs have all but eroded any profit margin. Opening at 191.6p/kg dw, the average price made steady gains throughout the month, to close at 195.5p/kg dw (up 3.9p to sit 30.6p above the closing average a year earlier).
4 The UK average ‘all milk’ price for May was 40.39ppl, an increase of 1.93ppl, far exceeding the (rising) rolling 5-year average of 30.28ppl. The EU average for May was 1.26ppl above the UK at 41.65ppl; 2.06ppl up from the EU average for April.
+ Other crop news August 2022
1 The results of the AHDB Planting & Variety survey for the 2022 harvest have been published. The UK wheat area is estimated to be 1.807 million hectares, 1 per cent up on 2021; the barley area is 1.103 million hectares, down 4 per cent with spring barley down 12 per cent but winter barley up 10 per cent; the oats area is down 9 per cent at 183,000 hectares; and the oilseed rape area is up 9 per cent at 336,000 hectares. KWS-Extase has been the most popular wheat variety with 14 per cent of the total wheat area while Laureate accounts for 32 per cent of the barley area.
2 By 19 July, 69 per cent of the English, Scottish and Welsh barley crop had been harvested. In the South and East of England, the oilseed rape harvest was 50-75 per cent complete.
3 The European Commission has reduced its forecast for the EU maize harvest by 7.9 per cent from the June forecast to 7.25 tonnes per hectare compared to the 5-year average of 7.87 tonnes per hectare.
4 The Agricultural Price Index for May shows increases of 10.1 per cent for wheat, compared to April, 2.9 per cent for barley, 2.9 per cent for oats, 11.2 per cent for oilseed rape and 1 per cent for forage plants but there were falls of 5.1 per cent for fresh vegetables and 38.3 per cent for fresh fruit. Compared to a year earlier, there were increases of 44.4 per cent for wheat, 67.6 per cent for barley, 69.8 per cent for oats, 5.7 per cent for potatoes and 78.8 per cent for oilseed rape but falls of 52.5 per cent for forage plants, 7.5 per cent for fresh vegetables and 23.9 per cent for fresh fruit.
5 Defra has published the results of its Review of Automation in Horticulture include establishing a consortium that brings together government and industry to drive the adoption of proven technologies; adopting a mission-led approach to fast-track new technologies; the horticulture sector setting up working groups to share novel harvest practices and to consider how to make the industry more attractive for workers; developing the sector’s skills pipelines and consider ways to attract and retain staff; and considering a long-term Seasonal Workers Scheme to help stabilise workforce pressures.
5 The Sainsbury Laboratory has been granted consent to conduct trials on genetically modified crops of Maris Piper and Charlotte potatoes.
6 Scientists at Duke University have identified a protein in plant cells which causes plant immunity to fail as temperature rise and, following research, they have identified how to reverse the loss.
7 A research programme at Scotland’s Rural University College is developing a ‘vertical farm’ powered by waste from indoor livestock production whereby waste bedding is processed in an anaerobic digester to produce biogas.
8 Nottinghamshire vegetable cooperative, Freshgrowers, has produced the world’s first carbon neutral carrot crop. The 12,500 tonnes of Chantennay generated 363 tonnes of carbon equivalent which equates to a carbon footprint of 0.03 grams of CO2e per kilogram of carrots.
9 The Allium & Brassica Centre has introduced a more sophisticated Brassica Alert system using pheromone trapping and monitoring of early pest presence, coupled with disease spore trapping and weather modelling to provide real-time risk assessments. This produces a traffic-light warning system for impending risk of ringspot and white blister as well as pests such as thrips, diamond back moths and silver Y moths.
10 Elsom has produced a F1 hybrid strawberry Soraya which has been specifically bred for both summer and winter production. Consumer testing has shown they are superior in taste to out of season imported strawberries.
11 Love Fresh Cherries has forecast a UK cherry crop of 6,000 tonnes, up 40 per cent on last year.
+ Other livestock news August 2022
1 In June, UK prime cattle slaughterings fell by 3.8 per cent, compared to a year earlier, to 155,000 head; beef and veal production fell by 2 per cent to 69,000 tonnes; sheep slaughterings fell by 2 per cent to 895,000 head; mutton and lamb production fell by 0.8 per cent to 20,000 tonnes; pig slaughterings rose by 17 per cent to 941,000 head; and pigmeat production rose by 19 per cent to 87,000 tonnes.
2 GB milk production in June fell to 2 per cent levels of a year earlier and by 8 per cent compared to May. In the year to date, production is down 2 per cent on 2021.
3 Arla has increased its milk price by 0.9ppl taking a standard manufacturing litre to 50.53ppl and an organic litre to 56.01ppl.
4 The Agricultural Price Index for May shows increases of 6.9 per cent for pigs, compared to April, 7.9 per cent for sheep and lambs, 2.1 per cent for poultry and 5 per cent for milk but a fall of 1 per cent for cattle and calves. Compared to a year earlier there were increases of 12.9 per cent for cattle and calves, 16.6 per cent for pigs, 4.7 per cent for poultry and 34 per cent for milk but a fall of 6.8 per cent for eggs.
5 In June, average butterfat content fell by 0.5 per cent, compared to May, to 4.07 per cent but was up 1.2 per cent on a year earlier. Average protein fell by 0.9 per cent, to 3.32 per cent, but was up 1 per cent on a year earlier.
6 A survey of 541 Arla farmers has revealed that 80 per cent of those looking for staff received ‘very few’ or ‘zero’ applications from people with appropriate experience or qualifications while 61 per cent were finding it more difficult to recruit than in 2019. 4.3 per cent had decided to reduce output by cutting back on milkings while 6 per cent intended to reduce herd size.
7 Defra is seeking views on how the UK pig sector currently functions and the nature of the relationship across the supply chain. The consultation closes on 7 October.
8 African swine fever has been reported in domestic pigs in Lower Saxony, Germany, just 15km from the Dutch border and 300km from the nearest reports of cases in wild boar. The farm is in an area of high density of pig farms.
9 During July, the cost of production of pigmeat is estimated to have been 231p/kg deadweight meaning farmers were losing £31-33 per slaughtered pig.
10 HPA1 H5N1 avian influenza has been confirmed in backyard premises in Orkney Islands and Devon while, in July alone, HPAI H5 has been detected in wild birds in 27 locations, 12 of which have not previously had cases. The total of cases in wild birds has now reached 343 in 78 separate counties and the number of positive cases is now 1,422. Further outbreaks have been reported in France, Germany and Hungary in domestic poultry while outbreaks in wild birds have endured a third peak this year across most of Europe.
11 Disease control zones in respect of avian influenza H5N1 are in force in Sandy, Bedfordshire; Dartington, Devon; Tiverton, Devon; and Guestling Green, East Sussex.
12 In the quarter to June, 222 million dozens of eggs were packed in UK packing stations, 3 per cent down on the first quarter and 6.5 per cent down on a year earlier. The average farm-gate price was 94.8 per dozen, 6.1 per cent up on the first quarter and 6.9 per cent up on a year ago. Productivity of egg products totalled 19,000 tonnes, 5.6 per cent up on the first quarter but 11 per cent down on a year earlier.
13 In June, UK commercial layer chick placings fell by 20 per cent, compared to a year earlier, to 2.9 million chicks; broiler chick placings fell by 4 per cent to 92.5 million chicks; turkey chick placings fell by 8.8 per cent to 1.2 million chicks; turkey slaughterings fell by 14.6 per cent to 600,000 birds; broiler slaughterings rose by 2.2 per cent to 92.5 million birds; and total poultry meat production fell by 1.3 per cent to 160,700 tonnes.
+ Inputs / Supply business August 2022
1 The British Survey of Fertilizer Practice for 2021 has been published. The results show that nitrogen applications increased by 9kg/ha on tillage crops, to 130kg/ha, but fell by 2kg/ha on grass, to 51kg/ha, reflecting a return to a more normal winter/spring cropping balance following the very west autumn of 2019. Phosphate applications to tillage crops continued to decline to 22kg/ha while applications to grass have remained stable at 7kg/ha. Potash applications, in the range of 35-40 kg/ha in the period 2014-2018, continued their recent decline to 28kg/ha on tillage crops while applications to grass remained stable at 11kg/ha. In 1993, sulphur was applied to 13 per cent of cereal crops and 30 per cent of oilseed rape crops but in 2021 applications to cereal crops had increased to a range of 55-73 per cent and to 79 per cent for oilseed rape crops.
2 The Agricultural Price Index for May shows increases of 0.1 per cent for seeds, compared to April, 2 per cent for energy and lubricants, 0.9 per cent for animal feeding stuffs, 1.6 per cent for equipment maintenance and 3.7 per cent for buildings maintenance while there were falls of 0.4 per cent for fertilizers and 0.1 per cent for veterinary services. Compared to a year earlier, there were increases of 6.6 per cent for seeds, 60.4 per cent for energy and lubricants, 145 per cent for fertilizers, 9.4 per cent for chemicals, 0.9 per cent for veterinary services, 18.5 per cent for animal feedingstuffs, 6.6 per cent for equipment maintenance and 27.2 per cent for buildings maintenance.
+ Marketing August 2022
1 In 2021, the value of UK food, feed and drink exports fell by 5.6 per cent to £20.2 billions while imports fell by 5.5 per cent to £45.9 billions.
2 Kantar research suggests that those consumers who consider themselves to be ‘struggling’ rose by 5 per cent in the last year to 22 per cent while those who consider themselves ‘comfortable’ have fallen by 10 per cent over the past 2 years to 33 per cent. In the 4 weeks to 12 June, sales of branded products fell by £43 millions with standard own label goods increasing by £27 millions.
3 During May, imports of pigmeat rose by 10 per cent, compared to April, and by 18 per cent compared to a year earlier, to 66,800 tonnes. Exports rose, by 14 per cent and 8 per cent respectively, to 21,700 tonnes.
4 A YouGov survey commissioned by Veg Power has found that 55 per cent of adults are struggling to eat their 5-a-day. This compares to a National Diet and Nutrition Survey which found that only 33 per cent of adults were achieving the 5-a-day target. Veg Power has launched a ‘Breakfast in Colour’ campaign to encourage consumers to include fruit and vegetables as part of breakfast.
5 Wines produced in Sussex have been awarded Protected Designation of Origin status.
6 The Government is to reconsider whether the Groceries Code Adjudicator should be amended or replaced.
7 Exports of sheep meat totalled 5,300 tonnes in May, down 27 per cent on April but up 10 per cent on a year ago. Imports were static at 6,200 tonnes but up 30 per cent on last year.
8 Gower Salt Marsh Lamb has been granted Protected Designation of Origin status.
9 UK imports of beef in May totalled 19,700 tonnes, down 3 per cent on April but up 13 per cent on a year ago. In the year to date, imports are up 22 per cent at 98,100 tonnes. Exports in May totalled 11,000 tonnes, 3 per cent down on April but 29 per cent up on last May. In the year to date, exports are up 52 per cent at 54,000 tonnes.
10 Cambrian Mountains Lamb has been granted Protected Designation of Origin status.
+ Miscellaneous August 2022
1 The Agricultural Engineers Association has reported that tractor registrations in June were 36 per cent down on a year earlier while registrations in the first 6 months of the year are down 6 per cent.
2 The April Farming Opinion Tracker recording farmers’ opinions of Defra show that 66 per cent understand Defra’s vision for farming, up from 61 per cent in October 2021; 68 per cent of farmers will need to make changes to their holdings in the next 3 to 5 years, up from 64 per cent; 80 per cent of farmers felt that environmental payments will be important to their business in the future; 65 per cent of farmers are not confident that changes to schemes and regulations will be successful, down from 68 per cent; and 47 per cent of farmers have a positive outlook.
3 The average life expectancy in Mainly Rural areas is now 2.5 years longer than for those in Urban with Minor Conurbation areas. The average life expectancy in England is now 79.3 years for a man and 83.1 years for a women but for those living in Predominantly Rural areas the figures increase to 80.6 years and 84.2 years respectively.
+ Postscripts August 2022
Nicknames for workmates we all know!!
"Wicketkeeper" - puts on gloves and stands back
"Sensor light" - only works if someone walks past
"Blister" - appears when the hard work is done
"Seaweed" - floats around all day and stinks
"Lantern" - not very bright, and has to be carried
"Deck chair" - always folds under pressure
"2-stroke" - hard to get started and always smokes
“Jungle” – thick and dense
“Wheelbarrow” – only works when he’s pushed
“4n20” – 4 days’ work and 20 years’ experience
“Fractions” – Does 2/5ths of sod all
“Cyclone” – slow moving depression
“Scarecrow” – just stands around all day and watches
“Minerals” - silver in his hair, gold in his teeth and lead in his backside
“Limo” – carries about 8 people
“Chainsaw” – hard to start and stops for no reason
“Cordless” – charges all night but only works for two hours
“Drill bit” – A small boring tool
“Broken arrow” – (bosses son) doesn’t work and can’t be fired
“007” – 0 motivation, 0 skills and 7 breaks
+ Business Box August 2022
Be nice to each other!
It is sincerely hoped that what follows is not of the slightest interest to readers of the Monthly Farming Update. The wags amongst you will say ‘no change there then’ – gosh that hurt, but on this occasion the sentiment is sincere.
The Government is proposing changes to the Capital Gains Tax laws which apply on divorce and separation.
Married couples are used to being able to pass assets between each other without having to worry about tax. In a separation situation, tax is the last thing on their mind and so the tax consequences of a financial arrangement can come as a nasty shock.
No Capital Gains Tax can arise on assets passing between spouses while living together nor in the tax year of separation.
However, once a new tax year commences, if the couple is separated on a basis which is likely to prove permanent, the tax rules which apply to independent parties come into play.
Sadly, in most cases, separation and divorce result in fraught communication. Add to this dealings between solicitors and lengthy delay to a settlement is inevitable. So what chance is there of a deal within a tax year even if negotiations commence on 6 April?
This anomalous situation has at last been acknowledged and it is proposed that the ‘no gain – no loss’ period is extended to three years after the tax year in which permanent separation occurs. Further, if assets are exchanged under a formal settlement agreement, no tax will arise even if outside this period.
Often the family home is involved. The party to the marriage who has been consigned to the metaphorical garden shed cannot claim Private Residence Relief on a disposal as part of a settlement. This too will be rectified.
It is proposed these changes will take effect next 6 April. So, for once, be grateful if the lawyers drag things out!