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 September 2018
+ CAP support details / payments September 2018
1 In the light of the dry conditions endured by farmers across Europe, the European Commission has announced a number of alleviating measures. Farmers may consider sowing catch crops if intended for grazing/fodder production; catch crops may be sown as pure crops and not as a mixture of crops; the eight-week minimum period for catch crops may be shortened to facilitate timely winter sowing; and land lying fallow may be used for the production of animal feed.
2 The European Commission has authorised the payment to farmers of up to 70 per cent of their direct payment and up to 85 per cent of payments due under rural development schemes as from mid-October instead of waiting until December.
3 The Scottish Government has launched the National Basic Payment Scheme in the light of recent adverse weather conditions. From early October loan payments will be offered to eligible farmers for up to 90 per cent of their anticipated 2018 Basic Payment. A similar facility is expected to be introduced by the Welsh Government.
4 Defra has published guidance to growers, processors and importers involved in the UK organic sector of the expected position on regulations governing organic food production, labelling, imports and exports in the event of a departure from the EU next March without a deal.
+ Grants / regulations / legislation / environment September 2018
1 Defra has announced that the Payments by Results project will be the first agri-environment scheme directly funded by the UK with farmers being paid according to the environmental outcomes they achieve over the next two years. In Norfolk and Suffolk farmers are benefiting from planting nectar plots while farmers in Wensleydale are focused on managing species-rich meadows.
2 Defra has imposed restrictions on the import of most species of oak to protect native trees from the threat of Oak Processionary Moth. Not only do the restrictions affect imported trees but also trees moved from London and surrounding counties where the moth is already present. The only oak unaffected is Quercus suber, the cork oak.
3 The Welsh Government has committed £6 millions to a Sustainable Production Grant. Grants of up to 40 per cent of project costs, with a maximum of £50,000, will be available for on-farm nutrient management and storage schemes where the investment exceeds compliance with existing slurry storage regulations.
4 The Welsh Government is to donate £500,000 to farming charities to help provide short-term support to those families least able to meet living costs.
5 The Forestry Commission has identified ash die back on three new tree and shrub species in the same family as ash at the Westonbirt Arboretum in Gloucestershire.
6 A Government consultation has been issued containing proposals which would restrict the sale of wet wood for domestic burning, applying sulphur standards and smoke emission limits to all solid fuels and phasing out the sale of traditional house coal. In addition, by 2022, only the cleanest stoves will be permitted to be sold.
7 A new cutting-edge glasshouse costing £5 millions has been opened at Delamere Nursery in Cheshire. The glasshouse covers a hectare and has strict environmental controls creating better growing conditions for the four million seedlings which will be grown to stock forestry land.
+ Other matters of farm finance and tenure September 2018
1 The first estimate of Total Income from Farming for 2017 in the English regions has been published. The total for England increased by 41 per cent compared to a year earlier to £4,077 millions. Gross output increased by 12 per cent to £19,442 millions with increases of 14 per cent in the outputs of crops, 10 per cent in livestock for meat and 22 per cent for livestock products, particularly milk. The cost of intermediate consumption increased by 7 per cent, particularly the cost of animal feed. The overall value of crops increased to £8,166 millions with increases of 23 per cent in wheat, 26 per cent in barley, 42 per cent in oilseed rape, 52 per cent in sugar beet and 13 per cent in potatoes. The cost of energy increased by 11 per cent to £918 millions while the cost of fertilizer increased by 7 per cent to £1,013 millions.
2 The Agricultural Price Index for June for all outputs rose by 1.6 per cent compared to a year earlier but fell by 0.6 per cent compared to May. The index for all inputs rose by 6.2 per cent and by 0.8 per cent respectively.
+ Product prices September 2018
A Market background
1 Sterling weakened against the Euro for the third month in succession, and with a greater level of volatility this month. Opening at 89.0p per €, it dropped to 90.1p, recovered to 89.0p, weakened to 90.9p, before partially recovering again to close the month at 89.5p per € (0.5p weaker overall). Against the Dollar Sterling also weakened but following a different pattern: losing throughout the first half of the month (dropping to 78.9p per $) and recovering in the latter half to close at 77.1p per $ (1.0p weaker than its starting point of 76.1p per $). Brent Crude oil prices were more buoyant this month after initially dropping back. From an opening position of $74.29 per barrel, the price dropped to just above $71.00 but then climbed to close the month at $77.64 per barrel.
1 After a considerable build in strength in July, on the back of the drought in northern Europe, the grains markets had a more challenging time in August. Gains continued into the early part of the month, assisted by the weakening of Sterling, but the release of the August USDA report, and the material uplift in US maize harvest expectations it contained, poured cold water on the UK market. The good progress of the harvest in UK and northern Europe added to this pressure, revealing (marginally) better outcomes than had been forecast. Despite this negative sentiment the milling premium rose back above the £10/tonne mark again, to sit at £12/tonne. LIFFE feed wheat futures settled down after the prior month’s upheaval: In late August, deliveries for November 2018, 2019 and 2020 stood at £182/tonne (-3), £168/tonne (-6) and £167/tonne (+2) respectively. The oilseed market, whilst under pressure of its own from the forecast ‘bumper’ US soyabean crop, bounced back with force from its sub-£300/tonne level, assisted by poor European yields, global oil prices and the weaker Sterling.
Average spot prices in late August (per tonne ex-farm): feed wheat £169 (-1); milling wheat £181 (-2); feed barley £167 (+14); oilseed rape £321 (+22); feed peas £185 (+21); feed beans £190 (+18).
2 This month saw the average potato price switch from the 2017 crop to 2018, as early maincrop started coming to market. The challenging growing conditions of the 2018 season have left the market concerned over volumes and this led the average price to open the season £40/tonne higher than the 2017 equivalent, whilst the free-buy price opened almost £200 higher. By late August the average potato price had gained £9 (having peaked £5 higher) over its opening position of £202 per tonne, to close at £211 per tonne (£56 above the August 2017 closing average). The free-buy average opened at £296 per tonne, gaining marginally from there to close the month at £300 per tonne (£198 above the August 2017 close). The market will develop further once maincrop harvest is fully underway.
2018 crop prices for grade 1 in late August (per tonne ex-farm): Salad varieties were achieving between £400 and £425; Maris Piper opened the new season at between £280 and £310; Estima and other white varieties opened the season at between £290 and £300; red skin potatoes were not moved in enough volume to quote.
1 Cattle prices gained progressively for the majority of the month, with a small mid-month ‘blip’, but lost momentum as the end of the month approached. The average finished steer price, from its opening position of 188p/kg lw, improved to a peak of 196p/kg but fell back in the latter stages to 195p/kg lw where it closed the month (7p higher and 2p/kg below the closing average a year earlier). The average finished heifer price, from an opening position of 201p/kg lw dropped back to 198p/kg before improving to a peak just below 210p/kg, closing at 209p/kg lw (8p up in the month and 2p below the price a year earlier). The average dairy cow price remained volatile, bouncing from its opening position of £811 per head up to £1,206; back to £849; back up to £1,232 and then on to a close of £1,164 per head (£353 above July and £189 below the average a year earlier).
2 Lamb prices, after last month’s material readjustment of the price level, remained volatile but not to the same level. The average new season finished lamb price (SQQ live weight) dropped from its opening position of 187p/kg lw to 178 p/kg, rose to a peak of 187p/kg, dropped back to 179p/kg but eventually closed at 182p/kg lw (down 5p overall to sit 7p/kg below the average a year earlier).
3 The average UK all pig price (APP) returned to the decline expected at this point in the season, opening at 153.1p/kg dw dropping back by 3.5p/kg to close at 149.6p/kg dw (sitting 18.6p/kg below the closing average a year earlier).
4 The UK average ‘all milk’ price for June, published in August, reported an increase of 0.38p (the first improvement of the year) to give an average of 27.16ppl (0.48ppl above the average in June 2017 and 0.75ppl below the rolling 5 year average of 27.91ppl). The most recent update of the UK’s ranking against the ‘EU28’ farmgate milk price, also for June, placed the UK 21st (unchanged) against an improved EU28 weighted average of 29.26ppl (up 0.27ppl in the month).
+ Other crop news September 2018
1 The AHDB has reported that average winter wheat yields on 11 Recommended List trial sites are 10.63 tonnes per hectare, down 0.64 tonnes per hectare on the five-year average.
2 Provisional estimates of the cereal and oilseed areas in England at June have been published. The area of wheat was down 0.6 per cent on a year earlier to 1.64 million hectares; barley fell by 3.1 per cent with winter barley down by 6.2 per cent to 338,000 hectares and spring barley down 0.8 per cent to 478,000 hectares; the area of oats increased by 13 per cent to 137,000 hectares; and the area of oilseed rape increased by 7.9 per cent to 564,000 hectares, the winter sown crop increased by 8.1 per cent but the spring sown crop only accounted for 8,000 hectares.
3 The Agricultural Price Index for June for crop products rose by 0.3 per cent compared to a year earlier but fell by 1.3 per cent compared to May; the index for wheat rose by 5.9 per cent and 2.7 per cent respectively; the index for barley rose by 13 per cent but fell by 0.3 per cent compared to May; the index for potatoes fell by 16 per cent but was unchanged compared to May; the index for oilseed rape fell by 12 per cent and 0.2 per cent respectively; and the index for forage plants rose by 40 per cent but fell by 0.2 per cent compared to May.
4 Trinity Grain, a new grain storage and marketing co-operative, has been launched to provide facilities for 300 members producing 200,000 tonnes of grain. The co-operative will operate from stores in Membury, Berkshire, Micheldever, Hampshire and Shrewton, Wiltshire.
5 AHDB is to invest £60,000 in research into the barley yellow dwarf virus in cereals.
6 Animal feed production in December 2017 rose by 10 per cent for sheep, 6.6 per cent for cattle and 3.7 per cent for pigs compared to a year earlier but fell by 0.2 per cent for poultry. There was an increase of 2.5 per cent in the use of wheat and 17 per cent in the use of barley.
7 The British Beet Research Organisation has reported cases of disease caused by the bacteria Curtobacterium flaccumfaciens. The disease can reduce yields by 50 per cent and there is no known cure.
8 Investigation by EU food safety agencies has linked a four-year salmonella outbreak to prepared cucumbers in ready-to-eat meals with the UK being the worst affected.
+ Other livestock news September 2018
1 The Government has asked the Farm Animal Welfare Committee to conduct a review of the standards which apply in live animal exporting and report on the potential for improvement.
2 In May, the number of new bovine TB incidents in England fell by 3 per cent with a fall of 5 per cent in the High risk area but increases of 1 per cent and 24 per cent in the Edge and Low risk areas respectively. There were increases of 26 per cent in Scotland and 4 per cent in Wales. The number of herds in England not officially TB free did not change, there was a fall of 2 per cent in the High risk area but increases of 8 per cent in the Edge area and 52 per cent in the Low risk area. There were increases of 18 per cent in Scotland and 9 per cent in Wales.
3 Slaughterings of UK prime cattle in July rose by 2.2 per cent compared to a year earlier to 163,000; beef and veal production rose by 4.8 per cent to 76,000 tonnes; sheep slaughterings fell by 2.8 per cent to 1,032,000; mutton and lamb production fell by 2.8 per cent to 23,000 tonnes; pig slaughterings rose by 5.9 per cent to 884,000; and pigmeat production rose by 6.2 per cent to 76,000 tonnes.
4 The Agricultural Price Index for animals and animal products in June rose by 2.6 per cent compared to a year earlier but fell by 0.2 per cent compared to May; the index for sheep and lambs rose by 6.8 per cent but fell by 7.1 per cent compared to May; and the index for milk rose by 1.5 per cent and 1.4 per cent respectively.
5 In July milk production fell by 3 per cent compared to June to 1,236 million litres but was up 1.2 per cent on a year earlier.
6 Muller has increased the price of a standard litre by 1.5ppl to 29.5ppl.
7 In June UK dairies processed 1,218 million litres of milk, down 7.2 per cent on May. Liquid milk production fell by 5.7 per cent, cheese production by 8.2 per cent and butter production by 20 per cent but milk powder production rose by 4.9 per cent.
8 Barbers has increased the price of a standard manufacturing litre by 0.5ppl to 29.8ppl.
9 AHDB Dairy has developed a new Autumn Calving Index to help producers breed cattle suitable for autumn block calving systems.
10 The RSPCA and Compassion in World Farming have called for the use of carbon dioxide to stun pigs to be outlawed by 2024.
11 The welfare code for laying hens has been updated to reflect the latest advice from vets and animal husbandry developments.
12 In July the average butterfat content fell by 0.2 per cent compared to June to 3.89 per cent and by 1.1 per cent compared to a year earlier. The average protein content fell by a similar amount to 3.22 per cent.
13 During July, commercial layer chick placings fell by 5.2 per cent compared to a year earlier to 3.6 million chicks; broiler chick placings rose by 3.8 per cent to 103.8 million chicks; turkey chick placings fell by 3.4 per cent to 2.3 million chicks; turkey slaughterings rose by 12 per cent to 1.1 million birds; broiler slaughterings fell 0.3 per cent to 106.5 million birds; and total poultry meat production fell 1.2 per cent to 185,900 tonnes.
14 Russia has reported an outbreak of H5N2 HPAI in a commercial farm of 500,000 birds in the north-west of the country. The same strain of the virus has been reported in a wild mute swan in Denmark.
15 In the quarter to June, 7.7 million cases of eggs were packed, up 2.3 per cent compared to a year earlier and 0.2 per cent on the first quarter. The average farm-gate price fell by 2.1 per cent and 0.3 per cent respectively. The production of egg products rose by 4.6 per cent and 6.1 per cent respectively to 24,800 tonnes.
+ Inputs / Supply business September 2018
1 The Agricultural Price Index for energy and lubricants for June rose by 16 per cent compared to a year earlier and by 3.7 per cent compared to May.
2 Corteva Agriscience has received approval for Belkar, a herbicide to tackle broad-leaved weeds in oilseed rape.
+ Marketing September 2018
1 A new trade deal has been agreed with China which will result in the export of UK seed potatoes. China is the world’s largest global consumer of potatoes.
2 Exports of UK food and drink in the first six months of 2018 rose by 4 per cent compared to 2017 to £10.6 millions.
3 A new trade agreement has been agreed with Taiwan for the export of British pork which is expected to be worth £50 millions over the next 5 years. The agreement also presents the opportunity to export parts of the pig carcases, such as offal, which are not popular in the UK.
4 The Scottish Government has committed £200,000 to support Quality Meat Scotland’s 2018 Scotch lamb promotional campaign.
5 The Chinese Government has agreed to allow the import of UK dairy products made with milk from third party countries. The agreement is estimated to be worth £240 millions over 5 years.
6 Protected geographical status has been applied for West Country beef and West Country lamb.
7 Research conducted by the University of Edinburgh has revealed that one-third of the fruit and vegetables grown across Europe goes to waste as being “too ugly to sell”.
8 Protected geographical status has been applied for Pembrokeshire Early Potatoes.
9 The City of London Corporation has instructed commercial property consultants to find a new composite wholesale market site for Billingsgate, Smithfield and Spitalfields Markets.
10 The Co-op is to open a new distribution centre at Inverness Airport Business Park at a cost of £6 millions.
+ Miscellaneous September 2018
1 Initial figures for July have revealed that the cost to the NFU Mutual of machinery and crop fires has doubled compared to July 2017 to £6.2 millions.
2 The NFU Mutual’s 2018 Rural Crime Report has shown an increase in 2017 of 13.4 per cent in the cost of rural crime to £44.5 millions.
3 Dyfed-Powys Police has launched a full-time rural crime team which will cover Ceredigion, Powys, Pembrokeshire and Carmarthenshire.
4 The Labour Party has issued a consultation document on whether an English Sovereign Land Trust should be granted compulsory purchase powers to acquire development land at agricultural land prices to increase rural house building.
+ Postscripts September 2018
Hello! Is this Gordon’s Pizza?
No sir – it’s Google Pizza.
I must have dialled the wrong number.
No sir – Google bought Gordon’s Pizza last month.
OK. I would like to order a pizza.
Do you want your usual, sir?
My usual – you know me?
According to our caller ID data sheet, the last 12 times you called you ordered an extra-large pizza with three cheeses – sausage – pepperoni – mushroom and meat balls on a thick crust.
OK – that’s what I want.
May I suggest that this time you order a pizza with ricotta – spinach – sun-dried tomatoes and olives on a whole wheat, gluten free, thin crust?
What – I detest vegetables.
Your cholesterol is not good, sir.
How do you know?
Well, we cross-referenced your home phone number with your medical records. We have the result of your blood tests for the last 7 years.
OK, but I do not want your vegetable pizza! I already take medication for my cholesterol.
Excuse me sir, but you have not taken your medication regularly. According to our database, you only purchased a box of 30 cholesterol tables once, 4 months ago.
I bought more from another chemist.
That doesn’t show on your credit card statement.
I paid in cash.
But you did not withdraw enough cash according to your bank statement.
I have other sources of cash.
That doesn’t show on your last tax return unless you bought them using an undeclared income source, which is against the law.
I’m sorry, sir, we use such information only with the sole intention of helping you.
Enough already! I’m sick to death of Google – Facebook – Twitter – WhatsApp and all the others!!
I’m going to an island without internet – cable TV – where there is no mobile phone service and no one to watch me or spy on me!!
I understand sir – but you need to renew your passport first. It expired 6 weeks ago!
+ Business Box September 2018
Updated 04.09.2018 5:06pm
Who is to blame?
The breaching of cross-compliance conditions is a serious matter and can prove very costly. A recent case clarified what may constitute a breach.
The gamekeeper of a Norfolk estate was convicted in 2014 of poisoning wild birds. The following year the Rural Payments Agency notified the Estate, as the employer of the gamekeeper, it was in breach of cross-compliance and imposed a 75 per cent penalty. The Estate appealed to the Independent Agricultural Appeals Panel which upheld the appeal based upon a Dutch case whereby the Estate was not responsible for the unlawful actions of an employee. Notwithstanding this, the IAAP recommended a penalty of 20 per cent be applied but Defra decided on a penalty of 55 per cent as it held the actions of the gamekeeper were to be treated as those of the Estate.
The relevant regulation provides that a penalty can be applied where the breach is “directly attributable to the farmer who submitted the aid application.”
The Dutch case had concerned a breach caused by muck spreading carried out by a contractor and the Court held there must be some form of blameworthy conduct on the part of the farmer.
The Estate issued judicial review proceedings against Defra and the Court, finding in favour of the Estate, deemed that “directly attributable to the farmer” meant that the case should focus on the culpability of the farmer who must have been negligent or had omitted to comply with the regulations.
It is clear that farmers should ensure policies and procedures are in place which endeavour to ensure contractors and employees comply with cross-compliance regulations. However, if the third party fails to abide by such policies and procedures, farmers should not expect to suffer the penalty.
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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