Author: Michael Haverty

Expanded SFI Offer for 2024

Expanded Offer

Defra has released details of the expanded SFI 2024 offer.  In total there will be 102 actions available.  This will include the 23 existing actions (available now under SFI 2023), over 20 brand new actions and more than 50 actions which were previously available under Countryside Stewardship Mid Tier (CS MT).  With reference to the latter, a number of these actions have been simplified and reduced from 5 to 3 years, so that over 90 of the actions are for 3 years.  This has the aim of making the scheme more accessible to tenant farmers.  Our article of 8th January gave details of some of the new actions, which include support for precision farming, agroforestry, boundaries and an improved offer for upland farmers (see https://abcbooks.co.uk/elm-2024/).

All the actions will be merged into one scheme – called the Sustainable Farming Incentive (SFI) and they will be available via one application.  Defra has said ‘bringing the schemes into one place, with one name, means farmers can access the best of both offers, the flexibility of the SFI with the breadth, scale and ambition of CS MT, just with less paperwork’.  It is our understanding that going forward there will no longer be a CS Mid Tier; this has now been subsumed into the SFI.  We were expecting this to happen over time, but it has occured quicker than we thought.  CS Higher Tier will remain available – see below.  

Controlled Rollout

The expanded SFI will be offered via a ‘controlled rollout’.  Initially, the RPA will invite a mix of farm businesses who have submitted an Expression of Interest (EoI) in the expanded offer.  EoIs have now opened and can be made via https://defragroup.eu.qualtrics.com/jfe/form/SV_cSGsCBrA5Kim3H0  Invites from the RPA will start from the end of May.  This is to test the system before full rollout.  Applications will then open to the wider sector ‘based on eligibility’ (it’s not clear what that actually means) from 22nd July 2024.  We do however know, the expanded offer will be available to those who have not previously claimed the BPS for the first time.

The SFI cap, which was put in place in March 2024, will remain with a further four actions from the new expanded offering being added.  This means new SFI applications will only be able to put 25% of the total agricultural area of their farm into a combination of one or more of these 10 actions which include:

The original actions:

  • IGL1 – Take improved grassland field corners or blocks out of management
  • IGL2 – Winter bird food on improved grassland –
  • AHL1 – Pollen and nectar flower mix
  • AHL2 – Winter bird food on arable and horticultural land
  • AHL3 – Grassy field corners and blocks
  • IPM2 – Flower-rich grass margins, blocks, or in-field strips.

New actions similar in nature to the 6 above:

  • WBD3 – in-field grass strips
  • AHW9 – unharvested cereal headland
  • AHW1 – bumblebird mix
  • AHW11 – cultivated areas for arable plants

Full details on the expanded offer can be found via https://www.gov.uk/government/publications/sustainable-farming-incentive-scheme-expanded-offer-for-2024

Guidance on all the individual actions can be found on the new digital tool known as ‘find funding for land or farms’ https://www.gov.uk/find-funding-for-land-or-farms.  This is similar to the Countryside Stewardship Grants finder.  Whilst it was very nice to have a SFI ‘Handbook’ with all the actions in when there was only 23, this may not be practical now we have 102 actions.  One has not been published as yet.

Countryside Stewardship Higher Tier

More information will be available later in the summer for those interested in the CS Higher Tier, this will include:

  • eligibility
  • how to apply and request specialist advice
  • details on each Higher Tier action

Higher Tier is being kept separate as these agreements are usually more complicated and require specialist advice from Natural England (NE) or the Forestry Commission (FC).  Later this summer applicants will be able to start working with NE or the FC to draw up their applications, with eligible farmers being able to submit applications online via Rural Payments during the ‘winter’ with the first agreements commencing in early 2023.  After this, applications will be possible all year round with agreements normally starting the month after applications are approved.

SFI 2023

The existing SFI 2023 scheme remains open, but it seems there will be a ‘downtime’.  Defra has said ‘you can apply for the SFI 2023 offer until access to the application servce is restricted, before the expanded SFI offer is launched in summer 2024’.  As all the actions that are in the 2023 offer will be carried forward into the 2024 offer, this will only really affect those that are in the middle of drawing up an agreement, we do however expect to be given warning before this happens, so this is just a ‘head’s-up’.

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Nutrient Management Research Grants

Defra has announced funding for projects which will develop innovative solutions to farm nutrient management.  Through the Farming Innovation Programme, £15m will be available through two competition strands;

  • Farming Futures: Nutrient Management Phase 1 – Feasibility – Funding for projects of between £200,000 to £500,000
  • Farming Futures: Nutrient Management Phase 1 – Industrial Research – funding for projects of between £500,000 to £1,000,000

The Farming Innovation Programme, is a partnership with Innovate UK who are part of UK Research and Innovation (UKRI) – the UK’s innovation agency.  Innovate UK deliver the programme, providing funding to those who want to research or develop an innovative solution to a known problem in agriculture.  Funding is grouped under four different themes; this support is via the Farming Futures Research and Development (R & D) Fund which supports work on ‘longer-term’ innovations.  Both competitions will open on 29th May and close at 11am on 24th July, but further guidance has been made available in advance of opening and can be found via https://farminginnovation.ukri.org/

Further to these strands, Innovate UK will run an additional competition, Farming Futures: Nutrient Management Phase 2 – Industrial Research, in Autumn 2024.  This Phase 2 competition will have higher project costs that can be supported through the Phase 1 competition.

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Impact of UK Trade Deals with Four Non-EU Partners on UK and Scottish Agriculture

The Scottish Government has recently published a Summary Report from a study that The Andersons Centre undertook in 2022 to assess the impact on Scottish agriculture of Free Trade Agreements (FTAs) between the UK and four selected non-EU partners, namely: Australia; New Zealand (NZ); Canada; and the Gulf Cooperation Council (GCC). 

It quantifies the FTA impacts on selected Scottish agricultural sectors namely: cereals (wheat and barley); livestock (dairy, beef and sheep); and potatoes. This has been done using two FTA scenarios, Low Liberalisation (tariff-free trade with a 25% reduction in non-tariff measure (NTM) costs) and High Liberalisation (tariff-free trade with a 50% NTM costs’ reduction). These scenarios are compared to the Main Baseline whereby the UK has left the EU and the Trade and Cooperation Agreement (TCA) is in place, as are the rollover trade deals that the UK agreed during the Brexit process. Additionally, a top-level comparison was given between the Main Baseline and an Alternative Baseline (No-Brexit) scenario.

The research was undertaken in collaboration with Wageningen University and Research (WUR) and used a combination of MAGNET, a computable general equilibrium economic model to assess the individual and aggregated impacts of each FTA, as well as desk-based research and interviews with industry experts representing organisations in Scotland and the UK, Australia, New Zealand, Canada and the Gulf region.

Assessments were also undertaken on the impact of tariffs, non-tariff measures (NTMs) and tariff rate quotas (TRQs) on UK trade with each selected partner, as well as the EU. These modelling results were then used in conjunction with additional analyses on potatoes to ascertain the impact of the FTAs on UK and Scottish agri-food output and farm-level performance in Scotland. 

A PDF version of the Summary Report is available via the Scottish Government website.

Agflation has Peaked, but its Corrosive Effects Linger

After rising sharply since 2021 and peaking in July 2022 at 28.4%, agricultural inputs’ inflation (Agflation) has been in free-fall during the first half of 2022 and has become deflationary. The latest estimates suggest that agricultural input prices in May 2023 are 3% lower than in May 2022. Agricultural output prices have broadly mirrored the trend for agricultural inputs and have also become deflationary, currently standing at -2.3%. This is in sharp contrast to food prices (depicted by CPI Food), which in May 2023 are estimated to have risen by 18.7% year-on-year.

Although, it appears that food prices for consumers are continuing to rise whilst agricultural prices are falling, importantly, there is a lag between how agricultural prices evolve and how these prices are reflected in retail prices. Back in 2017, when agricultural output prices reached their highest point in May of that year (at 13.2%), the CPI Food index did not peak until the following November (at 4.1%). This reveals a lag of about 6 months and indicates that the highest extent of inflation in food prices was significantly lower than for agricultural outputs. A key reason for this is that agricultural raw materials are one of several inputs that go into supplying food to consumers. Other inputs such as labour, energy, and packaging are also significant, and traditionally are much less volatile than agricultural prices.

Andersons ‘Agflation’ and UK Consumer Prices Index (CPI) – 2015 to 2023

Sources: ONS, Defra and Andersons

Notes: Andersons’ Agflation index builds upon on Defra price indices for agricultural inputs and weights each input cost (e.g., animal feed) by the overall spend by UK farmers. Andersons then provides a more up-to-date estimate of the price index for each input cost category.   The Agricultural Outputs index is compiled in a similar manner. Defra price indices for agricultural outputs are weighted based on their overall contribution to UK farming output. Andersons then provides more recent estimates for each output category, with the index being updated as the official Defra data becomes available.
* represents the % change versus the same month a year earlier.

That said, the combined effects of Brexit, Covid and the Russia-Ukraine conflict have exerted multiple pressures on both agricultural commodities, labour and energy inputs meaning that recent CPI Food inflation has almost reached 20%. However, there are signs that food price inflation might have peaked in March 2023, about 7 months after agricultural output prices had done similar.

Furthermore, although the chart above shows that inflation is trending downwards, it disguises that agricultural and food prices today are substantially higher than they were two years ago, as the indexed chart below shows. Agricultural input prices are 24% higher, agricultural outputs are up 15% whilst food prices are up by 29% in that time. In this time, prices elsewhere in the economy, denoted by the CPI index are also up by 18%. This reveals the corrosive pressure that inflation exerts on consumers’ incomes. Understandably, workers will seek pay rises to mitigate these increases. This, in turn, will mean that inflationary pressure across the economy generally will continue to linger, especially as annual inflation (8.7% (CPI)) remains way higher than the Bank of England’s 2% target.

Indexed Chart of Agricultural Inputs, Outputs, Food Prices and CPI – 2015 to 2023

Sources: ONS, Defra and Andersons

With consumer incomes under pressure, there is even greater focus on food prices and, by implication, the prices that farmers receive. All the while, farmers too are contending with their costs being significantly higher than two years’ ago. This signifies further challenges ahead, at a time when recent Free Trade Agreements with Australia and New Zealand have entered into force. Although farmers in those countries have also had to contend with inflationary pressures, it suggests that a delicate balancing act will be needed so that British prices remain competitive, whilst permitting farmers to cover the significant cost increases that they have experienced in the past two years.

Indeed, a key reason why agricultural inflation has come down is because the annualised figures compare with a given month a year earlier, a period when the world was adjusting to the shocks caused by the start of the Russia-Ukraine conflict. When annual inflation is compared to a period after which costs had increased considerably, it is unsurprising that the rate of increase has slowed, or turned negative in the case of agflation.

In such times, it is more important than ever for farmers and those that transact with farmers to be aware of the costs that farmers face. The Agricultural Budgeting and Costing Book contains all the farm and rural business information you need in one publication. It is concise, clear, and easy-to-use. The information is updated every six months, so you are always using the most relevant data, something which is especially vital during inflationary periods. The contents include;

  • Fully updated gross margins for all farming sectors, crops, and livestock, including net margins for key enterprises.
  • Sensitivity analysis and discussion of market prospects.
  • The widest range of information on alternative enterprises, diversification, and non-farming income sources available in any UK publication.
  • Explanation of the support systems and grants across GB, including BPS rules and rural grants. An outline of post-Brexit farm policy.
  • Farming costs including forage, feed, fertiliser, and pesticides.
  • Overhead cost data covering machinery, labour, contracting, building costs, and rents.
  • A vast array of general reference information for the farming sector.

For nearly 50 years, The Agricultural Budgeting and Costing Book has been providing industry leading farm management and costings information to agricultural advisors across the UK and is the leading publication of its kind in the industry. The 96th Edition, or an annual subscription (2 editions) can be ordered via The Andersons Centre website – https://theandersonscentre.co.uk/shop/

Ends.

Notes:

No. of Words: 966

Authors: Michael Haverty and Richard King

Date: 21st June 2023

This news release has been sent from The Andersons Centre, 3rd Floor, The Tower, Pera Office Park, Melton Mowbray, Leicestershire LE13 0PB. For further information please contact Michael Haverty on +44 (0)7900 907 902 or Richard King via +44 (0)7977 191427. 

Cost of Farming Squeeze Continues

Agricultural inputs’ inflation (Agflation) continues to outpace general economic inflation (CPI) as well as agricultural outputs and food prices (denoted by CPI Food). This is the key finding of Andersons’ Agflation estimates for January. The latest estimates put Agflation at 18.7% annually, significantly ahead of agricultural outputs (11.1%). Although the CPI and CPI Food indices continue to rise, currently standing at 10.5% and 16.8% respectively, there is still a gap between the food price inflation that consumers face and the increased input costs that farmers must manage. Therefore, UK agriculture continues to experience a cost of farming squeeze.

Andersons ‘Agflation’ and UK Consumer Prices Index (CPI) – 2015 to 2023

Sources: ONS, Defra and Andersons

Notes: Andersons’ Agflation index builds upon on Defra price indices for agricultural inputs and weights each input cost (e.g., animal feed) by the overall spend by UK farmers. Andersons then provides a more up-to-date estimate of the price index for each input cost category.   The Agricultural Outputs index is compiled in a similar manner. Defra price indices for agricultural outputs are weighted based on their overall contribution to UK farming output. Andersons then provides more recent estimates for each output category, with the index being updated as the official Defra data becomes available.
* represents the % change versus the same month a year earlier.

Although Agflation remains higher than food prices, it is declining. In July 2022, it peaked at 26.3%. That said, throughout 2022, agricultural input cost inflation generally surpassed price rises for agricultural outputs. The only exception came in October and November when both indices were aligned. During December and January, the agricultural outputs’ inflation rate has more than halved, declining from 22.9% in October to 11.1% today. It is now 7.6 percentage points lower than agricultural inputs’ inflation.

This signifies a challenging period ahead for farmers as the gap between input cost rises on the one hand and output prices on the other continues to widen. Global Dairy Trade (DGT) auction prices, taken as a proxy for global milk prices, have declined by 6% in the past month. Feed wheat prices (£213/t) are also down by 6% versus December and are returning to levels seen this time last year when prices stood at £210/t. The implications of these trends will require careful consideration.

Whilst general economic inflation looks to have peaked and several commentators are forecasting that the inflation rate will decline significantly during 2023, food prices continue to rise. This should not come as a surprise at this juncture because there tends to be a lag between the rates of inflation for agricultural commodities (inputs and outputs) and the inflation rate for food prices. In the past year or so, this has been in the region of 6 months. With agricultural inflation peaking in July, one would anticipate that the CPI Food index will also peak shortly, if it has not already done so.

Inflation and the impact of the ‘cost-of-living crisis’ on UK agriculture will be key themes during the forthcoming Andersons’ Spring Seminars on the Prospects for UK Agriculture which will be taking place across 11 UK venues from 24th February. The Seminars will examine UK farming’s profitability and performance, upcoming farm policy changes, trade, inflation and the impact of the cost-of-living crisis. They also provide sector-by-sector analysis and profitability outlook for the farming industry. Andersons’ Seminars have been running for 26 years and are renowned across Britain for informing agri-food professionals on how the industry is set to evolve in the next year and beyond, and the implications thereof for organisations serving the sector.

Despite the inflationary pressures that UK farming is facing, we have held the cost of the seminars at the same level as last year. Furthermore, if you book online via you will receive, via e-mail, a bonus complimentary copy of our most recent Professional Update bulletin (worth £50). More information including booking details is available via: https://www.theandersonscentre.co.uk/seminars

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Notes:

No. of Words: 658

Authors: Michael Haverty and Richard King

Date: 31st January 2023

This news release has been sent from The Andersons Centre, 3rd Floor, The Tower, Pera Office Park, Melton Mowbray, Leicestershire LE13 0PB. For further information please contact Michael Haverty on +44 (0)7900 907 902 or Richard King via +44 (0)7977 191427. 

Andersons Supporting ABP’s £1.5 Million Beef and Lamb Sustainability Programme

ABP has recently announced a £1.5 million investment in a unique sustainability programme which will support 350 of its farmer suppliers, and share wider learnings across the UK beef and sheep sectors. The Andersons Centre (Andersons) is delighted to be supporting ABP in conducting the on-farm assessments which will encompass both greenhouse gas emissions and other sustainability benchmarking.

This new programme, called PRISM 2030, will provide farmers with a support framework initially over 2-3 years. The aim of the programme is to help participants to improve their carbon footprint and sustainability across the entirety of the farm. The detailed programme will include assessment of carbon footprint, soil health, water use and support biodiversity creation and resource efficiency.

In addition to Andersons’ input, Harper Adams University will also provide support to ensure that farmers have direct and ongoing access to, and feedback from, the very latest environmental innovations and methodologies. ABP will also be making a sustainability grant available to farmers. There will also be peer-to-peer learning and expert advice on how environmental and productive performance can be improved throughout the programme.

The carbon assessments will be undertaken using Agrecalc as it is widely recognised as one of the leading carbon calculators in the UK, particularly in the grazing livestock sector. Agrecalc has over 8,000 active users with more than 17,000 carbon assessments completed across the UK in recent years.

Michael Haverty, Partner and Senior Research Consultant, will lead the Andersons team and commented that “given the scale of the climate change challenge, it is crucial that improvements in terms of greenhouse gas emissions are made as soon as possible. The PRISM 2030 programme addresses this challenge head-on by giving a robust baseline on emissions and, importantly, is focused on identifying and implementing actions which can improve both environmental emissions and productive performance.”

Dean Holroyd, Group Technical and Sustainability Director for ABP, stated that “British red meat production is amongst the most sustainable in the world, but we can and must do more because as an industry, we are well placed to be part of the climate solution.”

“So, we want to build on this position of strength, and while PRISM will mean direct support for those in our supply base who qualify for the programme, all of the outcomes will be made available to the wider industry.

In this way, it’s our hope that this initiative will play a part in helping beef and sheep farmers across the country become the global leaders in sustainable meat production – with lower emissions, lower costs and improved productivity.”

Farmers interested in participating in the PRISM 2030 programme should firstly contact a member of the ABP Livestock Team for their region to avail of a complimentary carbon assessment as well as a suite of other benefits.

Notes:

No. of Words: 475

Author: Michael Haverty

Date: 24th November 2022

This news release has been sent from The Andersons Centre, 3rd Floor, The Tower, Pera Office Park, Melton Mowbray, Leicestershire LE13 0PB.

Progress not Perfection, the Key to Addressing Greenhouse Gas Emissions

Despite Covid, Brexit and the Russia-Ukraine war, climate change is fast-becoming the central issue facing UK, European and global agriculture – as the recent record temperatures attest. The challenge with Greenhouse Gas (GHG) emissions is especially prevalent in grazing livestock. A recent White Paper by farm business consultancy, Andersons, has found that whilst there are notable imperfections with the methodologies used to quantify GHG emissions on farms, particularly methane, this is not an excuse for inaction.

The white paper’s finds that although the current tools and methodologies used to calculate GHG emissions are not perfect, improvement against an imperfect measure is still progress – which is urgently needed. The farming industry needs to avoid fixating on the details of the calculation methods and focus more on making the changes necessary to reduce emissions. Society expects agriculture to play its part and the industry will be judged on improvements made.

That said, there are strong grounds for methane to be treated separately as a GHG. Even within methane, clear distinctions are needed between methane from enteric fermentation (livestock) and methane emitted from fossil fuels. The former is recycled, if livestock populations and feeding methods remain largely the same over time. The latter is ‘new’ methane which has a much more potent impact, especially as methane production from energy (38%) accounts for a similar share of global output as agricultural methane (40%). Waste has a 20% share, much of this is food waste and needs reducing with urgency.

Estimated Global Methane Emissions by Source

Source: International Energy Agency (IEA), analysed by Andersons

For farmers, ‘doing the right thing’ environmentally can also help to improve productivity. These ‘win-wins’ (e.g., reducing inorganic nitrogen fertiliser) need to be deployed widely and urgently. Yet, this will only get farming so far.

To get to Net Zero a step-change in practices is needed, as are financial incentives for farmers to reduce net GHG emissions, particularly by sequestering carbon. Some farmers are adopting a wait-and-see attitude until there are clear commercial opportunities. Whilst many farmers want to do-the-right-thing, businesses need to be sustainable both environmentally and financially.

From a policy-making perspective, concerns with GHG emissions are rightly a core policy-making focus. Yet, it is vital that progress in this area does not lead to carbon leaking and environmental degradation elsewhere. Future policy requires a balanced approach across these issues.

Across the UK and Europe, emission targets are now in place. Whilst more work is required in terms of plans and strategies, the key now is effective action. Without this, the best plans and targets become, yet another, source of waste. There is much to be done and farmers are central to the solution. Andersons White Paper can be accessed by clicking here.

GHG emissions and the environment is a key topic within the forthcoming 53rd Edition of the John Nix Pocketbook for Farm Management, publishing in early September. It includes a detailed overview of emissions in agriculture and food production with additional information on ammonia emissions, food waste and an updated section on carbon markets in UK farming. Also, there is a wide array of detail on topics such as conservation costs, renewable energy, and fuel usage.

The 53rd Edition is updated for 2023 with over 100 enterprises costed for the year ahead, overheads, capital and other farming costs. It recognises that farming will continue; however challenging the coming months and years turn out to be, and farmers and managers must continue to focus on what they have control over within their farming systems.

The Farm Management Pocketbook is designed to help farmers, students, and other agribusiness professionals to understand their farms, the industry, and the opportunities that it offers. It costs £32.00 +P&P. Visit https://theandersonscentre.co.uk/shop/john-nix-pocketbook/ to pre-order a copy, for delivery in early September.

Ends.

Notes:

No. of Words: 627

Authors: James Webster and Michael Haverty 

Date: 17th August 2022

This news release has been sent from The Andersons Centre, 3rd Floor, The Tower, Pera Office Park, Melton Mowbray, Leicestershire LE13 0PB. For further information please contact James Webster (M: 07707 088409) or Michael Haverty (M:07900 907 902).

Cost of Farming Squeeze Apparent

For the first time, Andersons’ Agflation estimates include an index of Agricultural Outputs prices. The July estimates put Agflation at 23.5% annually, more than double that of agricultural outputs (10.1%). When Agflation is plotted against output prices, food inflation (denoted by CPI Food) and general economic inflation (CPI), which based on updated data for July 2022 now stand at 12.8% and 10.1% respectively, it becomes apparent that there is a cost of farming squeeze taking place.

In the months preceding June 2022, agricultural output prices generally rose in parallel with Agflation, albeit at a slightly lower rate. However, since then, these indexes have diverged considerably. Whilst recent falls in commodity grain prices have been the main driver, it also suggests that consumers are struggling to afford rising food prices and, that retailers and food service providers are reluctant to pass on further increases. With energy prices set to rise further towards winter and the Bank of England projecting that inflation will rise to 13% by year-end, the extent of the challenges facing the UK economy are stark.

Andersons ‘Agflation’ and UK Consumer Prices Index (CPI) – 2015 to 2022

Sources: ONS, Defra and Andersons

Notes: Andersons’ Agflation index builds upon on Defra price indices for agricultural inputs and weights each input cost (e.g., animal feed) by the overall spend by UK farmers. Andersons then provides a more up-to-date estimate of the price index for each input cost category.   The Agricultural Outputs index is compiled in a similar manner. Defra price indices for agricultural outputs are weighted based on their overall contribution to UK farming output. Andersons then provides more recent estimates for each output category, with the index being updated as the official Defra data becomes available.
* represents the % change versus the same month a year earlier.

Rising energy prices will also continue to affect Agflation in terms of fuel, fertiliser and feed costs. Therefore, Agflation will remain at elevated levels for this year and beyond.

Some sectors are better positioned to withstand these increases than others. Milk prices are up by 41% since July last year. Cereal prices, although lower recently, are still around 29% higher than a year ago. However, livestock prices, generally up 10-19%, are not rising as quickly as Agflation, with egg and fresh vegetable prices falling. Several of these sectors have been struggling in terms of profitability. Additional inflationary pressure on inputs will stretch working capital resources further.

Although advance BPS payments in England during July are welcome, BPS payments are declining and will by 35% lower in 2023 than in 2020. Successor schemes including the Sustainable Farming Incentive (SFI) will not bridge the income gap. If farmers are unable to get higher prices for their outputs, many will be severely squeezed in the months ahead. Difficult decisions will need to be made on cropping and enterprise viability. This will have direct implications for food supply, coming at a time when severe droughts are being experienced elsewhere, particularly in Europe.

In such times, having access to the latest available information likely to impact farmers’ decision-making is crucial. Inflationary challenges, and other key issues affecting UK farming, will be examined in much more detail during Andersons’ forthcoming Webinar, taking place on 22nd September. Tickets are priced at £70 per place, the agenda is set-out below and places can be booked by visiting: https://register.gotowebinar.com/register/3842561566295604752 

Agenda – UK Farming Prospects – Autumn Update

  • Farm Profitability and Finance Performance
  • Trade Update
  • Farm Policy Updates – England, Scotland and Wales
  • Sector Updates
    • Arable
    • Dairy
    • Grazing Livestock
    • Pigs and Poultry
  • Summary and Conclusions

Ends.

Notes:

No. of Words: 596

Authors: Michael Haverty and Richard King

Date: 10th August 2022

This news release has been sent from The Andersons Centre, 3rd Floor, The Tower, Pera Office Park, Melton Mowbray, Leicestershire LE13 0PB. For further information please contact Michael Haverty on +44 (0)7900 907 902 or Richard King via +44 (0)7977 191427. 

Farming Focus – July 2022

In the July 2022 edition of Farming Focus we inform readers that the Sustainable Farming Incentive is now open for applications in England and also the Adding Value theme of the Farming Transformation Fund.  The Welsh Government is looking for farmers to help with co-designing the Sustainable Farming Scheme.  We examine the fall in GB potato area and report on plans in NZ to introduce a livestock methane tax.  Finally, we take a look at NFU Sugar and British Sugar’s beet price increase for next year’s crop.

Our Spotlight article looks at the new Slurry Infrastructure Grants due to be available in the autumn.

Click Here to access our July 2022 edition of Farming Focus.

If you require advice from one of our consultants, do not hesitate to contact them by email or phone.  Their contact details can be obtained by clicking here. Alternatively, your can also contact our office on 01664 503200 or email [email protected]

If you would like more detail on the topics covered above as well as additional articles on UK farm business matters, why not subscribe to Andersons’ AgriBrief Bulletin? Over the course of each month, we give a concise and unbiased commentary on the key issues affecting business performance in the UK agri-food industry, and its implications for farming and food businesses. Please click on the link below for a 90-day free trial:

https://agribrief.co.uk/

 

Agflation Remains at Decades’ High Levels

Andersons’ latest estimates for June show that Agflation now stands at 25.3%. Since the onset of the Russia-Ukraine conflict in February, input costs have soared and are at levels which have not been seen in decades.

Andersons’ Agflation index builds upon on Defra price indices for agricultural inputs and weights each input cost (e.g., animal feed) by the overall spend by UK farmers. Andersons then provides a more up-to-date estimate of the price index for each input cost category. As the ‘official’ Defra figures are updated, Andersons Agflation estimates are also adjusted to take account of the Defra updates.

In comparison with general inflation, as measured by the consumer prices index (CPI) and food prices (CPI Food) which stand at 9.1% and 8.5% respectively, Agflation is nearly three times higher. Given the current situation with the Russia-Ukraine conflict and the upheaval caused across numerous commodity supply-chains, particularly feed, fuel, and fertiliser, Agflation is set to remain at elevated levels for at least the remainder of this year.

Andersons ‘Agflation’ and UK Consumer Prices Index (CPI) – 2015 to 2023

Sources: ONS and Andersons

Notes: Andersons’ Agflation index builds upon on Defra price indices for agricultural inputs and weights each input cost (e.g., animal feed) by the overall spend by UK farmers. Andersons then provides a more up-to-date estimate of the price index for each input cost category.
* represents the % change versus the same month a year earlier.

Due to the surging input costs, many farm businesses are feeling a severe squeeze on margins. Thus far, some sectors have been better able to withstand the inflationary storm than others.

The arable sector is less affected for 2022 as most farmers have bought forward their fertiliser and output prices have hit record levels (although this contributes to feed cost rises for livestock). For many farmers in this position, 2022 is shaping up to be a stellar year – the value of the unharvested wheat crop has risen by more than 50% since it went in the ground. That said, challenges loom for 2023. High input costs and taxation on 2022 profits will stretch working capital requirements.

As alluded to above, the livestock sectors are under additional pressure due to the burden of increased feed costs, which account for nearly a quarter of the weighting for the Agflation Index. Whilst pig prices have risen, they remain insufficient to cover the soaring production costs that pig farmers have had to contend with in recent months.

Dairy and livestock farms have also been feeling the strain. The dairy sector has seen some significant price rises in recent months, partly because UK milk production volumes are down, and processors and retailers are trying to encourage farmers to boost their production to meet with consumer demand. This will help the dairy sector to mitigate some of the inflationary strain.

These severe inflationary pressures are occurring at a time when all farms in England are facing cuts in BPS payments, which will reach 35% during 2023.

In such times, it is crucial to demonstrate competent cost management, particularly in terms of working capital, which will be essential to steer farm businesses through the current crisis.

To celebrate the John Nix Pocketbook becoming part of The Andersons Centre’s publications portfolio, and as an antidote to inflation, we are offering a 10% discount on all purchases of the 52nd Edition of the Pocketbook. To avail of the discount, simply click the link below and apply the discount (coupon) code “PKB5210” during the checkout process. Offer is available while stocks last. Please visit: https://theandersonscentre.co.uk/shop/john-nix-pocketbook/

Ends.

Notes:

No. of Words: 602

Author: Michael Haverty

Date: 28th June 2022

This news release has been sent from The Andersons Centre, 3rd Floor, The Tower, Pera Office Park, Melton Mowbray, Leicestershire LE13 0PB. For further information please contact Michael Haverty on +44 (0)7900 907 902.  

Farming Focus – June 2022

In the June 2022 edition of Farming Focus we examine the latest Total Income from Farming (TIFF) figures released by Defra. We report on Defra’s announcements that English farmers will get a 50% BPS advanced payment this year as well as guidance on the next round of the Farming Transformation Fund. The Welsh Government’s announcement on funding available to Welsh farmers over the next 3 years to assist during the transition to the Sustainable Farming Scheme is also covered.

In addition, we look at new season fertiliser prices for nitrogen and what the EU regulators’ decision on extending glyphosate approval until 2026 means for British farmers. Detail is also provided on the latest postponement to border controls on imports as well as a 25% advanced payment to sugar beet growers on their 2022 crop.

Our Spotlight article looks at the latest budgetary figures for Andersons Meadow Farm Model which is a mixed lowland farm based in England.

Click Here to access our June 2022 edition of Farming Focus.

If you require advice from one of our consultants, do not hesitate to contact them by email or phone.  Their contact details can be obtained by clicking here. Alternatively, your can also contact our office on 01664 503200 or email [email protected]

If you would like more detail on the topics covered above as well as additional articles on UK farm business matters, why not subscribe to Andersons’ AgriBrief Bulletin? Over the course of each month, we give a concise and unbiased commentary on the key issues affecting business performance in the UK agri-food industry, and its implications for farming and food businesses. Please click on the link below for a 90-day free trial:

https://agribrief.co.uk/

 

April Agflation Surpasses 30%

Since the turn of the year UK ‘Agflation’ has been soaring driven by primarily by the Russia-Ukraine conflict. The latest estimates for April shows that it now stands at 30.6% – levels not seen in decades. All the while, general inflation, as measured by the consumer prices index (CPI) and food prices (CPI Food) have been rising at a much slower rate (circa 6%). This means that many farm businesses are now feeling a severe squeeze on margins and this is set to continue for the foreseeable future.

Andersons ‘Agflation’ and UK Consumer Prices Index (CPI) – 2015 to 2023

Sources: ONS and Andersons

Notes: Andersons’ Agflation index builds upon on Defra price indices for agricultural inputs and weights each input cost (e.g., animal feed) by the overall spend by UK farmers. Andersons then provides a more up-to-date estimate of the price index for each input cost category.
* represents the % change versus the same month a year earlier.

The Russia-Ukraine conflict has had most effect on feed, fuel, and fertiliser prices. However, as these underpin most agricultural inputs in some form, cost increases are also showing elsewhere (e.g., contracting costs, crop protection products and building materials).
Several livestock sectors are showing signs of stress. The pressure is most pronounced in the pig and poultry sectors where feed traditionally accounts for 65-80% of production cost. Dairying and grazing livestock are also feeling the strain, particularly for those farms that have not bought forward their fertiliser.

The arable sector is less affected for 2022 as most farmers have bought forward their fertiliser and output prices have hit record levels recently (contributing to the feed cost rises mentioned above). For many farmers in this position, 2022 is shaping up to be a stellar year – the value of the unharvested wheat crop has risen by more than 50% since it went in the ground. That said, significant challenges loom for 2023. High input costs and taxation on 2022 profits will stretch working capital requirements.

These severe inflationary pressures are happening at a time when all farms in England will be facing cuts in BPS payments, which will reach 35% during 2023.

Without significant price increases to cover elevated production costs, many farms will struggle. In such times, it is especially crucial to demonstrate competent cost management, particularly for farm advisors which many farm businesses are depending on to steer them through the current crisis.

The Agricultural Budgeting and Costing Book contains all the farm and rural business information you need in one publication. It is concise, clear, and easy-to-use. The information is updated every six months, so you are always using the most relevant data, something which is especially vital during inflationary periods.

The contents include;

  • Fully updated gross margins for all farming sectors, crops, and livestock, including net margins for key enterprises.
  • Sensitivity analysis and discussion of market prospects.
  • The widest range of information on alternative enterprises, diversification, and non-farming income sources available in any UK publication.
  • Explanation of the support systems and grants across GB, including BPS rules and rural grants. An outline of post-Brexit farm policy.
  • Farming costs including forage, feed, fertiliser, and pesticides.
  • Overhead cost data covering machinery, labour, contracting, building costs, and rents.
  • An overview of taxation and the legislation affecting agriculture.
  • A vast array of general reference information for the farming sector.

For nearly 50 years, The Agricultural Budgeting and Costing Book has been providing industry leading farm management and costings information to agricultural advisors across the UK and is the leading publication of its kind in the industry. The 94th Edition, or an annual subscription (2 editions) can be ordered via The Andersons Centre website – https://theandersonscentre.co.uk/shop/

Ends.

Notes:

No. of Words: 619

Author: Michael Haverty

Date: 16th May 2022

This news release has been sent from The Andersons Centre, 3rd Floor, The Tower, Pera Office Park, Melton Mowbray, Leicestershire LE13 0PB. For further information please contact Michael Haverty on +44 (0)7900 907 902.