Category: News

Farming Focus – August 2022

In the August 2022 edition of Farming Focus we take a look at the Sustainable Farming Incentive; if you are already in CS it’s not quite as straight forward to also have an SFI agreement.   See how you can get a FREE farm business review.  We report that most English farmers should have received their 50% advance BPS payment and if you are considering extending your HLS or CS agreement it could now be under (more favourable) UK rules.  We take a look at the UK-Australia FTA and the latest farm profit figures for England.  Finally, we inform Welsh readers of two new grants that are open.

Our Spotlight article this month looks at future farm policy in Wales after proposals for the new Sustainable Farming Scheme have been announced.

Click Here to access our August 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/

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/

 

Farming Focus InBrief – May 2022

  • If you require advice from one of our consultants, do not hesitate to contact them by email or phone.  If you do not have their details please contact the office on 01664 503200 or email [email protected]
  • The Lump Sum Exit Scheme is now open for applications. The Scheme is open until 30th September 2022 and is not expected to be available for applications in future years. It allows English farmers to take their future BPS payments through to 2027 in a single Lump Sum. In return, farmers will have to transfer out (rent, sell or surrender their tenancy) the agricultural land that was at their disposal on 17th May 2021. Up to 5 hectares of agricultural land can be retained, also any non-agricultural land and buildings including the farmhouse. The payment will be based on the average BPS payment received by the business for the three years 2019-2021 (the reference period). This will be capped at £42,500 and multiplied by 2.35, meaning the maximum payment will be just under £100,000. The full scheme guidance and application forms can be found via https://www.gov.uk/government/collections/lump-sum-exit-scheme. For further information please go to our article published in February.
  • In response to rocketing prices of fertiliser, Defra has announced three measures to help farmers with their nutrient management.
    • Urea: The planned ban on the use of urea fertiliser has been scrapped. Instead, an industry-run voluntary scheme will aim to reduce the ammonia emissions from solid urea fertiliser, commencing in 2023. This will be delivered through the Red Tractor farm assurance scheme and FACTS advisers.
    • Farming Rules for Water: Defra has released ‘revised and improved’ statutory guidance on applying the Farming Rules for Water. The de facto ban on autumn manure spreading, based on how the rules were being enforced, has been removed. The Farming Rules for Water have not been amended. Instead, the new guidance tells the Environment Agency about criteria that they should consider when assessing if enforcement action should be taken under the regulations. It also provides some clarity for farmers as to how to manage the use of slurry and other manures during autumn and winter.‎
    • Slurry Storage: The final Defra announcement was a confirmation that grants for slurry stores will be available in England. This will come under the Farming Investment Fund. Little detail is currently known, but grants between £25K and £250K at a 50% rate are expected to be available to fund up to 6 months of slurry storage. Stores will need to be covered and it may be possible to cover existing stores. The scheme is expected to be competitive. If you need any advice on increasing or updating your storage, please get in touch.
  • The Welsh Government has announced it is making £227m of funding available over the next three years (2022-2024) to support Wales’ rural economy. This funding is in response to the ending of the EU Rural Development Programme (RDP), which will completely close in 2023. It will ensure continued support for the areas previously funded under the RDP such as environmental land management, capital equipment to improve productivity, nutrient management and on-farm storage. It will also provide support for organic farming and woodlands. Scheme details are still being drawn-up, but for 2022 £100m is being made available further details can be found at https://gov.wales/written-statement-funding-support-rural-economy-and-transition-sustainable-farming-scheme
  • Field trials of a genetically modified barley have been approved by Defra. The study will use gene-editing techniques to investigate the role of existing barley plant genes that interact with soil microbes. The aim is to make the plants more efficient users of soil nutrients and reduce the need for artificial fertilisers. The trials will take place over the next 5- years at 3 sites of the Crop Science Centre; a partnership between the National Institute of Agricultural Botany and the University of Cambridge.
  • The war in Ukraine has been the key driver of grain markets over the last two months and in the short-term it will continue to drive commodities and inputs. However, there are other factors also driving prices. Severe drought in parts of the US wheat belt has lowered US wheat crop condition ratings. In addition, the US maize crop is smaller as growers are opting for soyabeans over maize. The latest International Grains Council (IGC) supply and demand estimates, support the view of tight markets. World grain closing stocks are forecast to fall by 26.5 million tonnes from 2021/22 to 2022/23. But with the situation in Ukraine, all forecasts should be treated with caution.
  • The Bank of England increased the Base Rate by a further 0.25% on the 5th of May.  This takes the cost of borrowing from 0.75% to 1%.  This is another attempt to respond to increasing inflation which is being exacerbated by the Russia-Ukraine conflict.  The Bank is tasked with keeping inflation at 2% but, according to the Bank’s own forecast, increases in prices would rise above 10% this year.  The rise in interest rates is meant to bring inflation back towards the target over the medium term.  Many forecasters believe that there will be at least another 0.25% price rise before the end of 2022, taking rates to 1.25%.

This month’s Spotlight looks at the recent Defra announcement on the Sustainable Farming Incentive (SFI). Click Here for further information.

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/

 

Spotlight on the Sustainable Farming Incentive

Defra has released further information on the Sustainable Farming Incentive (SFI) for 2022. It is now expected to open for applications in June and then remain open with no closing date. This is to allow those interested to apply at a time to suit. However, Defra has stated that, if it is necessary to close applications, it will give six weeks’ notice. The information is included in a ‘collection’ of webpages which can be found at https://www.gov.uk/government/collections/sustainable-farming-incentive-guidance.

Below is a summary of the key points:

  • Agreements will be for three years. Initially it will only be open those businesses which are eligible for the BPS – the business (SBI) must have at least 5 Ha of eligible land and 5 or more BPS entitlements on 16th May 2022 – but there is no requirement to have made a claim.
  • The applicant must have ‘management’ control of the land for three years e.g. own the land or have a tenancy over it
  • Payment will be made quarterly in arrears i.e. the first payment will be made three months after the agreement commences
  • The Standards will not include funding for capital items in 2022. But it is possible to apply for existing funding for capital items for parcels included in an agreement, such as Countryside Stewardship capital grants.
  • In the future, SFI will include capital items funding to help complete the actions in the standards
  • Applications will be online via the Rural Payments Service. Prospective applicants are encouraged to ensure their digital maps are up-to-date, including land cover (certain land covers will be eligible for each standard) and available area. With the application window opening after BPS, in most cases these should already have been checked
  • Certain changes can be requested to an agreement. It will be possible to upgrade an agreement annually to:
    • add more Standards as they become available
    • add more land, including land coming out of Countryside Stewardship
    • increase Levels within Standards already in an SFI agreement
    • it will not be possible to reduce the Levels or land area, except under very limited and specific circumstances
    • it will not usually be possible to transfer an SFI agreement to another person
  • You do not need to have an SFI Standards agreement to be eligible to apply for the SFI Annual Health and Welfare Review.

Below is a summary of payments. The Moorland Standard payment has been increased, fairly significantly, since the previous announcements. Those with common land entered into an SFI agreement will receive an additional £6.15 per Ha. Payments for the other standards, remain the same:

Sustainable Farming Incentive (SFI) 2022 

Source: Defra (as at March 2022)

 

 

 

 

 

 

 

 

 

 

 

Andersons Agflation Update

Surging Costs Causing Serious Concern

Even before the conflict in Ukraine, inflation had become a hot topic both in the general economy and in farming. Events since the 24th of February have exacerbated the inflationary pressures, particularly at the farm-gate level, and will cause input costs to rise sharply in the year ahead. This is one of the key messages from the recent Andersons Spring Seminars.

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 March 2022 estimates are now available. Agflation is currently running at 28.8% per annum, dwarfing the UK Government’s Consumer Price Index (CPI) which itself has accelerated to 6.2% in February.

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

Sources: ONS and Andersons

Note: * represents the % change versus the same month a year earlier.

Andersons’ Agflation index is much more variable than general inflation. This is due to the linkages to commodity prices for such things as fuel, fertiliser, and animal feed (feed is almost a quarter of the index). Whilst Agflation surged to nearly 30% in March 2022 (versus March 2021), it had been at 10% even before the invasion of Ukraine. Given recent developments, it is likely to remain high for the rest of 2022 at least.

The value of ammonium nitrate has exceeded £900 per tonne, up from £645 per tonne in January. The value of tractor fuel has also risen substantially. In 2021, the price of red diesel averaged almost 66 pence per litre according to the AHDB. Whilst price discovery for inputs is challenging presently, with terms changing frequently, red diesel prices have been quoted by some publications in excess of 130 pence per litre. Russia’s importance in energy markets, especially natural gas and crude oil, will pose significant challenges for the industries relying on these commodities. Natural gas is a key input into ammonium nitrate production and fertiliser prices will remain elevated as a result.

At the farm-level, the high cost of inputs will challenge many businesses in the next 12 months and beyond. The working capital of farms will be under serious pressure. While output prices have risen in some sectors (e.g., cereals), these have of course, created additional pressure on feed costs in the livestock sectors. Across all sectors, the level of cash required to operate has also been increasing considerably.

These issues were examined during Andersons Spring Seminars and an Online version is now available. Andersons Online Seminars contain a full recording of the Spring Seminar held at Harper Adams University in March. It covers the Russia-Ukraine conflict and a range of other issues affecting the profitability of UK agriculture (including policy reform and land use change) in greater detail. To learn more and access your copy today, please go to https://theandersonscentre.co.uk/shop/andersons-2022-seminar-online/

 

Ends.

Notes:

No. of Words: 497

Author: Michael Haverty

Date: 7th April 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 InBrief – April 2022

  • If you require advice from one of our consultants, do not hesitate to contact them by email or phone.  If you do not have their details please contact the office on 01664 503200 or email [email protected]
  • Input prices were already high before the invasion of Ukraine but cost inflation has now been exacerbated. Between January 2021 and January 2022, the price of UK produced ammonium nitrate was up 145%, urea up 156%, and glyphosate up 307%.   Since the invasion, the value of ammonium nitrate has exceeded £900/t, up from £645/t in January.  The value of tractor diesel has also risen substantially, with some reports quoting 130p/l.  The high cost of inputs will challenge many businesses over the next 12 months and beyond.  The working capital of farms will be under significant pressure.  While the cost of outputs has risen, the level of cash required to operate has also increased rapidly.  Our Spotlight article looks how the rising costs are affecting our Model Farms.
  • The Chancellor, Rishi Sunak, used the Spring Statement on the 23rd March to announce a number of policies designed to mitigate the cost of living crisis.  The Statement came a day after the latest inflation figures were announced.  These showed year-on-year inflation in February (CPI measure) had risen to 6.8%. Even so, the 1.25% increase in National Insurance contributions will still be introduced in April, although the threshold at which it becomes payable will be increased to £12,570 (to come into force in July). The rate of fuel duty has been reduced by 5p/l and VAT on energy saving equipment (solar panels, heat pumps etc) has been cut to zero.  He also made the commitment to cut the basic rate of income tax by 1% to 19% by the end of the Parliament (2024).
  • Defra is consulting on binding environmental targets for England which could have a significant effect on agriculture over the coming years. These include water quality, the area planted to woodland, halting species decline and the creation of wildlife-rich habitats outside of protected sites.
  • The Bank of England increased the Base Rate by a further 0.25% on the 17th March.  This takes the cost of borrowing from 0.5% to 0.75%.  This is a response to increasing inflation.  The Bank is tasked with keeping inflation at 2% but, according to the Bank’s own forecast, increases in prices will hit 8% this spring.  The rise in interest rates is meant to bring inflation back towards the target over the medium term.  Many forecasters believe that there will be two further 0.25% rises before the end of 2022, taking rates to 1.25%.
  • The 5th  Woodland Carbon Guarantee auction will take place from midday on Monday 9th May to midday on Sunday 15th May 2022.  Applications to take part in the next auction can be submitted now and need to be made by midnight on Sunday 24th April.  Woodland creation projects accepted into the Woodland Carbon Guarantee scheme have the option to sell Woodland Carbon Units (WCUs) to the government every 5 or 10 years up to 2055/56.
  • It has been confirmed that Young Farmers and New Entrants will not be able to apply for entitlements from the National Reserve in England this year, except in respect of land which was leased, bought, or gifted prior to 17th May 2021. With De-linking of entitlements expected to take place in 2024 this is just another step in drawing the BPS to a close.
  • British Sugar has announced all contracts, irrespective of length, will receive at least £27 per tonne for the 2022/23 crop year.  The guaranteed £27 per tonne will apply to all beet for the crop which is about to be planted.  Any growers with a fixed contract price below this amount will have it raised to £27 per tonne.  Those whose contracts include a market bonus element will receive a guaranteed market bonus of £5.82, raising their price to £27 per tonne on delivery.  Any surplus beet for the 2022/23 crop will also be paid at £27 per tonne.
  • Defra has announced that the ’emergency’ authorisation of Syngenta’s Cruiser SB seed treatment for sugar beet has been granted for this year.  Used to control Yellow Virus, the use of the neonicotinoid is dependent on nine conditions being met.  This includes an initial threshold for use, meaning the seed treatment can only be used if the predicted Yellow Virus incidence is at or above 19% of the national crop on 1st March.  According to Defra, following what has been a relatively mild winter, modelling on 1st March predicted a 68% (!) level of virus incidence.  In 2018, 25% of the national sugar beet crop was lost to YV, with an estimated cost to processors and growers of £67 million.
  • A reminder that Countryside Stewardship (CS) is now open for applications (see https://theandersonscentre.co.uk/countryside-stewardship/). This includes the Higher-tier, Mid-Tier, Wildlife Offers and the stand-alone Capital Grant Scheme.  Many are having another look at CS, in part to try and retrieve some ‘lost’ BPS, but also because the domestic scheme has seen some improvements and flexibility.  Successful applications will commence 1st January 2023 and can be ended early where an ELM agreement has been approved.  Payments have been timelier and the penalty/inspection process less penal.  Most will have some areas on their holding that are less productive and could probably be entered into CS.  Please contact one of our consultants if you are considering CS, they can help you prepare and submit a cost-effective CS application but only if initial discussions conclude it is financially viable.
  • Our Special Edition in February also included details on the Lump Sum ‘retirement’ scheme which will be in operation this year only (see https://theandersonscentre.co.uk/lump-sum-payments/) Do not hesitate to contact one of our consultants if this is something that maybe of interest to your business and they can work through the details with you.
  • The Andersons Centre will be at Dairy Tech on Thursday 7th April.  Please join us on stand B50 where our consultants will be available to speak to. Please note that we will also be selling copies of the 52nd edition of the John Nix Pocketbook on the stand and there will be a 20% discount for purchases on the day.

This month’s Spotlight looks at the impact of cost inflation on two of our Model Farms Click Here for further information.

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/

 

Spotlight on Impact of Cost Inflation

It is hugely difficult to budget in any farming sector with such large and sudden changes in prices and costs.  However, we have produced some updated figures for our Friesian Farm model ahead of the Dairy Tech show on the 7th April.  And with such significant rises in costs we have also revisited our Loam Farm model budget.  The figures are summarised in the tables below.

For Friesian Farm, it can be seen that the 2021/22 year just ending was profitable for the farm as milk prices increased and costs, whilst rising, had not yet hit current levels.  The upcoming 2022/23 year shows the massive increase in the cost of production.  Although the budgeted milk price is also moving up strongly, it results in a margin from production only just above break-even levels and the worst for a few years.

Friesian Farm is a notional 210 cow business.  It has been used to track the fortunes of British dairy farming for well over a decade.  It has a year-round calving system, like most of the UK industry, but it is trying to maximise yield from forage.  The farm comprises 130 hectares (of which 60 hectares are rented on an FBT).  The proprietor provides labour along with one full time worker (plus casual/relief).  The table above shows the farm’s actual results for the two previous milk years (April to March), an estimate for the current 2021/22 year then a forecast for 2022/23.  

The situation is similar for Loam Farm.  The table below shows the results for harvest years 2020 and 2021, a provisional figure for 2022 and a forecast for 2023.  For harvest 2022 fertiliser was purchased the previous summer, i.e. before the recent price hikes and therefore shows spectacular profits for the year.  For harvest 2023, the significant increase in variable costs can clearly be seen, together with fuel costs in the overheads.  Meaning the margin from production is negative.  The fall in BPS is mitigated by involvement in the Sustainable Farming Incentive (SFI).

Loam Farm is a notional 600 hectare business that has been used since 1991 to track the fortunes of British combinable cropping farms.  It is partly owned and partly rented and is based on real-life data. It has 1 full-time worker and a harvest casual labourer.

 

 

 

 

 

 

 

 

 

 

 

Farming Focus InBrief – March 2022

  • If you require advice from one of our consultants, do not hesitate to contact them by email or phone.  If you do not have their details please contact the office on 01664 503200 or email [email protected]
  • The application window for the BPS in England will open on the 15th March and runs until the 16th May.  In the meantime, it is already possible to transfer land and entitlements online in England in readiness for this year’s BPS applications.  Claimants have until 16th May (the 15th is a Sunday) to complete the transactions.
  • For those who are taking place in the SFI Pilot, the payment rates have been revised.  Some of the payments have remained the same whilst others have increased.  Some Pilot agreements will have already started, others are still being agreed but the new payments will apply from the start of all agreements. The first batch of quarterly payments under the SFI Pilot have now been made to those participants whose agreements commenced on November 1st.    Not all applications had been processed by this initial start date but offers have been sent out on a regular basis since. 
  • The application window for the first round of Landscape Recovery pilot projects is now open and will close on 24th May 2022.  Landscape Recovery is the third component of ELM.  It is for farmers and land managers, including groups, who want to take a more radical and large-scale (500-5,000 Ha) approach to producing environment and climate goods on their land, such as establishing new nature reserves, restoring floodplains to help reduce the risks from flooding, or creating woodland and wetlands.  The first round will focus on species recovery and river restoration.
  • Defra has started to send out Agreements for the first round of the Farming Equipment and Technology Fund (FETF).  Agreements need to be accepted by midnight on 1st April (extended from 4th March), via the dedicated FETF acceptance portal.  Claimants then have until midnight on 31st October 2022 (also extended by one month) to buy and install the items and submit a claim for payment.
  • Defra has announced the new Slurry Investment Scheme will now be incorporated into the Farming Investment Fund and will not be a separate scheme. Further details should be available through the spring, but it is expected grants to help farmers achieve 6 months slurry storage will be available in the autumn.
  • The Bank of England increased UK base rates on Thursday 3rd February from 0.25% to 0.50%.  This is in response to rising inflation.  Further increases are expected.
  • A reminder that Countryside Stewardship is now open for applications (see https://theandersonscentre.co.uk/countryside-stewardship/ ). This includes the Higher-tier, Mid-Tier, Wildlife Offers and the stand-alone Capital Grant Scheme.  Many are having another look at CS, in part to try and retrieve some ‘lost’ BPS, but also because the domestic scheme has seen some improvements and flexibility.  Successful applications will commence 1st January 2023 and can be ended early where an ELM agreement has been approved.  Payments have been timelier and the penalty/inspection process less penal.  Most will have some areas on their holding that are less productive and could probably be entered into CS.  Do not hesitate to contact one of our consultants if you are considering CS, they can help you prepare and submit a cost-effective CS application but only if initial discussions conclude it is financially viable.
  • Our Special Edition in February also included details on the Lump Sum ‘retirement’ scheme which will be in operation this year only (see https://theandersonscentre.co.uk/lump-sum-payments/) Do not hesitate to contact one of our consultants if this is something that maybe of interest to your business and they can work through the details with you.
  • Trade patterns for farm goods on the island of Ireland have changed significantly as a result of Brexit. Latest data from the Irish Central Statistics Office (CSO) show that total agri-food trade between Northern Ireland (NI) and the Republic of Ireland (ROI) has increased significantly (by 42%) in 2021 versus 2020.  NI agri-food imports from ROI have increased by 47% with regulatory controls imposed on GB to NI trade as a result of the NI Protocol being the primary driver. Corresponding NI exports to ROI have also risen by 38% over the same period, showing that increased all-island agri-food trade is happening in both directions.

This month’s Spotlight looks at the impact Russia’s invasion of Ukraine is having on the arable market Click Here for further information.

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/

 

Spotlight on Markets Following Russia’s Invasion

World politics have been balancing on a knife edge throughout February.  On the morning of 24th February 2022, that balance was firmly tipped.  Russia’s invasion of Ukraine represents the biggest political shock to markets in a long time. The ramification for world agricultural markets is significant.

Russia and Ukraine account for more than 28% of world wheat exports, as such developments in the conflict will have large ramifications for prices.  Furthermore, Ukrainian crop production (wheat, barley, and sunflowers) is largely focused in the East of Ukraine, the current epicentre of the conflict.  The conflict in Ukraine will be the biggest shock to prices, outweighing all other fundamentals.  As the conflict in Ukraine continues, the value of commodities has risen considerably. On Monday 7th March UK feed wheat futures (May-22) closed at £303 per tonne, a rise of almost £68 from 23rd February, the day before the invasion began. While prices have risen, daily movements have been volatile.

It is not just wheat, Ukraine and Russia account for 10% of global oilseed production (rapeseed, soybeans, sunflower).  The main oilseed grown in the Black Sea region is sunflowers; Ukraine accounts for about 30% of global sunflower seed production with the optimal sowing season about 8-9 weeks from now.  If this is compromised, this will have an impact on global vegetable oil prices and in turn rapeseed into the 2022/23 marketing year.

As well as the large rises in output prices as a result of the conflict, input prices are equally inflated. Russia is a key producer of fertiliser and exporter of fuels. The price of fuel is likely to stay inflated with the UK and US governments announcing, on 8th March, their intention to ban Russian oil imports. The UK ban will be phased; Russian supplies of fossil fuels account for 8% of UK imports.

Countryside Stewardship

The Countryside Stewardship scheme is now open for applications in England.  This includes;

  • Mid-tier – Open from 8th February to 29th July 2022 for agreements to commence on 1st January 2023.  This year, it is possible to apply online for Mid-tier via the Rural Payments service, meaning it is no longer necessary to request a pack.  But for those who prefer not to, or are unable to apply online, packs can be requested via Rural Payments by 5th July.  If it is not possible to go online, requests for packs by telephone or email must be made by the earlier date of 27th May.  The last date to request Catchment Sensitive Farming Approval or Natural England approval (required for certain options) is 20th May.  For more information go to https://www.gov.uk/guidance/mid-tier-and-wildlife-offers-manual-countryside-stewardship
  • Wildlife Offers – These are also open for applications from 8th February to 29th July 2022.  As previously, online applications are preferred, but where this is not possible, packs must be requested by 5th July.  The Wildlife Offers are meant to be quicker and simpler to apply for.  Unlike the Mid-tier, they are not scored, meaning all eligible applications will get an agreement.  There are no capital items included in the Wildlife Offers, but it is possible to apply for a standalone Capital Grant (see below) alongside a Wildlife Offer. For more information go to https://www.gov.uk/guidance/wildlife-offers-countryside-stewardship
  • Higher-tier – The application period commences on 8th February.  The deadline for submitting a Higher-tier initial application is 29th April with the final application to be submitted by 31st August.   The deadline for requesting an application pack (online, email or post) is 31st March.  Higher-tier includes woodlands, commons and environmentally significant sites (eg.SSSIs).  For more information go to https://www.gov.uk/guidance/higher-tier-manual-countryside-stewardship
  • Capital Grants – From the 8th February 2022, Capital Grant applications are now open all year round.  Further information can be found at https://www.gov.uk/guidance/countryside-stewardship-capital-grants-manual.  Readers will recall the Capital Grants offer was expanded last year so it now offers standalone capital items within three areas;
    • Boundaries, trees and orchards
    • Water quality
    • Air quality
  • SFI Pilot Capital Grants – It is now possible to make a Capital Grants application to support SFI Pilot Standards.  Those wishing to make an application need to read the Countryside Stewardship Capital Grants (SFI) supplement first (https://www.gov.uk/guidance/countryside-stewardship-capital-grants-manual-from-8-february-2022-sustainable-farming-incentive-pilot-supplement).  This will direct them to the relevant sections in the 2022 Capital Grants Manual.
  • Protection and Infrastructure Grant – This is a new standalone capital grant open all year round from 8th February 2022.  It is a two year capital grant for support to create Woodland Infrastructure (FY2).  Further information can be obtained via https://www.gov.uk/guidance/protection-and-infrastructure-countryside-stewardship
  • Other CS grants remain open all year round, these include;
    • Woodland Management Plan grant
    • Woodland Tree Health grant
    • Implementation Plan (PA1) and Feasibility Study (PA2) grants – funding for more complex projects – speak to a NE advisor first

Andersons’ consultants are experienced at drawing up CS applications.   We work with our clients to prepare and submit cost effective CS applications but only if initial discussions conclude it is financially viable.  Please contact one of our consultants for further advice.