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 2020


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+ Policy issues

1 The Government has launched the National Framework for Water Resources designed to take care of water resources, reduce demand, halve leakage rates, develop new supplies, move water to where it’s needed and reduce the need for drought measures.

1 Defra has confirmed that crop diversification requirements, known as the “three crop rule”, will be relaxed this year due to the effects of flooding.

2 Defra has issued guidance to landowners who are affected by Phase 1 of HS2 where affected land is in a stewardship scheme.

3 Defra has issued guidance on Countryside Stewardship options where land has been designated by HM Revenue & Customs as conditionally exempt from Inheritance Tax and Capital Gains Tax.

1 Between 2016 and 2017, the UK’s carbon footprint is estimated to have fallen by 3 per cent reflecting a decrease in household travel and a reduction in the emissions associated with goods and services produced in the UK due to decarbonisation of electricity used. The carbon footprint is 21 per cent lower than when at its peak in 2007. Greenhouse gas emissions relating to imports in 2017 were 18 per cent higher than in 1997 while emissions associated with imports from China were 260 per cent higher. Emissions associated with the consumption of goods and services produced in the UK in 2017 were 31 per cent lower than in 1997.

2 The Government has added £6 millions to the Farming Recovery Fund to assist farmers affected by flooding in East and North Yorkshire, Gloucestershire, Worcestershire, Shropshire, Staffordshire, Nottinghamshire and Herefordshire.

3 The UK Irrigation Association has launched a new strategy aimed at ensuring irrigated agriculture receives a fair share of the nation’s water resources and uses it in a sustainable and efficient manner. The strategy includes managing irrigation ‘hotspots’ and forecasting demand; addressing regulatory and environmental challenges linked to a changing climate on-farm; and working together to build resilience to climate and water risks.

4 The Government has announced that the Nature for Climate Fund will invest £640 millions in planting 30,000 hectares of trees and restoring 35,000 hectares of peatland.

5 The Government has increased the funding of the Animal and Plant Health Agency, based at Weybridge in Surrey, by £1.4 millions.

6 Nine projects have been awarded funding from the Future Farming Resilience Funding scheme designed to support farmers transitioning to a new farming system following Brexit. The projects will be carried out by Bishop Grosseteste University, Brown & Co, Devon County Council, Ricardo – AEA, RSK-ADAS, Soil Association and Scotland’s Rural College.

7 In 2018, the UK recycling rate for waste from households fell from 45.5 per cent to 45 per cent despite the EU target being 50 per cent by 2020. Only Northern Ireland achieved an increase, to 47.7 per cent. England fell to 44.7 per cent, Scotland to 42.8 per cent and Wales to 54.1 per cent. In 2017, 70 per cent of UK packaging waste was recycled, down from 71.4 per cent in 2016, but still above the EU target of 60 per cent.

8 The UK’s first ever ‘super’ National Nature Reserve has been created on the Purbeck Heaths in Dorset. It joins existing reserves at Stoborough Heath, Hartland Moor and Studland and Godlingston Heath with new connecting areas of land and in total covers 8,231 acres.

1 The Government has concluded its review of agricultural tenancy legislation. Proposed changes include the removal of the minimum age of 65 for when retirement succession applications can be made; council farm retirement notices will only be able to be served when the tenant has reached the earliest age they can be in receipt of the state pension; the repeal of the commercial unit test for succession eligibility and the improvement of suitability provisions; the provision of a new mechanism in tenancy legislation to enable tenancy clauses to be amended where existing clauses present an unreasonable barrier to business development or access to future schemes; the exclusion from rent review consideration of a landlord’s investment in the holding; the use of third party determination as an alternative arbitration in rent review disputes; and members of the Central Association of Agricultural Valuers and the Agricultural Law Association to be capable of appointment as independent arbitrators. Matters which are subject to further consideration include the ability of an older tenant to assign the tenancy for payment; the loss of the right of tenancy succession once the existing tenant reaches 5 years past state pension age; succession rights to include children of cohabiting partners; extending succession rights to nieces, nephews and grandchildren; and the shortening of notice to quit periods in farm business tenancies with a duration in excess of 10 years.

2 In 2018, the average rent for AHA tenancies was £170 per hectare; the East Midlands recorded a fall of 4 per cent to £192 per hectare while the East of England recorded an increase of 5 per cent to £252 per hectare; while general cropping farms recorded an increase of 5 per cent to £220 per hectare, only lowland grazing farms saw a fall. For FBT agreements, the average increase was 3 per cent to £231 per hectare; both the North East and the East of England recorded increases of 9 per cent but Yorkshire and Humber saw a decrease of 11 per cent to £148 per hectare; and bucking the AHA trend, rents for lowland grazing farms increased by 8 per cent to £190 per hectare. The average rent for seasonal agreements rose by 2.6 per cent to £156 per hectare.

3 Andersons has downgraded its forecast result for its model 600 hectare farm. Output is expected to be 10 per cent lower at £1,094 per hectare and, despite a reduction in variable costs, a loss of £77 per hectare, before Basic Payment, is expected.

4 AMC lending to UK farming increased by 22 per cent to £572 millions in 2019.

5 The Agricultural Price Index for January for outputs fell by 1.7 per cent, compared to the previous year, driven by falls in crop outputs compensated by increases in fresh fruit and livestock. Inputs fell by 2.4 per cent, compared to the previous year, due to falls in the cost of feedstuffs and fertilizer.

6 Figures from Carter Jonas indicate that fewer than 100,000 acres of farmland was publicly marketing in 2019, nearly half that of 2018 and 38 per cent below the 5-year average. The average price was £8,539 per acre, 2.1 per cent less than in 2018.

7 Between quarters two and three in 2019, average rural house prices were static at £334,900 but in urban areas rose by 0.3 per cent to £308,300. Between quarters three and four in 2019, 3.1 per cent of the rural population was unemployed, a rise of 0.4 per cent, compared to 4 per cent of the urban population, a fall of 0.4 per cent.

+ Product prices

Prices and the availability of prices have been severely hampered by the unfolding world pandemic of Coronavirus Covid-19 (“CV19”); every effort has been made to obtain the information below.

A Market background

1 Sterling exchange rates against the Dollar and the Euro were highly volatile this month as the emergence of CV19 hit different countries in turn. Against the Euro, having started the month at 86.0p per €, Sterling dropped as close to parity as it has been in more than a decade, reaching 94.9p, before improving again to close the month at 89.6p per € (3.6p weaker). Against the US Dollar, Sterling opened at 78.0p per $, improved to 75.8 in the early stages but, as CV19 took hold, the Dollar, viewed as a safe-haven currency, strengthened to a peak of 87.4p before dropping back to close the month at 80.3p per $ (2.3p weaker). The crude oil price war between OPEC and Russia, alongside the falling demand as a result of CV19, saw Brent Crude oil prices fall to a 20-year low, dropping from $50.52 per barrel to $24.88 mid-month before improving marginally to close at $26.34 per barrel; a reduction of $24.18 (48 per cent).

B Crops

1 The average wheat price logged strong gains in the month, but these were tempered, and in the latter stages partially reversed, by the changes in currency markets. Aside from the CV19-related increase in demand from the general public, which may be short-lived, the US wheat area this season is expected to be at an all-time low and the Russians are expected to approve a proposed export limit this week, both of which had a buoyant effect on world prices. LIFFE feed wheat futures held pretty flat for the early part of the month but the CV19 effect on Europe brought improvement and volatility to the second half, with swings in the medium term of up to £16. By late March prices had relaxed slightly but deliveries for November 2020 and 2021 were still standing at £172/tonne (+12) and £156/tonne (+6) respectively. The oilseed rape price has fallen foul of the material reduction in the crude oil price, which currently shows little sign of recovery, and the movement in Sterling rates, whilst pulse prices have continued to gain as a result of global pulse shortage.

Average spot prices in late March (per tonne ex-farm): feed wheat £156 (+9); milling wheat £176 (+10); feed barley £129 (+4); oilseed rape £306 (-11); feed peas £230 (+5); feed beans £238 (+8).

2 The average potato price, as with many other commodities, has improved as a result of the unplanned ‘stocking up’ exercise undertaken by consumers and processors alike, as a result of CV19. However, this masked the diversity within the market place; domestic demand for general use potatoes remained strong, whilst frying varieties saw demand plummet as restaurants and takeaways reacted to government guidance and commercial demand waned as institutions were shut and many processors reduced output. In stark contrast to the social and economic lock-down, the weather was far more amenable this month (recent snow showers excepted), enabling most growers access to their land once again; whilst unharvested 2019 crop is most likely now beyond recovery, planting of early varieties, for some, has moved apace. By late March the average potato price had gained £27 to close at £204 per tonne (£1 above the March 2019 closing average) whilst the free-buy average made a far larger gain of £50 to close the month at £232 per tonne (£10 above the March 2019 close).

2019 crop prices for grade 1 packing in late March (per tonne ex-farm): Salad varieties (<45mm - mainly Maris Peer, Charlotte and Gemson) had tightened in spread to between £300 and £420; Maris Piper had improved further at the top end to between £180 and £365; more King Edwards moved this month at between £200 and £290; white varieties in general had improved materially to between £230 and £365, as was the case with red varieties which had increased to between £300 and £350.

C Livestock

1 Cattle prices improved steadily over the course of the month, somewhat impervious to the volatility seen elsewhere. The average finished steer price gained marginally overall; having dipped from an opening position of 184p/kg lw to 183p/kg, it improved for the rest of the month to eventually close at 189p/kg lw (up 5p to sit 7p above the closing average a year earlier). The average finished heifer price tracked a similar line, dipping from an opening position of 193p/kg lw to 192p before improving over the remainder of the month to close at 198p/kg lw (up 5p overall to sit 3p below the price a year earlier). The average dairy cow price returned to volatility; from an opening position of £1,079 per head the average peaked at £1,368, dropped to £1,007 and improved again to close at £1,244 per head (up £165 in the month and £21 above the average a year earlier).

2 Lamb prices (old season) recovered from the negative trend at the end of February and saw a substantial uplift from household demand, stocking up in preparation for CV19, however the end of the month saw the price fall back materially as the market rebalanced. The average new season finished lamb price (SQQ live weight), from an opening position of 235p/kg lw, rose to a peak of 250p/kg but in the final stages of the month dropped back to close at 230p/kg lw (down 5p but sitting 29p/kg above the average a year earlier).

3 The average UK all pig price (APP) made further gains overall this month, as the logistical issues from CV19 became more obvious to the market. Opening at 164.9p/kg dw, the average dropped back marginally to 164.7p/kg before improving with more vigour to close at 166.0p/kg (up 1.1p to sit 23.2p/kg above the closing average a year earlier).

4 The UK average ‘all milk’ price for January, published in March, reported an average of 28.77ppl, being a drop of 0.55ppl from the December average (0.84ppl below the average in January 2019 and 1.91ppl above the rolling 5 year average of 26.86ppl). In the rankings against the ‘EU28’ farmgate milk price, the December figures remain the most up to date information, recording the UK’s December average as 18th against a reduced EU28 weighted average of 30.89ppl (0.59ppl down).

+ Other crop news

1 During 2019, the UK Cereal Pathogen Virulence Survey identified 10 new strains of yellow rust.

2 The latest Bayer SpotCheck results show that 160 samples of oilseed rape evaluated in February had extremely high levels of light leaf spot infection after three days incubation.

3 The Agricultural Price Index for January, compared to a year earlier, shows falls of 22.7 per cent for wheat, 44.7 per cent for barley, 57.7 per cent for oats, 9.3 per cent for potatoes, 4.6 per cent for fresh vegetables and 26.4 per cent for forage plants but there were increases of 2.7 per cent for oilseed rape and 46.8 per cent for fresh fruit. Compared to December, there were increases of 5.6 per cent for wheat, 2.4 per cent for barley, 4.7 per cent for potatoes, 3.2 per cent for oilseed rape, 7.7 per cent for forage plants, 3.7 per cent for fresh vegetables and 30.4 per cent for fresh fruit but there was a fall of 1.9 per cent for oats.

4 Following the loss of neonicotinoid seed treatments, levels of virus yellows in sugar beet increased from 18 per cent in 2018 to 55 per cent in 2019.

5 Balbirnie Home Farms, in Freuchie, Fife, is Scotland’s’ first AHDB Strategic Cereal Farm for arable growers.

6 The AFPI apple research station in Northern Ireland has closed.

+ Other livestock news

1 Figures have been published for UK livestock populations at 1 December 2019. Cattle and calves totalled 9.5 millions, down 1.6 per cent on a year earlier; the cattle breeding herd was down 1.3 per cent at 3.3 millions; pig numbers totalled 4.7 millions, up 2 per cent with fattening pigs up 2.2 per cent at 4.2 millions; sheep and lambs were up 2.1 per cent at 22.8 millions but breeding ewes fell 0.4 per cent to 13.8 millions.

2 The Government has announced plans for the Animal and Plant Health Agency to deploy a bovine TB cattle vaccine within the next 5 years while intensive badger culling is to be phased out. Badger vaccination will be deployed in areas where the 4-year cycle of culling has ended.

3 According to Agri Benchmark, the average UK finishing unit made a loss in 2018 of £76 per 100kg deadweight. Of the 30 main beef producing countries, only Poland performed worse.

4 In England, the number of new herd bovine TB incidents in the year to December 2019, compared to the previous year, fell by 9 per cent with falls of 9 per cent in the High risk area and 11 per cent in the Edge area but an increase of 16 per cent in the Low risk area. There was a fall of 11 per cent in both Scotland and Wales. The number of herds not officially TB free in England fell by 12 per cent with falls of 12 per cent in the High risk area, 14 per cent in the Edge area and 1 per cent in the Low risk area. There was a fall of 4 per cent in Wales but a rise of 28 per cent in Scotland.

5 The Agricultural Price Index for January, compared to a year earlier, shows increases of 0.1 per cent for cattle and calves, 19.5 per cent for pigs, 9.7 per cent for sheep and lambs, 5.6 per cent for poultry and 4.4 per cent for eggs but a fall of 3.4 per cent for milk. Compared to December, there were increases of 0.5 per cent for pigs, 7.5 per cent for sheep and lambs and 0.4 per cent for poultry but falls of 0.6 per cent for cattle and calves and 2.3 per cent for milk.

6 During February, slaughterings of UK prime cattle rose by 1.2 per cent, compared to a year earlier, to 163,000; beef and veal production rose by 1.5 per cent to 75,000 tonnes; sheep slaughterings fell by 7.9 per cent to 836,000; mutton and lamb production fell by 9.7 per cent to 20,000 tonnes; pig slaughterings rose by 3.6 per cent to 864,000; and pigmeat production rose by 5.1 per cent to 78,000 tonnes.

7 During February, UK dairies processed 1,102 million litres of milk, a 0.1 per cent increase on the rolling 12 month average to January. On a monthly basis, liquid milk production fell by 4.2 per cent to 524 million litres, cheese production fell by 8.7 per cent to 34,400 tonnes, butter production fell by 2.7 per cent to 15,300 tonnes while milk powder production was constant at 7,000 tonnes.

8 Muller has reduced the price paid to M&S suppliers by 0.61ppl to 32.72ppl.

9 First Milk has called upon its 800 members to sign up to the First4Milk pledge with a commitment to improvements in animal welfare, people and the earth.

10 Arla has increased its manufacturing milk price by almost 1p per litre but Meadow Foods has invoked a reduction of 2 per litre as a result of the loss of business to Arla.

11 In February, average butterfat content rose by 0.7 per cent, compared to January, to 4.8 per cent and by 2.2 per cent compared to a year earlier. Average protein rose by 0.2 per cent, compared to January, to 3.37 per cent and by 1 per cent compared to a year earlier.

12 First Milk has increased its member premium to 0.5ppl for members who have reached their capital target.

13 Livestock market turnover approached £1.6 billions in 2019 according to the Livestock Auctioneers’ Association. Overall there were increases of 46,670 in store sheep, 183,446 in prime sheep and 11,132 in cull ewes while there were increases of 5,000 in cattle and 32,053 in calves.

14 Moredun and the Game and Wildlife Conservation Trust have launched a partnership to tackle louping ill, a tick-borne virus to which sheep and red grouse are susceptible.

15 Poland has reported an outbreak of African Swine Fever in a commercial holding of 23,700 pigs. There have been numerous cases in wild boar in the country, the latest only 13km from the German border. Further outbreaks in domestic pigs have occurred in Bulgaria, Romania, Moldova and Ukraine.

16 Germany has reported outbreaks of HPA1 H5N8 avian flu in breeding turkeys, close to the border with the Netherlands, and in ducks and chickens near Leipzig. Further outbreaks in large flocks have been reported in Poland and Bulgaria.

17 In February, compared to a year earlier, UK commercial layer chick placings rose by 28 per cent to 3.8 million chicks; broiler chick placings rose by 3.9 per cent to 86.2 million chicks; turkey chick placings rose by 14 per cent to 1 million chicks; turkey slaughterings fell by 11 per cent to 1.1 million birds; broiler slaughterings were static at 81 million birds; and total poultry meat production fell by 1.6 per cent to 145,500 tonnes.

1 Bayer has advised growers not to use the potato tuber treatment Monceren as a result of the European Commission setting a new maximum residue limit which is expected to become law by June.

2 The Agricultural Price Index for January, compared to the previous year, shows increases of 6.2 per cent for energy and lubricants, 16.5 per cent for chemicals and 3.1 per cent for vehicle maintenance but there were falls of 0.8 per cent for seeds, 16.2 per cent for fertilizer, 1.2 per cent for veterinary services, 10.1 per cent for feedstuffs and 1.5 per cent for building maintenance. Compared to December, there were increases of 3.3 per cent for energy and lubricants, 14 per cent for chemicals, 0.9 per cent for feedstuffs, 0.7 per cent for vehicle maintenance and 0.2 for building maintenance while there was a fall of 5.2 per cent for fertilizer.

3 The British Hop Association and AHDB have applied for emergency authorisation for the use of a copper hydroxide fungicide, Fungaran Progress, on hops and organic apples and pears for the control of Alternaria cone disorder in hops and scab in apples and pears.

+ Marketing

1 The Government has relaxed elements of competition law to allow supermarkets to work together. Retailers will be allowed to share data on stock levels, co-operate to keep shops open, share distribution depots and delivery vans and pool staff. Rules around the working hours of delivery drivers have also been relaxed and the 5p charge for plastic bags has been waived for online purchases.

2 The US has agreed equivalence of standards on the UK’s disease control measures for beef which is expected to result in the export of British beef with a value of £66 millions over the next 5 years.

3 In the 12 weeks to 26 January, Kantar data records that Sainsbury’s was the best performing large supermarket yet sales fell by 0.6 per cent compared to a year earlier while its market share fell to 15.8 per cent. Tesco sales fell by 0.9 per cent, Asda by 2.2 per cent and Morrisons by 3 per cent. Meanwhile Lidl’s sales grew by 11.2 per cent and Aldi’s by 5.7 per cent.

4 The Scottish Government has provided £220,000 to help develop a website for businesses to encourage tourists to enjoy Scottish food and drink.

+ Miscellaneous

1 The new Chair of the Agriculture and Horticulture Development Board is Nicholas Saphir.

2 As a consequence of Coronavirus, the Royal Three Counties Show, The Royal Highland Show, the Royal Norfolk Show, the South of England Show and many more have been cancelled while others have been postponed. Cereals has also been cancelled but will create an online presence.

+ Postscripts


A group of guys, all turning 40, discussed where they should meet for lunch. Finally, it was agreed that they would meet at the newly opened Royal Oak in Muswell Hill because the waitresses were young, pretty and wore mini-skirts.

Ten years later, aged 50, the friends once again discussed where they should meet for lunch. Finally, it was agreed that they would meet at Royal Oak in Muswell Hill because the waitresses were quite attractive, the food and service was good and the beer selection was excellent.

Ten years later, aged 60, the friends again discussed where they should meet for lunch. Finally, it was agreed that they would meet at Royal Oak in Muswell Hill because there was plenty of parking, they could dine in peace and quiet – with no loud music – and it was good value for money.

Ten years later, aged 70, the friends discussed where they should meet for lunch. Finally, it was agreed that they would meet at Royal Oak in Muswell Hill because the restaurant was wheelchair accessible and had a toilet for the disabled.

Ten years later, aged 80, the friends discussed where they should meet for lunch. Finally, it was agreed that they would meet at Royal Oak in Muswell Hill because they hadn’t been there before.

+ Business Box

Drip, drip, drip … dry!

The Government has published the National Framework for Water Resources. With climate change and wild variations in temperature and precipitation, the impact of a shortage of water resource will be felt by all, not least agriculture.

Instead of having a national framework, regional plans will be developed by Water Resources groups covering the East, South East, West, West Country and North regions.

If no action is taken between 2025 and 2050, additional capacity of 3,435 million litres a day is expected to be required in England. This rises to 6,000 million litres per day by 2100. At the moment, water companies pump about 14,000 million litres each day into the public supply.

While half of the additional need for supply is in the South East, the North has limited demand pressure and in some parts of the region has significant surpluses which could create the potential for transfer to other regions. In the East region there is no surplus water available and the additional need is equivalent to all the new supply options put together.

Away from general public use, water abstraction for agriculture is 35 per cent of all abstracted water but this rises to 59 per cent in the East region. Of agricultural use, 75 per cent is accounted for by spray irrigation but this rises to 94 per cent in the East region, indeed this region uses more water in agriculture than all the other regions combined.

The newly created bodies will need to reduce demand while at the same time increasing capacity. The aim is to reduce the average use per person from 130 litres per day to 110 litres per day; leakages must be dramatically reduced; transfers between regions need to be developed; temporary use bans and non-essential use bans must be reviewed; and use by industry and agriculture must be reduced.

This is a long term project but climate change and population growth do not wait for projects to be effective. The agricultural sector is on notice; it must play its part.

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