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Monthly farming update

Our renowned Monthly Farming Update was started by Prof John Nix and is our running commentary on the industry. Offering the latest news and unique insights on the rural and farming sectors, updated on a 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

Policy issues

1 Defra has published a policy and progress update on ‘Farming for the future.’ The Environmental Land Management scheme is expected to start in 2024. A national pilot will begin in 2021 and will be increased in scale in phases. A pilot will also be introduced for tree health schemes with the main grant scheme being implemented in 2024. An Animal Health and Welfare Pathway will be established to promote the production of higher welfare animals at a level beyond compliance with regulations. The first schemes will be introduced in 2022. A UK Shared Prosperity Fund will be created to tackle inequality and deprivation with particular emphasis on the needs of rural areas. Statutory codes of practice for contracts between qualifying sellers and business purchasers will be introduced, initially into the dairy and red meat sectors, and consultations will commence this Spring. In 2021 improvements will be made to cross-compliance provisions with more emphasis on correction than draconian penalties. Defra has invited comments on the structure of the proposed Environmental Land Management Scheme. The consultation is open until 5 May.

2 The Environment Bill has received its Second Reading in the House of Commons.

3 The Scottish Government has published its Environment Strategy for Scotland.

1 The Government has published an outline of the Environmental Land Management scheme. Relevant points are as follows:

• To incentivise environmentally sustainable farming and forestry

• To support land managers to deliver locally targeted environmental outcomes with particular emphasis on collaboration

• To coordinate projects which can deliver landscape scale land-use change such as woodland and forest creation, peatland restoration, wetlands and salt marsh creation

It is acknowledged that payment rates will need to be sufficiently attractive to encourage land managers to participate. Consideration is being given to administrative price setting, where rates are set by government, and market-based price setting involving competitive tendering or auctions.

• Tree health grants will be expanded and enhanced along with woodland restoration grants

• Grant schemes will be introduced to improve the health of farmed animals

• Technology, equipment and infrastructure grants will be introduced in 2021

• An innovation R&D scheme will be introduced in 2021 to include the funding of syndicates of farmers, scientists and industry

Direct payments in England will be phased out between 2021 and 2027. In 2021 the following reductions will be made:

Up to £30,000 5 per cent

£30,000 - £50,000 10 per cent

£50,000 - £150,000 20 per cent

£150,000 + 25 per cent

1 The Scottish Government has provided funding of £40 millions to the Agricultural Transformation Programme with the aim of supporting the agricultural industry to undertake a range of potential actions to reduce greenhouse gas emissions.

2 Ahead of new licences coming into force in August, Defra has extended the existing 6 general licences for the shooting of birds until then. The licences cover carrion crows, Canada geese, wood pigeons and 3 general licences. However, Wild Justice has threatened to take the Government to court.

3 Thirteen projects in urban communities in England have been awarded grants in the first round of the Urban Tree Challenge Fund.

4 The Scottish Government has awarded 21 projects a total of £95,000 from the Connect Local Regional Food Fund.

5 Defra is to conduct a review into the release of gamebirds into protected sites and the impact on the environment.

1 The forecast of Farm Business Incomes for the year to February has been published. Cereals incomes are expected to fall by 15 per cent to £57,000 as a result of lower prices and higher input costs, particularly machinery costs; general cropping incomes are forecast to fall by 7 per cent to £99,000 as a result of increased costs; dairy incomes are forecast to be static at £80,000 with a fall in input costs, particularly feed, and higher quantities of grass and silage; lowland grazing livestock incomes are expected to grow by 51 per cent to £19,000 as a result of better prices and lower feed costs; upland grazing livestock incomes are forecast to rise by 40 per cent to £22,000 caused by higher sheep prices and lower feed costs; pigs incomes are expected to be up 95 per cent at £58,000 due to increased prices and carcase weights and reduced feed costs; poultry incomes are forecast to fall by 10 per cent to £67,000 due to reduced output; and the incomes of mixed farms are expected to rise by 5 per cent to £48,000.

2 Compared to a year earlier, average annual employee earnings in predominantly rural areas rose by 3.4 per cent in 2019 compared to an increase of 1.8 per cent in the Consumer Price Index. Earnings in predominantly urban areas rose by 4.2 per cent.

3 In 2018 Gross Value Added from predominantly rural areas contributed £261 billions, or 15.9 per cent, of England’s Gross Value Added but this was down from 17.3 per cent in 2001. However, excluding London, the decline was from 22.7 per cent to 21.8 per cent.

4 The Agricultural Price Index for December shows that the value of outputs rose by 1.5 per cent compared to November but fell by 3.7 per cent compared to a year earlier. The value of inputs fell by 0.1 per cent and 3.3 per cent respectively.

+ Product prices

A Market background

1 The exchange rates of Sterling versus Dollar and Euro followed different paths this month. Against the Euro, having started the month at 84.0p per €, Sterling dropped back in the early stages to 85.3p, improved to 83.0p mid-month before weakening materially in the latter stages to close the month at 86.0p per € (2.0p weaker). Meanwhile, against the US Dollar, Sterling opened at 75.8p per $ and dropped back almost immediately to a low of 77.6p; after recovering a little, the rate dropped back again to close the month at 78.0p per $ (1.2p weaker).

Brent Crude oil prices fell from $58.29 per barrel to a low of $53.27 in the early part of the month; a mid-month recovery saw the price reach $59.31 but the remainder of the month saw further reductions which led to a close of $50.52 per barrel; a reduction of $7.77 (13 per cent).

B Crops

1 The average wheat price fluctuated over the course of the month but finished at a low point in the cycle. The low expectation for the Australian cereal crop and the weaker Sterling were more than balanced by the improved estimates for Black Sea production this season. The added pressure of the developing Covid-19 outbreak and the global lack of understanding of its impact led markets to slow. Despite this, milling premiums have gained as much as £5. LIFFE feed wheat futures were unpredictable but more collected this month, with swings limited to £3. By late February they had dropped back, with deliveries for November 2020 and 2021 standing at £160/tonne (-2) and £150/tonne (-3) respectively. The further reduction in the crude oil price and the dampened Chinese demand in light of the Covid-19 outbreak saw the oilseed market drop back, despite the positive effect of a weaker Sterling. Pulse prices have been the winner this month, making strong gains in light of a perceived global shortage, most evident in East Asia.

Average spot prices in late February (per tonne ex-farm): feed wheat £147 (-1); milling wheat £166 (+3); feed barley £125 (-); oilseed rape £317 (-9); feed peas £225 (+33); feed beans £230 (+32).

2 The average potato price was more volatile this month, albeit with limited levels of swing. The weather held in the early part of the month, allowing some harvesting to take place but wet weather returned mid-month (with numerous storms!) which again prevented field access, both for harvest purposes and for planting early 2020 crops; few windows of opportunity opened up in between. The weather has also suppressed demand which has led to oversupply in the short / medium term market as the tonnages lifted in the wet, expected to store badly, hit the market promptly and suppressed prices. Clean samples, particularly with good baking quality, will attract a premium nonetheless. By late February the average potato price had dropped back £11 to close at £177 per tonne (£20 below the February 2019 closing average) whilst the free-buy average fell further, losing £22 to close the month at £182 per tonne (£63 below the February 2019 close).

2019 crop prices for grade 1 packing in late February (per tonne ex-farm): Salad varieties (<45mm - mainly Maris Peer, Charlotte and Gemson) had improved at the bottom end to between £280 and £450; Maris Piper had improved marginally at the top end to between £180 and £315; King Edwards continued to move in small volumes at £250; white varieties had improved marginally to between £190 and £305 whilst red varieties had increased in spread to between £190 and £255.

C Livestock

1 Cattle prices were mixed but uninspiring this month. The average finished steer price gained marginally overall, having dropped from an opening position of 183p/kg lw to 181p/kg, it rose to 184p/kg lw where it closed the month (up 1p to sit on a par with the closing average a year earlier). The average finished heifer price was a little more volatile: from an opening position of 192p/kg lw, it improved to a peak of 196p/kg mid-month but dropped back over the remainder of the month to close at 193p/kg lw (up 1p overall to sit 3p below the price a year earlier). The average dairy cow price was less volatile than previous months: from an opening position of £1,061 per head, the average dropped to £985, peaked at £1,154 and dropped again to close at £1,079 per head (up £18 in the month and £70 above the average a year earlier).

2 Lamb prices (old season) continued to improve for most of the month, upping the game materially, but ended on a negative note. The marked increase was driven by a combination of limited supply and extreme weather conditions hitting livestock hard. The average new season finished lamb price (SQQ live weight), from an opening position of 214p/kg lw, rose to 240p/kg but dropped back in the final stages to close at 235p/kg lw (up 21p and 43p/kg above the average a year earlier).

3 The average UK all pig price (APP) was more volatile this month, relaxing back from the ‘plateau’ trend of the previous month with an undertone of negativity. Opening at 165.4p/kg dw, the average peaked at 165.6p/kg, relaxed to 164.6p/kg and eventually closed at 164.9p/kg (down 0.5p to sit 21.1p/kg above the closing average a year earlier).

4 The UK average ‘all milk’ price for December, published in February, reported an average of 29.32ppl, a drop of 0.53ppl from the November average (1.10ppl below the average in December 2018 and 2.21ppl above the rolling 5 year average of 27.11ppl). In the rankings against the ‘EU28’ farmgate milk price, the December figures recorded the UK improving by a further place to 18th against a reduced EU28 weighted average of 30.89ppl (0.59ppl down).

+ Other crop news

1 The latest AHDB Early Bird survey of planting intentions shows a 17 per cent reduction in the wheat area, winter barley down 23 per cent, spring barley up 47 per cent, oats up 26 per cent, oilseed rape down 32 per cent, pulses up 27 per cent and arable fallow up 50 per cent.

2 The Agricultural Price Index for December, when compared to November, shows increases of 3.1 per cent in the value of wheat, 2.3 per cent in barley, 4.4 per cent in oats, 13 per cent in potatoes, 4.2 per cent in forage plants, 0.5 per cent in fresh vegetables and 8.2 per cent in fresh fruit. However, oilseed rape fell by 2.9 per cent. Compared to a year earlier, there were falls of 25.3 per cent in wheat, 47.1 per cent in barley, 58.6 per cent in oats, 13.2 per cent in potatoes, 0.4 per cent in oilseed rape, 1 per cent in sugar beet, 31.1 per cent in forage plants and 3.4 per cent in fresh vegetables but fresh fruit rose by 38.7 per cent.

3 Potato stocks at the end of November have been estimated to be 2.88 mt, down 4 per cent on 2018 and 11 per cent below the 5-year average, the lowest since 2012.

4 Defra has announced an expansion of the Seasonal Workers Pilot which will allow farmers to hire up to 10,000 workers for seasonal horticulture work.

5 Of the respondents to the Seasonal Labour in Horticulture Survey for England covering the 4th quarter of 2019, 37 per cent needed seasonal labour, the average shortfall was 5 per cent ranging from 7 person days in December to 12 person days in October.

+ Other livestock news

1 The Government has published the ‘UK Approach to Animal Health Surveillance’. The document provides trading partners, stakeholders and delivery partners with an outline of government’s, industry’s and the veterinary profession’s requirements for the surveillance of threats to both animal health and animal-related public health issues. The document will be reviewed annually by the UK Surveillance Forum.

2 Statistics have been published by Defra concerning livestock on holdings in England in December. Compared to the previous June, the total of cattle and calves fell by 2.5 per cent to 5.14 millions; female cattle aged 2 years or more fell by 1.5 per cent to 3.77 millions with the greatest fall in the beef herd; female cattle between 1 and 2 years fell by 1.9 per cent to 774,000, again the main fall was in the beef herd; and male cattle fell by 5.3 per cent to 1.37 millions. The number of pigs fell by 7 per cent to 3.77 millions; the breeding herd fell by 1.5 per cent to 404,000; and fattening pigs fell by 7.6 per cent to 3.37 millions. Compared to the previous year, the sheep flock fell by 1.7 per cent to 15.39 millions with falls of 2 per cent in the breeding flock to 7.23 millions and 1.5 per cent in lambs to 7.77 millions. Again compared to a year earlier, the poultry flock fell by 0.6 per cent to 138.8 millions; breeding and laying birds rose by 0.4 per cent to 33.8 millions with laying birds up 0.4 per cent and breeding birds up 0.1 per cent; broilers fell by 0.7 per cent to 95.1 millions; ducks fell by 9.8 per cent to 1.7 millions; geese fell by 9.6 per cent to 141,000; and turkeys fell by 4.6 per cent to 3.8 millions.

3 In the year to November, the number of new bovine TB incidents, compared to the previous year, fell by 9 per cent in England with falls of 11 per cent in the High risk area and 8 per cent in the Edge area but an increase of 20 per cent in the Low risk area. There were falls of 20 per cent in Scotland and 11 per cent in Wales. The numbers of herds not officially TB free fell by 10 per cent in England with falls of 11 per cent in the High risk area and 8 per cent in the Edge area but a rise of 8 per cent in the Low risk area. There was an increase of 32 per cent in Scotland but a fall of 3 per cent in Wales.

4 A new farmer-led group in Scotland is to consider proposals for alternative ways to support the suckler beef sector, mitigate its environmental impact and identify practical ways in which it can reduce greenhouse gas emissions.

5 Data from the British Cattle Movement Service has revealed that, over the past 5 years, the Limousin share of the beef herd has fallen by 4 per cent to 24 per cent, Aberdeen Angus has risen by 3 per cent to 19 per cent, British Blue has risen by 3 per cent to 12 per cent, Simmental has fallen by 1 per cent to 9 per cent, Hereford has risen by 2 per cent to 9 per cent and Charolais has fallen by 2 per cent to 8 per cent.

6 An industry standard for measuring and monitoring antibiotic use on beef farms has been agreed following the recommendations of the Cattle Health and Welfare Group’s Antimicrobial Usage Subgroup.

7 During January, UK prime cattle slaughterings fell by 0.3 per cent, compared to a year earlier, to 170,000; beef and veal production rose by 0.7 per cent to 79,000 tonnes; sheep slaughterings rose by 0.7 per cent to 1.041 millions; mutton and lamb production rose by 0.3 per cent to 24,000 tonnes; pig slaughterings rose by 2 per cent to 960,000; and pigmeat production rose by 2 per cent to 85,000 tonnes.

8 The Agricultural Price Index for December, compared to November, shows increases of 4.6 per cent in cattle and calves, 2.5 per cent in pigs, 6.2 per cent in sheep and lambs and 0.5 per cent in poultry but a fall of 2.2 per cent in milk. Compared to a year earlier there were increases of 0.6 per cent in cattle and calves, 16.6 per cent in pigs, 7 per cent in sheep and lambs, 4 per cent in poultry and 3.3 per cent in eggs but a fall of 4.4 per cent in milk.

9 During January, UK dairies processed 1,173 million litres of milk, a fall of 0.2 per cent in the annual rolling average compared to December. Liquid milk production rose by 0.1 per cent to 515 million litres; cheese production fell by 0.3 per cent to 38,900 tonnes; butter production fell by 1.2 per cent to 15,500 tonnes; and milk powder production fell by 1.4 per cent to 8,700 tonnes.

10 Under the banner of the Dairy Roadmap, the UK dairy industry has become an aggregating member of the Dairy Sustainability Framework, a global initiative which monitors and reports data on sustainability.

11 The Global Dairy Trade Index fell by 2.9 per cent in February with whole milk powder and skimmed milk powder both down 2.6 per cent, butter down 3.9 per cent but cheddar increased by 5.3 per cent.

12 Average butterfat content in January fell by 2.2 per cent, compared to December, to 4.15 per cent but was up 1.5 per cent on a year earlier. Average protein fell by 1.3 per cent to 3.36 per cent but was up 0.9 per cent on a year earlier.

13 NFU Mutual has reported that dog attacks on livestock increased by 15 per cent in England in 2019, despite falls in Wales, Scotland and Northern Ireland, and that claims totalled £1.5 millions.

14 This year there have been further outbreaks of African Swine Fever in Indonesia, 465 outbreaks affecting 38,000 animals; Bali, affecting 1,000 pigs; China, 1 outbreak affecting 465 animals; Philippines, 169 outbreaks affecting 155,000 pigs and South Korea, affecting 107 wild boar. China has now lost in excess of 1 million pigs to the disease.

15 Bulgaria has reported its first outbreak of H5N8 avian flu since last April with a third of over 15,000 ducks on a farm infected. The Czech Republic has reported its second case this year on a holding of 137,500 birds. Germany, Poland and Slovakia have all reported further cases.

16 In January, UK commercial layer chick placings rose by 1.2 per cent, compared to a year earlier, to 3.9 million chicks; broiler chick placings rose by 4 per cent to 104.9 million chicks; turkey chick placings rose by 21 per cent to 1.2 million chicks; turkey slaugherings fell by 0.2 per cent to 2.1 million birds; broiler slaughterings rose by 3.8 per cent to 101 million birds; and total poultry meat production rose by 1.2 per cent to 190,000 tonnes.

17 The Animal Welfare (Sentencing) Bill, introduced to Parliament as a private member’s bill, has received the support of the Government. The bill increases the maximum prison term for animal cruelty from 6 months to 5 years.

1 Strong demand from the US has caused fertilizer prices to jump in February with urea prices increasing by £5 per tonne.

2 The Agricultural Price Index for December, compared to November, show an increase of 1.4 per cent in straight feedingstuffs but falls of 0.9 per cent in energy and lubricants and 2.5 per cent in fertilizers. Compared to a year earlier there were increases of 2.9 per cent in chemicals, 0.5 per cent in veterinary services and 2 per cent in vehicle maintenance but falls of 0.8 per cent in seeds, 0.8 per cent in energy and lubricants, 12.5 per cent in fertilizers, 13.3 per cent in straight feedingstuffs, 8.4 per cent in compound feedingstuffs and 0.7 per cent in building maintenance.

3 Authorisation has been granted for the use of DEVRINOL on strawberry, blackcurrant, redcurrant, gooseberry and raspberry crops for weed control.

+ Marketing

1 Quality Meat Scotland, Hybu Cig Cymru and the AHDB have agreed to increase the Red Meat Levy Ring-fenced Fund from £2 millions to £3.5 millions. The additional funding will focus particularly on improving the reputation of meat with consumers, addressing misconceptions and promoting the benefits of sustainable meat consumption.

2 In 2019 red meat exports rose by 13 per cent to 661,000 tonnes. Beef exports rose by 7.5 per cent to 183,000 tonnes, or £532 millions, sheep rose by 12.5 per cent to 99,000 tonnes, or £402 millions, while pigmeat rose by 24 per cent to 378,000 tonnes, or £609 millions. China alone imported 131,000 tonnes of pig meat with a value of £191 millions.

3 In the first 12 weeks to the end of December, Tesco’s grocery sales fell by 1.5 per cent and its market share fell to 27.4 per cent; Sainsbury’s sales fell by 0.7 per cent leaving its market share at 16 per cent; Asda saw sales fall by 2.2 per cent and its market share fall to 14.8 per cent; Morrisons sales fell by 2.9 per cent with a fall in market share to 10.3 per cent; while Aldi and Lidl grew their market shares to 7.8 per cent and 5.9 per cent respectively.

4 UK sheep meat exports fell by 17 per cent in December to 7,600 tonnes mainly caused by a 31 per cent fall in exports to France. However, in 2019 as a whole, exports rose by 13 per cent to 93,600 tonnes.

5 Application has been made for Protected Geographical status for Tewkesbury Mustard.

6 The Agricultural Productivity Working Group, set up by the Food and Drink Sector Council, has recommended encouraging UK agriculture to become more data-driven; developing the Evidence for Farming Initiative on knowledge exchange; directing innovation funding and strategy towards the needs of the industry; addressing agricultural training; and investing in rural infrastructure.

7 Application has been made for Protected Geographical status for Forfar Bridies.

8 UK imports of EU produced food rose to £34.4 billions in 2019 while EU exports to the US fell by 40 per cent to £20.2 billions. UK exports to the EU rose by 3.7 per cent to £24.1 billions.

9 Imports of mozzarella cheese fell by 10 per cent in 2019 while exports rose by 85 per cent resulting in the trade deficit falling by 44 per cent to 27,200 tonnes.

+ Miscellaneous

1 George Eustace has been appointed Defra Secretary. Victoria Prientis is the new Agricultural Minister.

+ Postscripts

1. Couple in their nineties are both having problems remembering things. During a check-up, the doctor tells them that they’re physically okay, but they might want to start writing things down to help them remember.

Later that night, while watching TV, the old man gets up from his chair.

‘Want anything while I’m in the kitchen?’ he asks.

‘Will you get me a bowl of ice cream?’

‘Sure.’

‘Don’t you think you should write it down so you can remember it?’ she asks.

‘No, I can remember it.’

‘Well, I’d like some strawberries on top, too. Maybe you should write it down, so as not to forget it?’

He says, ‘I can remember that. You want a bowl of ice cream with strawberries.’

‘I’d also like whipped cream. I’m certain you’ll forget that, write it down?’ she asks.

Irritated, he says, ‘I don’t need to write it down, I can remember it! Ice cream with strawberries and whipped cream – I got it, for goodness sake!’

Then he toddles into the kitchen. After about 20 minutes, the old man returns from the kitchen and hands his wife a plate of bacon and eggs. She stares at the plate for a moment.

‘Where’s my toast?’

2. An elderly couple had dinner at another couple’s house, and, after eating, the wives left the table and went into the kitchen.

The two gentlemen were talking, and one sad, ‘Last night we went out to a new restaurant and it was really great. I would recommend it very highly’. The other man said, ‘What is the name of the restaurant?’

The first man thought and thought and finally said, ‘What’s the name of that flower you give to someone you love? You know, the one that’s red and has thorns.’

‘Do you mean a rose?’

‘Yes, that’s the one,’ replied the man. He then turned towards the kitchen and yelled, ‘Rose, what’s the name of that restaurant we went to last night?’

3. Hospital regulations require a wheel chair for patients being discharged. However, while working as a student nurse, I found one elderly gentlemen already dressed and sitting on a bed with a suitcase at his feet, who insisted he didn’t need my help to leave the hospital.

After a chat about rules being rules, he reluctantly let me wheel him to the lift.

On the way down I asked him if his wife was meeting him.

‘I don’t know,’ he said. ‘She’s still upstairs in the bathroom changing out of her hospital gown.’

+ Business Box

Is your family tree clothed in gold!

Unlike many issues aired in this column, this month’s subject is unlikely to affect the reader in any way other than as a matter of slight amusement.

Back in 1928, when the country’s fortunes were still recovering from the First World War and the General Strike, an anonymous benefactor created the National Fund with a donation of £500,000. The benefactor set out a very progressive investment policy for the Fund with the objective that it should, in due course, be used to repay the National Debt.

The Victorians and Edwardian’s aspired to clear the National Debt in its entirety or, at the very least, maintain it at an acceptable proportion of gross domestic product.

The original trustees of the fund were Barings which disappeared in 1995 following the actions of a rogue trader in its Singapore office. Responsibility was then assumed by Zedra.

By last December, the Fund had grown to £520 millions, having doubled in value in this century alone. Sadly though, the National Debt has risen to £1,820 billions.

The Attorney General has proposed the Fund is now applied to reduce the National Debt. The trustees favour the Fund being used for other charitable purposes.

And now for the spanner which has appeared in the works.

A distant relative of the original benefactor has joined in the case at the High Court. His claim is that the original constitution of the Fund was technically invalid from the outset on the grounds that the objectives of the Fund were impossible or impracticable to achieve. Further, if the purpose of the Fund failed at the outset, the gift remained the property of the original benefactor and therefore formed part of his estate on death. The consequences are fairly obvious!

The hearing in the High Court has been postponed until October. That should give enough time for you to check your family tree. However, the identity of the benefactor remains unknown to the world at large for the time being!

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