Spot Light on Harvest Progress & Autumn Plantings

Harvest Progress

Normally at this time of year, the lion’s share of harvest is completed.  But with intermittent rain preventing significant progress in many parts and a considerable proportion of crops being spring sown, there is still ample to do.  Rather inevitably, it has been uneven, more so than usual.  In parts of the South and East some might have all-but finished.  Further into the Midlands, West, North and Scotland, it is only just starting.

Growers on lighter soils appear to have experienced greater yield reductions, suggesting the spring drought was more damaging to crops than the winter rains were; at least for those that made it through to harvest at all.  On the whole, many growers have a higher winter wheat yield than they thought likely back in February before the rain stopped, but many fields are patchy.  Most still agree yields will not reach the 5-year average.

Oilseed rape has been overwhelmingly poor and most opinions canvassed suggest a national yield of perhaps 2.5t per Ha will be as good as it gets.  The official yield will be affected by how much land farmers decided to re-classify as fallow or was re-drilled in the spring.  Plenty of farms drilled 120% of their farm this year; their failed OSR area eventually harvesting a crop of beans or spring oats.

Autumn Drilling

So, what are growers going to do this Autumn?  Most people are expecting a serious decline in the OSR cropped area.  However, the harvested area of OSR might actually increase next year.  We estimate a 25% write-off from this year’s OSR crop that did not reach harvest.  If next year, the percentage written off falls to a more typical 7%, then a decline in planted area from our estimate of 495,000 hectares in 2019 to a possible 410,000 this autumn would still leave more harvested winter OSR.

 

Simply replacing OSR with another break crop may not solve the problem.  Whilst crops such as pulses provide a break from cereals and offer soil and following-crop benefits, they might not demonstrate such high potential gross margins and could also become squashed in the rotation, affecting their long-term yields.

Some farmers are increasingly collaborating with nearby dairy or AD farmers to offer wholecrop rye, grass fields, as well as other cereals.  Interestingly, the harsh winter of 2012 led many cereal farmers to grow (spring) oats.  Their positive outcome meant the oat area has been higher than pre-2012 every year apart from one.  A surge in oat area this year too, might see something similar happen – depending on market demand.  Spring barley area has also been on an upwards trend with possibly a million hectares being harvested in the current year.  The gradual rise of spring crops can also be seen by a slow decline in winter cropping including wheat which, until 2008, topped 2 million hectares on a few occasions, and now averages 1.8 million.

If you are interested in getting a concise and unbiased commentary on the key issues affecting business performance in the UK agri-food industry, click on the link below for a 90-day free trial of Andersons’ AgriBrief Bulletin:

https://agribrief.co.uk/

Consultants’ Contact Details

Below are the contact details of our Farm Business Consultancy team;

  • Joe Scarratt – 07956 870263 jscarratt@theandersonscentre.co.uk 
  • George Cook – 07836 707360 gcook@theandersonscentre.co.uk
  • Oliver Hall – 07815 881094 ohall@theandersonscentre.co.uk
  • Tony Evans – 07970 731643 tevans@theandersonscentre.co.uk
  • Kerry Jerman (Wales) – 07990 063803 kjerman@theandersonscentre.co.uk
  • David Thomas (Wales) – 07850 224524 dthomas@theandersonscentre.co.uk
  • Edward Calcott – 07827 317672 ecalcott@theandersonscentre.co.uk
  • Jonathan Hughes – 07892 689544 jhughes@theandersonscentre.co.uk

If your organisation deals with the farming sector or you are interested in obtaining further insights on the key trends influencing the economic performance of UK agriculture, please contact a member of our Research Team;

  • Richard King – 07977 191427 rking@theandersonscentre.co.uk
  • Michael Haverty – 07900 907902 mhaverty@theandersonscentre.co.uk
  • Graham Redman – 07968 762390 gredman@theandersonscentre.co.uk
  • Caroline Ingamellscingamells@theandersonscentre.co.uk

 

 

Spot Light on BPS Transition and Autumn Lettings

Farmers and their advisors in England need to be particularly careful this autumn, as the way agreements are structured could have implications for who gets support (BPS) for the whole Agricultural Transition period through to 2027.

Agricultural Transition

We do know direct support (the BPS) will be phased-out from 2021 to 2027 (Agricultural Transition) and replaced by the Environmental Land Management (ELM) scheme, together with other schemes to help increase farm productivity, animal welfare and support for Producer Organisations.  There has been quite a lot of lobbying to delay the start of the Transition by one year, but Defra appear to be resisting this.  This will mean in 2021 we expect to have a direct payment scheme similar to the current BPS (without Greening) but payments will be reduced as follows;

Currently we only know the deductions for 2021.  It is hoped the consultation later in the year may shed some light on future % reductions.  Our view is that as the ELM scheme is not due to be launched until late 2024, the deductions in the first few years could be relatively low.  These could then increase more sharply as funds are redirected/required for the ELM scheme later in the Agricultural Transition.

De-Linking

This is a mechanism that breaks the link between receiving support and occupying agricultural land.  Once support is de-linked a farmer could double the size of their holding or stop farming completely – they would still get the same future stream of income tapering-off to 2027.  It effectively gives the claiming business a right to the future support.  The key point is that it will be based on what the claimant received in a ‘reference year’ (or years).  The reference year is not yet known and this will determine who gets the support through to 2027.  De-linking is an option in the Ag Bill, but the indications are that it will happen (Ministers seem keen).  However, the legislation states that it cannot happen before the 2022 claim year.  So we are expecting the 2021 scheme structure to be similar (or the same) as the 2020 scheme year with entitlements, which presumably can be traded.  

The closer the reference year is to de-linking the less ‘problems’ there will be due to changes in business structures or land occupation.  It would therefore seem logical for it to be 2021, but earlier dates or even a range of dates is possible.  There is likely to be force majeure and business change provisions similar to those which operated when the Basic Payment was introduced – but details of these are also unknown.  Any Tenancy Agreements written pre-2019 are unlikely to have any clauses in them which deal with de-linked payments.  If a Tenant has made a BPS claim which included the reference year, the right to the future income stream could become vested in the Tenant.  If the Agreement is brought to an end during the Agricultural Transition the Tenant could still have the right to receive the de-linked income stream and the land may not have any ‘support’ for the incoming Tenant.  Of course the incoming Tenant may have some ‘support’ to ‘bring’ with him, and so we can already see the problems with what rent level can be asked or what price Tenant’s will be prepared to pay – every situation could be different.

New Agreements this autumn will need to ensure they contain clauses to try and protect the Landlord’s position in case 2021 is the reference year, so that he/she can offer the right to receive future support along with the land for incoming Tenants.  If 2019 or 2020 turns out to be the reference year, then it may already be too late.

Lump-Sum

This must not be confused or ‘bundled-up’ with de-linking.  It is the idea that the future stream of income from de-linked payments is rolled-up into one single payment.  But it is separate from de-linking and is only an option in the Agriculture Bill; it may not be introduced in 2022, it may not be available to everyone, it may not even be introduced at all.  More information is (again) expected in the upcoming consultation.  The idea is that it could be used as a retirement sum or allows for investments to be made.  If it is introduced, it may not be available to everyone at the same time, but there might be an age threshold for example.  For those Agreements which come to an end within the Agricultural Transition, the Tenant could potentially leave with a de-linked lump-sum.

Environmental Land Management

Once the BPS has been phased out, the main support for farmers will be the Environmental Land Management (ELM) scheme. But in a Landlord and Tenant situation or Contract Farming Agreement how is it going to be dealt with? This looks like an area where there will have to be a lot of ‘sorting out’ over the next 5-10 years as a new normal gets established.  It certainly does not look like it is going to be as simple as the BPS.

For AHAs and existing long-term (whole farm?) FBTs it will likely be down to the tenant to decide whether to enter or not.  But the ability to pick up ELM payments will presumably be part of the earnings potential of the holding and would therefore come into consideration of the rent.  This might become a contentious area in rent reviews in the future – what if the Tenant had entered into a low-level, low income, ELM agreement, but the Landlord thought that he/she should have gone for a higher-paying one and be paying more rent?

For new/short term FBTs, we might well see situations where the Landlord wants to be the claimant, both so that they are in control of what happens and so they are guaranteed the income.  Of course, it depends on the detailed ELM rules – will Landlords even be able to apply if the land is let out?   The land would therefore be let ‘naked’ without any support and the rent would reflect this.

Any tenancy agreement would have to bind the Tenant to adhere to the ELM requirements – as has been done in the past for ES / CS agreements etc.  But this is not always the best approach, as the Tenant (the actual land manager) has not got any financial stake in the ELM agreement.  This might become more of an issue if the payment methods become more sophisticated over time – e.g. payment by results, reverse auctions etc.  Perhaps some revenue-sharing model would be the answer – but with the Landlord remaining the agreement holder?

There are also Contract Farming Agreements (CFAs) to consider.  There have been differing opinions in the past on whether BPS has been included in the ‘pot’ or not.  Often agri-environmental payments have been kept out of agreements and remain with the farmer (land provider).  Will ELM payments go in the pot or not?  Perhaps not – which might have an effect on first charges and divisible surpluses in some cases.  But where the ELM scheme requires a sophisticated on-the-ground management, it might have to go into the agreement to get buy-in from the contractor.

Unfortunately, we are posing more questions than answers, but hopefully this article highlights key areas which will need to be kept abreast of over the coming months, especially ahead of autumn lettings.  The consultation in the autumn should help to answer a few questions as we adjust to the new arrangements over the next 5-10 years.

If you are interested in getting a concise and unbiased commentary on the key issues affecting business performance in the UK agri-food industry, click on the link below for a 90-day free trial of Andersons’ AgriBrief Bulletin:

https://agribrief.co.uk/

Consultants’ Contact Details

Below are the contact details of our Farm Business Consultancy team;

  • Joe Scarratt – 07956 870263 jscarratt@theandersonscentre.co.uk 
  • George Cook – 07836 707360 gcook@theandersonscentre.co.uk
  • Oliver Hall – 07815 881094 ohall@theandersonscentre.co.uk
  • Tony Evans – 07970 731643 tevans@theandersonscentre.co.uk
  • Kerry Jerman (Wales) – 07990 063803 kjerman@theandersonscentre.co.uk
  • David Thomas (Wales) – 07850 224524 dthomas@theandersonscentre.co.uk
  • Edward Calcott – 07827 317672 ecalcott@theandersonscentre.co.uk
  • Jonathan Hughes – 07892 689544 jhughes@theandersonscentre.co.uk

If your organisation deals with the farming sector or you are interested in obtaining further insights on the key trends influencing the economic performance of UK agriculture, please contact a member of our Research Team;

  • Richard King – 07977 191427 rking@theandersonscentre.co.uk
  • Michael Haverty – 07900 907902 mhaverty@theandersonscentre.co.uk
  • Graham Redman – 07968 762390 gredman@theandersonscentre.co.uk
  • Caroline Ingamellscingamells@theandersonscentre.co.uk

 

 

Spot Light on Brexit & Trade Negotiations

Brexit

Whilst multiple rounds of negotiations have taken place, talks with the EU have been stalling due to impasses on several key issues.  These include governance (role of the European Court of Justice), ‘level playing-field’ issues, fisheries, criminal and judicial cooperation as well as the implementation of the Irish Protocol.  On 15th June, the Prime Minister and the EU Commission President, Ursula von der Leyen, held talks where they agreed to intensify negotiations (to be held on a weekly rather than fortnightly basis) in a bid to secure an agreement.  Most analysts now believe that it will be October before a deal is likely to emerge. Due to the time required for EU members to ratify any deal, negotiations cannot really continue right up to the December deadline.

Transition Period Extension

The deadline for extending the Transition Period beyond 31st December this year has passed with a whimper rather than a bang.  The UK Government made it clear it would not ask for an extension before the 1st July cut-off.  The EU saw little point in asking for one from its side as it simply provides an opportunity for the UK to say ‘no’.

Other Trade Deals

The Department for International Trade (DIT) is also conducting talks on Free-Trade Agreements (FTAs) with a number of other countries;

  • talks with the US have already started. There is little substantive to report as yet. The key issue in terms of agri-food is threat posed by permitting imports from the US which do not meet the standards that British farmers currently adhere to.
  • negotiations with Japan have commenced and, given that Japan recently concluded an FTA with the EU (which at the time included the UK), it is anticipated that talks should be wrapped up quickly.  The UK already exports significant volumes of wheat and barley to Japan.  Export opportunities also exist for products such as whisky.
  • the UK has formally announced its objectives for the upcoming trade negotiations with Australia and New Zealand.  Agriculture is likely to feature prominently, especially given the historical trading relationships which existed before the UK joined the EEC. Increased access for beef, lamb, dairy and horticultural products will be the key asks from Australia and New Zealand.
  • the UK has reaffirmed its interest in becoming a member of the Comprehensive and Progressive Agreement Trans-Pacific Partnership (CPTPP) which is one of the world’s largest free trade areas, accounting for 13% of global GDP in 2018.  The CPTPP includes Japan, Australia and New Zealand and deals with these countries are seen as a step towards joining this larger trade bloc, which also includes Canada, Chile, Malaysia, Mexico, Singapore and Vietnam.
  • with the UK leaving the EU, it is seeking to replace the FTAs which the EU had agreed with other countries whilst the UK was still a Member State.  To this end, it has been pursuing Continuity Agreements.  To date, agreements have been concluded with approximately 50 countries, including Switzerland, South Korea, Chile and South Africa.  Negotiations are ongoing with 16 others, including Canada, Mexico and the Ukraine.  Such rollover agreements are anticipated to have a limited impact on agri-food as they are largely seeking to replace existing FTAs.

Whilst pursuing trade deals around the world is a crucial aspect of the UK’s independent trade policy, one must not lose sight of the fact that exports to the EU (£300 billion) accounts for 43% of total UK exports.  Therefore, it is hoped that securing a comprehensive FTA with the EU remains the priority of the UK Government.

If you are interested in getting a concise and unbiased commentary on the key issues affecting business performance in the UK agri-food industry, click on the link below for a 90-day free trial of Andersons’ AgriBrief Bulletin:

https://agribrief.co.uk/.

Consultants’ Contact Details

Below are the contact details of our Farm Business Consultancy team;

  • Joe Scarratt – 07956 870263 jscarratt@theandersonscentre.co.uk 
  • George Cook – 07836 707360 gcook@theandersonscentre.co.uk
  • Oliver Hall – 07815 881094 ohall@theandersonscentre.co.uk
  • Tony Evans – 07970 731643 tevans@theandersonscentre.co.uk
  • David Thomas (Wales) – 07850 224524 dthomas@theandersonscentre.co.uk
  • Edward Calcott – 07827 317672 ecalcott@theandersonscentre.co.uk
  • Jonathan Hughes – 07892 689544 jhughes@theandersonscentre.co.uk

If your organisation deals with the farming sector or you are interested in obtaining further insights on the key trends influencing the economic performance of UK agriculture, please contact a member of our Research Team;

  • Richard King – 07977 191427 rking@theandersonscentre.co.uk
  • Michael Haverty – 07900 907902 mhaverty@theandersonscentre.co.uk
  • Graham Redman – 07968 762390 gredman@theandersonscentre.co.uk
  • Caroline Ingamellscingamells@theandersonscentre.co.uk

 

 

Spot Light on Farm Incomes

The profit of UK farming recovered in 2019 after the drought-affected 2018 year.  The latest estimates for Total Income from Farming (TIFF) released by Defra show an increase of 6% in real terms, leaving profit for the industry at £5,278m.

TIFF is the total profit from all UK farming businesses for the calendar year.  It shows the return to all entrepreneurs for their management, labour and capital invested.  The main reason for the rise in profitability was an increase in arable output.  The overall sales of arable crops rose by 6%, with wheat leading the way with a 16% increase in output value.  This was largely a ‘bounce-back’ from the lows of 2018. Overall livestock output was close to year-earlier levels, as were costs.  The chart shows the historic TIFF figures, plus our forecast for the current 2020 year and 2021.

Whilst we are only partway through the 2020 year it seems highly likely that the lack of autumn plantings will affect output from harvest 2020.  There are also likely to be some Covid-19 effects such as reduced beef prices and dairy farm incomes affected for certain producers.  Whilst this will be offset by lower costs, we currently forecast a decline in farm profitability for the year of 10%.  Towards the end of the year there may be market disruption as the Transition Period comes to an end – depending on whether a trade deal has been concluded with the EU or not.  Some of these trade effects may well linger into 2021 which is why there is a (tentative) forecast for another decline.

Productivity

Alongside the TIFF figures, Defra also published estimates of Total Factor Productivity (TFP) for 2019.  This measures how well inputs are converted into outputs and thus gives an indication of the efficiency and competitiveness of the farming industry.  It is one of the measures that Defra looks at closely, as it tries to improve the performance of UK agriculture.  The figures for 2019 show a significant uptick with TFP increasing by 4% between 2018 – 2019.  This was largely caused by an increase in the volume of outputs (up 3.8%) with a small decline in the amount of inputs used (-0.2%).
Although this is encouraging, any one year’s figures need to be viewed with some caution – the series tends to fluctuate on an annual basis, and it is the trend over a longer period that is more important.  UK agriculture shows an improvement in productivity, but the rate of increase is slow.  Since the figures began in 1973 the annual average increase is around 1%.  From 2000 to 2019 is has been at a lower level of 0.7% per year. 

Consultants’ Contact Details

Below are the contact details of our Farm Business Consultancy team;

  • Joe Scarratt – 07956 870263 jscarratt@theandersonscentre.co.uk
  • George Cook – 07836 707360 gcook@theandersonscentre.co.uk
  • Oliver Hall – 07815 881094 ohall@theandersonscentre.co.uk
  • Tony Evans – 07970 731643 tevans@theandersonscentre.co.uk
  • David Thomas (Wales) – 07850 224524 dthomas@theandersonscentre.co.uk
  • Edward Calcott – 07827 317672 ecalcott@theandersonscentre.co.uk
  • Jonathan Hughes – 07892 689544 jhughes@theandersonscentre.co.uk

If your organisation deals with the farming sector or you are interested in obtaining further insights on the key trends influencing the economic performance of UK agriculture, please contact a member of our Research Team;

  • Richard King – 07977 191427 rking@theandersonscentre.co.uk
  • Michael Haverty – 07900 907902 mhaverty@theandersonscentre.co.uk
  • Graham Redman – 07968 762390 gredman@theandersonscentre.co.uk
  • Caroline Ingamells – cingamells@theandersonscentre.co.uk

 

 

Farming in Focus InBrief – May 2020

  • Andersons’ consultants are continuing to support their clients during the pandemic. If you require any support, please contact them, their details can be found at the end of this Briefing.
  • England has joined Wales in extending the 2020 BPS application deadline to 15th June.  However, in both countries, land must be at the claimant’s disposal on 15th May and the entitlement transfer deadline is also 15th May.  The period for amending claims without penalty moves to 30th June with an absolute deadline of final submission of applications and claims (but with penalties) of the 10th July.
  • In England, the annual revenue claim deadline date for Environmental Stewardship and Countryside Stewardship has also been extended by a month to 15th June.  However, new Countryside Stewardship applications for 1st January 2021 start date remain 1st May and 31st July for Higher and Mid-Tier respectively.
  • The next round of the Woodland Carbon Guarantee Scheme will open from 8th – 19th June in England.  This scheme allows those planting woodlands to sell carbon credits to the Government at a guaranteed price up to 2055.
  • The expression of interest window for Glastir Woodland Creation is now open and will close on 12th June.  Also in Wales, Farming Connect will be opening the next application round for accredited courses on 9th May, this will close on 26th June. The Welsh Government has also announced, the claim deadline for the Glastir Small Grants – Landscape and Pollinators 2019, has been extended until 30th September 2020. 
  • The Government has stated that there will be no extension to the end of the Brexit Transition Period beyond 31st December 2020.  Speaking on the 16th April a Government spokesman stated “we will not ask to extend the Transition.  And, if the EU asks, we will say no.  Extending the Transition would simply prolong the negotiations, prolong business uncertainty, and delay the moment of control of our borders.”  The negotiations themselves restarted on the 15th April by videoconference.  There is still wide divergence between the sides as the deadline for extending the Transition Period (30th June) looms.
  • The Government has launched a new website, ‘Pick for Britain’ aimed at recruiting British workers for harvesting and processing roles, mainly in the horticulture sector. The aim is to encourage workers on furlough, students and others to fill the estimated 80,000 seasonal fruit and veg vacancies through the summer months.  The site can be found at – https://pickforbritain.org.uk/.  Although there has been significant initial interest from potential workers, this seems not to have yet translated into large numbers of people on farm.  The expectations of employees and employers appear to be mismatched.  Workers are often discouraged by the location of jobs, conditions and pay.  Employers seem dubious about the skills and motivation of UK staff and would prefer their traditional East-European workers. 
  • The Government has produced its key findings from the review of the AHDB.  Its response suggests the levy board’s activities should be structured around ‘market development’ and ‘improving farm performance’.  Levy payers should also be allowed to vote on a 5 year plan for each sector.
  • The Welsh Government has published draft legislation that would make the whole country a Nitrate Vulnerable Zone (NVZ).  This would impose new restrictions on the storage and spreading of slurry, manure and nitrogen fertiliser, including closed periods for applications.
  • Sales of fungicides containing the active ingredient epoxiconazole will end on 31st October 2020.  Product already on farm can continue to be used until 31st October 2021.

Consultants’ Contact Details

  • Joe Scarratt – 07956 870263 jscarratt@theandersonscentre.co.uk
  • George Cook – 07836 707360 gcook@theandersonscentre.co.uk
  • Oliver Hall – 07815 881094 ohall@theandersonscentre.co.uk
  • Tony Evans – 07970 731643 tevans@theandersonscentre.co.uk
  • David Thomas (Wales) – 07850 224524 dthomas@theandersonscentre.co.uk
  • Edward Calcott – 07827 317672 ecalcott@theandersonscentre.co.uk
  • Jonathan Hughes – 07892 689544 jhughes@theandersonscentre.co.uk
  • Jake Armstrong-Frost – 07931 610398 jarmstrongfrost@theandersonscentre.co.uk

Impact of the Covid Crisis on Livestock Farming

The pandemic has illustrated that ‘Black Swan’ events do exist.  It highlights the importance of being prepared for events that have a small chance of occurring but a large effect when they do happen – they are more abundant than most people accept.  The progress of the disease in the UK has now slowed and thoughts are turning to how to loosen some of the lockdown rules in order that things can begin to return to ‘normal’ – especially getting the economy restarted.

The world has a lot to learn about how it has, and has not, coped over the last few months and continues to adapt now.  Some supply chains have demonstrated remarkable resilience and adaptability, others less so.  What would we do differently next time?  Early reports suggest congestion in Beijing now exceeds that of the same time last year.  Have we learnt much?  The UK food and farming industry needs to repair, mend and raise its resilience.  Farms, it transpires have greater resilience than most other businesses, but food supply chains are more fragile it seems.

Impact on the Dairy Sector

Covid-19 has seen some producers having to discard their milk as increased demand from the retail sector has not made up for volumes usually consumed in the food service sector.  But you cannot turn a dairy cow ‘off and on’ and production is expected to continue to rise as we head towards the spring peak.  According to the AHDB, GB average daily milk deliveries to processors for the week ending 11th April, were up 1.4% on the previous week’s average.  This is, however, 2.3% below the average deliveries for the same week in 2019, but remains in-line with the AHDB’s forecast for this year. Some farmers will be trying to dry cows off early, but this will be a small adjustment nationally.
These figures include an estimated 800,000-900,000 litres of milk which was not collected during the week ending 11th April and had to be thrown away by producers.  This volume is about 0.4% of the total milk delivered for the week.  Since then, according to the AHDB, there have been no further reports of milk not being collected.  However, in some cases, only the fat content has been utilised, with the skim reportedly ending up in anaerobic digesters.  As a result of the over-supply, producers have seen some processors introduce new pricing measures.  This has led to calls for a specific support scheme for the sector.
At the beginning of April, all Muller suppliers were asked to reduce their supply by 3% until the end of May.  It is unclear what action will be taken if a producer fails to cooperate.  Perhaps the most notable actions have been those of Medina and Freshways – both of which have a significant share of their business in the food service sector.  Suppliers to Medina will see their milk price cut by 5ppl as from the 1st May after the processor announced a further 3ppl drop, after having already said the price would fall by 2ppl.  This will see its standard litre down to 20.75ppl.  In addition, payments will also be deferred by 21 days.
Freshways has back-dated its price cut by 13 days and is also extending its payment terms.  Freshways has restricted its A pricing to 60% of a producer’s current A quota, with milk delivered in March being paid 50% at the end of April and 50% by 15th May.  On top of this, the processor is reported to have actually increased its prices to supply Nursing Homes, something which has not gone un-noticed by the national press or some of its customers in the food service, who are looking to distance themselves from the processor’s negative publicity.
Not all processors are cutting their prices though, some of the supermarket aligned contracts have seen rises. For example, Belton Farm (cheese), Barbers (cheese) and First Milk (cheese) have all announced they will retain their current price until at least June.  Before it announced the 3% supply reduction, Muller (see earlier) told suppliers they would receive a 1ppl rise from May 1st, this was rather surprising at the time and will probably be short-lived.
It is estimated around 550 farmers, predominantly those supplying Freshways and Medina are under serious financial pressure.  The RABDF has launched a survey and is asking all those affected by the Covid-19 milk crisis to submit an online daily account of their losses so that it can supply Defra with ‘accurate and credible supportive data’.  The survey can be accessed at www.rabdf.co.uk/survey. Further comments are provided below on what support is available and what industry is calling for.

Meat Sector Impacts

The beef sector has experienced price declines recently, primarily due to the loss of the food services trade.  In the UK, about one-third of beef product sales in monetary terms are to the food service sector.  Such sales consist of the highest value products (e.g. fillet steaks).  With the implosion of demand, this has a much more pronounced impact on carcase value, which some have estimated to have declined by around £200 per head (or 15-20%) at the processing level.  Increases in retail sales which have taken place are primarily for mince and burgers, which are of lower value, thus only partially compensating for steak sales losses.  At the farm level, price declines have remained relatively small with GB steer prices on 18th April (324 ppkg) approximately 4% lower than prices on 21st March (336 ppkg).  If the Covid crisis continues for a sustained period, further farmgate declines are likely.

The lamb trade has also experienced issues, although the Easter holiday and the recent commencement of Ramadan have mitigated the problem.  That said, major concerns remain due to the closure of the food services sector in continental Europe, most notably France.  As more UK lamb comes onto the market later in the year, any oversupply at that point will have a much more pronounced effect on prices.  If restaurants do open, they are unlikely to be operating at capacity, due to social distancing measures.  As most lamb is eaten outside of the home, this will present difficulties.

Similar trends have taken place in the pig meat sector with convenience products (e.g. bacon and sausages) seeing sales increase significantly but demand for roasting cuts has decreased markedly.  There are additional complexities at play more globally in pig meat.  Processing capacity in the US has been hit by coronavirus cases amongst workers in meat plants, meaning that production lines have shut down.  Whilst Europe has not witnessed processing disruption on the scale of the US, food services demand has lowered, meaning price declines have resulted.  Imports of pig products have slowed, meaning a relatively buoyant closed market for the UK producer in the short-term.  Some items remain scarce in the shops.

Much of what will happen in the pig meat sector will be governed by the recovery in the Chinese market which has been hit by both the Covid crisis and African Swine Fever (ASF).  China has started to re-open again after a lockdown in some regions, and some analysts have predicted that Chinese demand will be back to 90% of normal levels by the end of the year.  On the supply-side, it has had to deal with ASF which has almost halved its breeding sow herd and is only in the early stages of recovery.  Short-term, the deficit of pork in China should help European prices recover from Covid.  It could also provide some support in other protein categories but will not compensate for the losses in carcase value seen in beef, nor the potential oversupply in lamb as the UK production season progresses.

Support

In reaction to the Covid crisis, various forms of support have been instigated across Europe.  Some mechanisms have been aimed at the wider economy, whilst more recently, specific measures to support the farming sector have been announced by the EU-27.

Looking at the economy generally, whilst the UK has opted for a furlough system, this scheme is of limited use to the food sector as it necessitates workers being off work for that period.  This has created difficulties for processors who have to continue operations whilst also coping with price declines.  The wage subsidy systems in place elsewhere in countries such as the Netherlands, Ireland and New Zealand, arguably offer more support to sectors such as agri-food where turnover declines are projected, but production must continue.  In the Netherlands for example, if a 25% decrease in turnover is projected, the State will subsidise approximately 22.5% of wages for a 12-week period.

As regards the farming sector, the EU-27 recently announced a range of measures to support agricultural commodities, including the re-opening of Private Storage Aid (PSA) for several commodities including beef (25,000 tonnes) and lamb (36,000 tonnes).  Pig meat will not be supported by this scheme. For dairy this will see the opening of PSA for SMP, butter and all cheeses that are suitable for storage.  The volume allocations for each country have not been set yet.

PSA will allow the temporary withdrawal of products from the market for a minimum of 2 to 3 months, and a maximum period of 5 to 6 months.  It has been initiated to reduce supply and rebalance the market.  There are shortcomings though.  In beef, storing product means freezing it, thus value deterioration versus fresh.  Also, when the storage period ends, that product will need to be released onto the market thus increasing supply and lowering prices at that point.  The EU plans to formally agree the scheme by the end of April.  Previously, the EU also announced plans to offer increased flexibility to CAP and Rural Development funding, including larger BPS advances to farmers.

In the UK, there has not been any announcement of support specifically directed towards the agri-food sector.  Whilst many of the more generic support measures (e.g. Coronavirus Business Loan Interruption Scheme (CBILS)) will offer some assistance, there have been many industry calls for targeted support. The response from the Government so far has been to relax some elements of competition law to make it easier for processors (e.g. in dairying) to be able to come together and work out how to temporarily reduce production to create space in the market. For the dairy sector, the Government has asked the AHDB and Dairy UK to co-ordinate a proposal.  But the industry is claiming this is too late, particularly for those 550 dairy farmers who need urgent support now to help with their cashflow.  A letter has been sent to Defra calling for a targeted grant scheme similar to those being offered to the retail, hospitality and leisure sectors.

Given the extent of the price declines and impact on turnover have affected many agricultural sectors, it is evident that more targeted support from Government is required.  Otherwise, many businesses will come under severe pressure in the weeks ahead, with many likely to cease trading.  If this happens, it will take the sector much longer to recover.

Footnote:

Image source: Imperial College London

Source: Imperial College London

Spot Light on: Covid-19 Impacts on Farming

There has, of course, been only one topic that has dominated everything else over the past few weeks.  This article provides some initial thoughts on how the pandemic might affect agriculture and the wider economy. 

Short Term

  • The Consumer:  Supermarket shelf-stripping has been a consequence of both panic buying and a requirement to replace the food usually purchased via food service, restaurants, coffee shops etc.  Consequently, the demand from retailers for most goods including milling wheat for bread and biscuits has rocketed; the broiler kill rate has gone up sharply and the demand for other meats has also increased.  Total food requirements should not change overall, but it is taking a while for these supply lines to re-route to where the food is needed.
    However, eating habits in the home differ from the restaurant or food service.  With no eating out, consumption of expensive cuts of beef and lamb and ‘top-end’ cheeses such as Stilton have fallen sharply.  We would expect more demand for chicken and lower priced pig and beef meat for burgers and sausage style foods. 
  • Prices: Commodity prices move when demand and supply are not aligned.  Expect some volatility.  Overall trends may take some time to establish according to how the supply chain manages the flow of goods and how the consumer changes their habits. However, an added challenge for the UK agri-food sector is the near disappearance of the food services segment due to the lockdown. This has meant that demand for some products (e.g. steak meat) has imploded and whilst retail demand has increased for some products (e.g. mince), this does not adequately compensate for the loss of value in steak meat. As a result, beef prices have been falling. Similar trends are also affecting the dairy sector where the loss of food services and catering trade is having a major negative impact on spot prices, with prices as low as 15ppl reported. 

Medium Term

  • The Farmer:  Farmers are relatively good ‘self-isolators’ already.  Most should be able to ‘carry on farming’ with the majority of farms operating as usual as long as supplies get through.  However, staff absences could lead to livestock welfare issues and diversified business’ dependent on general public foot fall could be hard hit.
  • Farm Workers:  Access to casual migrant labour is going to become a big issue if travel bans remain in place over the summer.  Appeals have started to go out for British workers to work on farms, both locally and nationally. 
  • Supply Chain:  Many food processing operations are labour intensive and cannot be done at home.  The flow of cash has also already slowed, with many firms hoarding cash and not paying each other.  Expenditures that are not short-term-critical are also being postponed.  Profitable businesses unable to turn their profits into cash will struggle in coming weeks and months.  Some supermarkets have committed to pay small manufacturers more quickly than usual.
  • Trade:  Cross-border restrictions do not apply to goods.  However, some supply-chain glitches are already emerging, people going into self-isolation, shipping containers not where they are supposed to be etc.  Whilst bulk imports are still available, smaller items such as minerals and medicines are showing signs of delays.

Long Term

  • Policy:  The severe shortages of food availability in the shops, and the images of desperate panic-buying shoppers might encourage Defra, and Government more widely, to rethink its policies on food security.  Might Defra consider that more home-produced goods could be a strategic benefit?
  • Supply Chains:  Following the horsemeat scandal of 2013, some food supply chains decided to shorten their linkages, sourcing from fewer and more local outlets.  Perhaps this will do the same. 
  • Wider Economy:  The Bank of England has cut the interest rate down to an all-time low of 0.1%.  It will also embark on another round of quantitative easing.  These measures, along with the rising Government debt, and a flight to the ‘safe haven’ of the Dollar have all seen the Pound weaken.  In the short-term, weak Sterling is good for farming.  Longer-term, it tends to be inflationary across the whole economy.  Industries will also look towards Government to support the rebuilding of the UK economy when this calms down.  This could be a huge cost, and hinder investment.

Consultants’ Contact Details

For further support in determining what Covid-19 could mean for your farm business, please contact a member of our Farm Business Consultancy team;

  • Joe Scarratt – 07956 870263 jscarratt@theandersonscentre.co.uk
  • George Cook – 07836 707360 gcook@theandersonscentre.co.uk
  • Oliver Hall – 07815 881094 ohall@theandersonscentre.co.uk
  • Tony Evans – 07970 731643 tevans@theandersonscentre.co.uk
  • David Thomas (Wales) – 07850 224524 dthomas@theandersonscentre.co.uk
  • Edward Calcott – 07827 317672 ecalcott@theandersonscentre.co.uk
  • Jonathan Hughes – 07892 689544 jhughes@theandersonscentre.co.uk

If your organisation deals with the farming sector or you are interested in obtaining further insights on what the Covid-19 outbreak could mean for UK agriculture generally, please contact a member of our Research Team;

  • Richard King – 07977 191427 rking@theandersonscentre.co.uk
  • Michael Haverty – 07900 907902 mhaverty@theandersonscentre.co.uk
  • Graham Redman – 07968 762390 gredman@theandersonscentre.co.uk
  • Caroline Ingamells – cingamells@theandersonscentre.co.uk

 

 

A Monthly Briefing for UK Farmers – April 2020

  • During the ‘lockdown’ measures introduced by the Government to help combat COVID- 19 Andersons’ consultants are continuing to work and assist their clients as normal whilst following Government guidelines on social distancing.  Consultants are working remotely, if you wish to contact one of them their details can be found at the end of this Briefing.
  • The Government has introduced a number of initiatives to support businesses as a result of COVID-19, these include;
    • Business Interruption Loan Scheme to provide loans of up to £5m, with no interest payable for the first 12 months.  Applications are made through the banks.
    • One-off cash grant of £10,000 to all businesses qualifying for the Small Business Rate Relief.  This will be made automatic, through Local Authorities.  Useful for farming enterprises which have diversified into the leisure sector and pay business rate
    • The Coronavirus Job Retention Scheme is open to any employer and covers the wage cost of any worker ‘furloughed’ – sent home due to there being no work for them.  Up to 80% of their wages are paid by the Government, up to a monthly limit of £2,500.
    • The self-employed scheme to pay 80% of the average monthly trading profits over the last 3 years.  It is only open to those with a trading profit of less than £50,000 per year.  Funds will be in one single payment in June covering the three months of the scheme (March-May). 
    • VAT payments due between 20th March and 30th June are deferred.  Businesses have until the end of the 2020/21 tax year to pay.  The return still needs to be made though.
    • Self-Assessment Tax payments due in July will be deferred until 31st January 2021.

Please call one of our consultants if you wish to discuss any of the above initiatives or require a farm budget to approach your bank.  Contact details for consultants can be found at the end of this Briefing.

  • The 2020 Basic Payment Scheme claim window is now open. In England the deadline for submissions without penalties remains 15th May 2020 (there is strong pressure mounting to have this extended by a month).  Wales has recently announced it has extended the deadline for SAFs to be submitted by one month until 15th June 2020.  Consequently the entitlement transfer deadline has also been extended in Wales from 30th April to 15th May 2020.  Entitlement transfers in England remain 15th May deadline.
  • England, (Scotland) and Wales have all now confirmed that the Crop Diversification rule (two and three crop rule) will not apply for the BPS 2020.  Ecological Focus Area (EFA) requirements remain.
  • All 2020 BPS payments will be made in Sterling, there will not be an option to be paid in Euros this year.  The exchange rate to convert Euro denominated entitlements to Sterling is expected to be the same rate as in 2019; €1=0.89092.  There seems a strong chance that the 2020 payment will also set the ‘start point’ for payments during the Agricultural Transition.
  • In England, the Countryside Productivity Small Grants Scheme (CPSG) Round 2 claim deadline has been extended to mid-night on 31st July 2020.  Due to COVID-19 issues, suppliers are finding it difficult to deliver equipment by the original 31st May deadline.
  • In Wales, the BPS 2019 Support Scheme and the Glastir 2019 Support scheme have re-opened.  These are available to those who have not received either a full payment under the 2019 BPS and/or the 2019 Glastir Entry or Advance, or a payment under the previous Support Schemes.  Eligible claimants will receive 70% of their estimated BPS payment or 50% of their expected Glastir payment.  These are opt-in schemes and applications must be submitted by 17th April 2020 via RPWales online.  A reminder that the Farm Business Grant in Wales closes on 10th April 2020.

Consultants’ Contact Details

  • Joe Scarratt – 07956 870263 jscarratt@theandersonscentre.co.uk
  • George Cook – 07836 707360 gcook@theandersonscentre.co.uk
  • Oliver Hall – 07815 881094 ohall@theandersonscentre.co.uk
  • Tony Evans – 07970 731643 tevans@theandersonscentre.co.uk
  • David Thomas (Wales) – 07850 224524 dthomas@theandersonscentre.co.uk
  • Edward Calcott – 07827 317672 ecalcott@theandersonscentre.co.uk
  • Jonathan Hughes – 07892 689544 jhughes@theandersonscentre.co.uk

Spot Light on: Future Farm Policy

Defra has published a policy statement outlining its plans for farm support in England.  This is to accompany the Agriculture Bill as it enters the Committee stage in Parliament.  A summary is given below.


The plans for the ‘Agricultural Transition’ as set out in the original Statement of September 2018 remain unchanged.  Direct payments (i.e. BPS) will be phased-out starting in the 2021 year, with 2027 being the last year any will be made.  The phasing process is still unknown with only the first year’s deductions being set (see table).  Again, these are unchanged from what has been announced previously.  A few new points emerge from the document;

  • deductions in future years will depend on the funding required for other elements of the Government’s plans.
  • delinking of payments from land will occur during the Transition.  This will happen from 2022 at the earliest.  Once this is done, there will be no link between land occupation and payments, and entitlements will disappear – there will just be a right to support for the business or individual claiming in a reference period.  There will be no requirement for that business to carry on farming.  A consultation is promised on the mechanics of delinking
  • when delinking occurs, there will be no link between land and subsidy, so the cross-compliance regime will end at this point.  Defra plans to bring in an alternative regulatory regime.
  • the option to allow the delinked payments to be capitalised into a one-off lump sum is still being considered.

As Direct Payments are phased-out, various new schemes will be introduced.  The main replacement for the BPS in England will be Environmental Land Management (ELM).  The shape of the new scheme is becoming clearer, it contains strong echoes of the previous Environmental Stewardship (ES) scheme with an entry level, broad-and-shallow, tier and higher level options.  Underpinning the scheme is the idea that land managers will only be paid for ‘public goods’.  Six key categories of public goods have been set out; clean air, clean & plentiful water, plants & wildlife, beauty heritage & engagement, hazard protection and climate change, with the latter two coming more to the fore than previous schemes.  The current plan is for ELMS to be based on a three-tier model;

  • Tier 1 – a broad (and shallow) offer available to all farms. Likely to have a menu of options and be managed online.
  • Tier 2 – this will require more intensive management from farmers. It is likely that a whole-farm plan will have to be drawn up (possibly by accredited advisors).  The focus will be on rewarding farmers for positive management such as biodiversity, flood management, carbon storage, landscape heritage etc.
  • Tier 3 – this aims to get groups of landowners to work together to deliver widespread change.

As well as annual payments there will also be capital grants available.  Payment rates are yet to be set.  However, unlike previous EU schemes they will not be limited to ‘income foregone’.  Therefore, payments may be set at more attractive levels.  Pilots will start in 2021 continuing through to 2024, the intention is for the scheme to be rolled out in full in 2025.

Aside from ELM, the policy Statement sets out other initiatives which may be available for farmers and foresters, these include; advice, a change to farm regulation, farm diversification via the UK Shared Prosperity Fund, animal health & welfare, and productivity support.

Just from this brief summary, it is hopefully clear that Defra has big plans now that it is free to set English farm policy.  Although it will not all happen overnight, there is still a large shopping list of initiatives.  There will be a question of whether Defra (and the wider Government) has the capacity to deliver them all, and deliver them well.  

A Monthly Briefing for UK Farmers – March 2020

  • The window for Countryside Stewardship (CS) applications in England opened on 11th February, for agreements which will commence on 1st January 2021.  This covers Higher Tier, Mid-Tier, Hedgerows & Boundaries Grants and the Wildlife Offers. The deadlines for each scheme are set out below.  The schemes are now being run under domestic legislation rather than EU rules, however there are no major changes, although the new UK regime should make record keeping and inspections less onerous.

  • Further information and the new manuals are available on the GOV.UK website at https://www.gov.uk/government/collections/countryside-stewardship-get-paid-for-environmental-land-management . With the BPS starting to be phased out from 2021 and the ELM not being fully rolled out until 2025 (see later article) is it worth having another look at what the CS can offer? * also includes Wildlife Offers paper application
  • The 2020 BPS application window in England is expected to open online on 12th March, with those who still wish to make a paper claim receiving their application forms shortly after this date.  The Land Use screen is already available for those who wish to check the information is correct ahead of their application. However, note that the mapping update work is expected to continue until around 10th  In Wales, the Single Application Form (SAF) 2020 was available from 2nd March, guidance and information is available online.  The deadline without penalties is the usual 15th May.  A reminder that RPWales must be notified of the transfer and lease of entitlements by 30th April (15th May in England), for them to be used for a 2020 claim.
  • The Government is consulting on what tariffs to impose once the Brexit Transition Period ends on the 31st This is key for UK farming, as it sets the level of protection the industry has from low-cost agricultural imports from the rest of the world.  For the past 40 years, UK farming has benefited from the EU Common External Tariff (CET), but after Brexit, the Government has to implement its own trade policy.  The consultation can be found at – https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/863880/Approach_to_MFN_Tariff_Policy.pdf.  
  • The Government’s plan for a post-Brexit immigration scheme look set to cause problems for farming and the wider food chain.  Free movement of labour for EU citizens will end on the 31st December 2020.  From that point, potential immigrants from the EU and the rest of the world will be treated in the same way.  There will be a points system that will require immigrants to speak English, have a job offer, and that job to pay more than £25,600 p.a. This threshold can be lowered in some cases i.e. if the job is in a ‘shortage occupation’.  It seems unlikely that any farming jobs will be included on this list.
  • George Eustice has been promoted to Secretary of State for Environment, Food and Rural Affairs.  Mr Eustice was previously a junior Minister (Minister of State) in Defra, responsible for agricultural matters.  Victoria Prentis has been appointed as the new Parliamentary Under Secretary of State for Defra and will take on Mr Eustice’s agricultural role within the department.
  • The AHDB has released its latest version of the Nutrient Management Guide; RB209. The main changes to the revision include new recommendations for the use of Phosphate in arable crops.
  • At the time of writing Defra had not announced any derogation to the three crop rule.  It is worth reiterating that fallow land is classed as a ‘crop’ and that spring and winter varieties are also treated as separate crops based on the variety grown and not the date when sown.  In addition where a crop has been planted but subsequently fails it can be counted as the original crop (field records will need to be kept if evidence is required on inspection).  Lastly, for those who will struggle to get anything or very little drilled, there are also exemptions to the Crop Diversification rules; where more than 75% of the arable area is left fallow (or is used for temporary grass or planted with leguminous crops) the three crop rule does not apply.

Land Use: Policies for Net Zero

The way land is used in the UK will have to see a ‘transformation’ if the country is to meet its target of Net Zero emissions by 2050. This is the conclusion of the Committee on Climate Change (CCC), the Government’s independent advisors on climate change, in their first ever report into land use which was published on the 23rd January. As the dominant user of land in the British Isles, farming would be at the forefront of these changes.

The key recommendations in the report for farming, and the wider food sector and consumers are;

  • Low-carbon Farming Practices: such as controlled release fertilisers, improving livestock health, and slurry management
  • Afforestation and Agro-forestry: increasing UK forestry cover from 13% to at least 17% by 2050 by planting around 30,000 hectares or more of broadleaf and conifer woodland each year.  In addition, 2% of the agricultural area should be devoted to agro-forestry (planting trees, whilst maintaining the agricultural use).  Additional hedgerow planting is also recommended.
  • Peatlands:  restoring at least 50% of upland peat and 25% of lowland peat.  This equates to 7% of the UK’s land area.  Although there might be some agricultural production, it is likely to be very low intensity grazing at best.
  • Bio-energy Crops:  increase the growing of energy crops by around 23,000 hectares each year so that by 2050 they comprise 3% of total land use.  The report states that energy crops are faster growing than new woodland, but also cautions that the negative impacts of energy crops need to be managed.
  • Reducing Meat and Milk Consumption: (i.e. beef, lamb and dairy) by at least 20% per person.  The report implicitly recognises that this might be the most contentious recommendation.  It states that such a reduction would bring consumption within healthy eating guidelines, and can drive sufficient release of land to support the proposed changes in tree planting and bioenergy crops.  It calculates that, alongside expected population growth, it requires around a 10% reduction in cattle and sheep numbers by 2050 compared with 2017 levels.  Then the report points out that this compares with a reduction of around 20% in numbers over the past two decades.
  • Reducing Food Waste: the 13.6m tonnes of food waste produced annually should be reduced by 20%

In terms of how to achieve this shift, the report suggests there should be a mix of legislation, public funding and better information, advice and training.  With regards to legislation, this might include regulating enteric fermentation from livestock and steps such as a change in the diet of cattle to reduce methane emissions.  The report suggests public funding should be used to incentivise farmers to plant trees and take up lower-carbon farming practices as well as for non-carbon benefits such as helping to prevent floods and for recreational purposes.  In respect of changing diets, it suggests the first stage should be relatively ‘soft’ through persuading consumers and the wider food chain to make changes.  A second stage of regulation or pricing needs to be considered if this does not work.

The report recognises reducing emissions should not be done by producing less food in the UK and increasing imports, it goes on to state that the UK is a ‘relatively low-greenhouse gas producer of ruminant meat’.  The report outlines methane emissions are a key factor for the farming sector (unlike most other sectors, where CO2 is the biggest issue).  It also addresses how methane emissions are assessed, and equated to CO2 – there is increasing debate on this subject.

Methane has a far greater global warming effect than CO2.  However, CO2 emissions raise the concentrations in the atmosphere for thousands of years, whilst methane has mostly disappeared after approximately 12 years.  It is argued methane-induced warming is dependent on whether the emissions are sustained or new emissions.  Like much in the climate change sphere, it seems the measurement and statistics are open to interpretation, without an agreed methodology.  This may provide some comfort to the livestock sector that it is not as bad as it has been painted.  However, it would be dangerous to cling to this too closely as a reason to continue unchanged.  Society will expect farming to do its bit and many of the policies outlined in the CCC report will be part of that change.

 

UK Harvest Commences

UK Combinable Crop Harvest – What should we Expect?

The harvest is in its early stages; this year a little earlier than usual.  Over the last six weeks, the UK has received minimal or no rain (at least in England) with June receiving only 25% of the normal levels, and July just as parched so far.  Consequently, some crops across the country will have been too dry to yield properly.  Before that, of course, though March, April, and the first half of May, the UK received 50% more rain than normal, leaving those areas with strong soils and healthy levels of organic matter, with a long-lasting moisture reserve.

Crops were late emerging from winter dormancy or being planted often into cold, wet spring soils and so had a lot of growing up to do in a short amount of time.  This alone reduced expectations of harvest yield.  But it is possible that those crops on land strong enough to retain some moisture for a while may have done better than expected.  It appears that moisture held deep below the soil’s surface has, on may farms, been a lifeline for the survival of this year’s crops, with the sunshine and hot weather providing an opportunity for heavy, high bushel weight crops to develop.  It has been mentioned that this is the weather pattern that more continental countries experience every year, the Paris Basin included.  Crops on lighter soils though will presumably bring overall yield averages down.

OSR

More specifically, oilseed rape, whose harvest is now well under way, needed minimal swathing or spraying in many parts this year.  Some crops are dry but not completely mature, with brown seeds.  As yet, yields appear to have held up well, albeit maybe not a record season, even after moisture adjustments are accounted for.  Farmers should be careful not to harvest oilseed rape too dry as it can incur penalties if moisture levels are below 6%.

To recap, the standard FOSFA contract for oilseed rape is for 9% moisture.  You lose 1% of price if moisture goes up to 10% and gain 1% for every 1% the moisture falls down to 6%.  Below that point, it becomes difficult for a crusher to extract oils so could be unsellable.  Certainly, a penalty such as a blending charge with wetter seed would become payable.  It is worth getting the moisture right and if you’re not sure, keep it comfortably above 6%.

Barley

The barley harvest too is under way, with moderate to good yields, and excellent quality on the whole, although it is too early to reach big conclusions about national yields.  Bushel weights are high, meaning a greater tonnage might fit in the barn than usual.  It also means those farmers who take their own grain to a store, should beware of trailer weights; overweight vehicles tend not to be prioritised for tipping, or, if more road travel is required, not allowed back on the road.  Some hauliers might end up carrying too heavy a load; it is the driver’s responsibility and could be expensive to them.  It will catch some hauliers out.

Wheat

It is possible that the very first wheat crops are starting to be cut now, but it is too early to make any useful comments about it.  More next month.

This article is from Andersons’ AgriBrief Bulletin, a subscriber-based publication which provides readers with expert, concise and unbiased commentary on the key issues affecting business performance in the UK agri-food industry and what it means for you and your clients. For further information, including a free trial, please visit:

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